Earlier this year, we carried out a short piece of research to get a ‘temperature check’ of the trading capability that currently exists across UK insurance companies to build and make effective use of broker and client relationships to support the achievement of business targets
Some of the headline findings were as follows:
- – 2/3rds of respondents stated that their underwriters only sometimes demonstrate and use an in depth technical knowledge of their products to ensure they can provide the right solution to their brokers’ and clients’ needs
- – Over 40% of respondents stated that their underwriters sometimes/rarely/never leverage their broker relationships to seek out and take opportunities for profitable growth
- – The lowest scoring response was for the effective use of a pipeline to support cross-sell and new business with 30% saying they rarely or never used a pipeline and a further 46% saying this was only used sometimes
- – Nearly 60% of respondents stated that their underwriters, never/rarely/sometimes apply the principles of negotiation to effectively close deals.
And our corresponding headline conclusions are:
- – Overall the responses from our survey suggest mediocrity and little differentiation between insurers/employers. “Everybody does an ok job in trading” – therefore there is an opportunity for those who do this well to stand out from the pack.
- – There are three areas we have identified which seem of particular interest/importance and are central to good trading – product knowledge, ability to leverage relationships and negotiation. These three are interrelated and support each other, for example:-
- – negotiation is the language and/or interaction that brings all of the trading capabilities together
- – good relationships with brokers support open and honest negotiation
- – knowledge of product and market underpins any negotiation position beyond price
- – confidence to leverage relationships and find win-win positions with brokers derives from the underwriter’s knowledge of the product, the market and the broker.
- – In addition, there is a further area where there is a gap in capability and that is in the area of using a pipeline to support new and cross sell business opportunities.
What does this mean for insurers in the context of the market?
Increased regulation of the insurance industry over the last decade or so has driven a requirement for competence and compliance in staff and this we contend can be seen in insurers’ investment in introductory/basic technical training, and in new regulations (e.g. Insurance Act and GDPR).
Over the same period the prevalent market conditions have been ultra-competitive with excess availability of capital (soft market) leading to pressure on premiums and with brokers having the greater power of leverage.
The most successful underwriters combine technical competence with the ability to manage relationships and negotiate with brokers. The leading insurers who recognise this either buy in the best underwriters (expensive) and/or invest in trading skills training for their existing underwriters.
Our experience is that technical staff such as underwriters who have long been recognised for their technical knowledge, pricing expertise and decision-making are not always naturally talented in the sales skills of negotiation, deal making and relationship management (or pre-disposed to learning them).
Trading skills programmes aimed at technical underwriting staff can add real value and make a difference to performance in this ultra-competitive environment.
The survey suggests a lot more can be done in this arena of trading skills training on such matters as selling benefits rather than product features, elevator pitches, negotiating, closing a deal, how to say no, understanding the broker’s strategy and business, leveraging relationships, managing a pipeline, etc.
If you would like to discuss any of the content in this article and/or you would like a complimentary copy of the full research report, please contact us at firstname.lastname@example.org