Dallas, TX: ReportsandReports announce it will carry UK Commercial Insurance Distribution 2010 Market Research Report in its Store. Browse complete UK Commercial Insurance Distribution 2010 Report Introduction This report gives a comprehensive analysis of distribution in the UK commercial insurance market. It explores issues including the growth of direct insurers in commercial insurance and the acquisitions occurring between commercial insurance brokers. The report also includes data and insight on SMEs’ purchasing behavior, broker consolidation and the latest activity of the managing general agents. Scope Highlights SMEs have been generally loyal to their commercial insurance providers, most commonly maintaining the relationship for two to five years. However, SMEs were perhaps expectedly motivated to stay or leave their provider according to price, implying a high level of potential churn in that sector. For the past year, broker networks have continued to acquire regional brokers in a bid to increase their market share and improve their regional coverage. According to Datamonitor’s commercial insurance broker survey, 45.7% of commercial brokers are part of a broker network or club. A number of insurers withdrew capacity from managing general agents (MGAs) in H1 2009 but the total number of MGAs is set to increase. The cost efficiency and penetration into niche markets are benefits many insurers are keen to exploit and as such major players such as Giles have been forming new MGAs. Reasons to Purchase Table of Content Overview Catalyst Summary Executive Summary Total general insurance GWP declined in 2006 Brokers continued to dominate the distribution of commercial insurance National brokers have lost distribution market share to the direct channel, chain brokers and telebrokers Larger companies are more likely to have switched brokers between 2006 and 2007 Companies with a large turnover are more likely to switch broker The market saw a number of mergers and acquisitions, many involving brokers The broker channel is dominant in UK commercial insurance distribution, however its share of the market is declining Brokers are forecast to see a 1% decline in market share between 2007 and 2011 Table of Contents Table of figures Table of tables Introduction What is this report about? Who is the target reader? How to use this report? Market Context Introduction Total general insurance GWP declined in 2006 The motor insurance market recorded its fourth consecutive year of decline Property insurance GWP rose very slightly in 2006 General liability recorded a significant fall in GWP Accident and health was the only business line to record strong growth Pecuniary loss GWP fell by 3.2% The general liability, commercial property, commercial motor and pecuniary loss markets recorded a fall in GWP in 2006 The UK business parc is continuing to grow steadily with most of the impetus coming from the smallest firms The majority of UK businesses have no employees Distribution Dynamics Introduction Brokers continued to dominate the distribution of commercial insurance National brokers have lost distribution market share to the direct channel, chain brokers and telebrokers The direct channel increased its share of commercial insurance GWP by 1% in 2006 Affinity groups remain a small channel for the distribution of commercial insurance Banks and building societies continue to play a small role in the distribution of commercial insurance Organic growth remains a key strategy for brokers, although broker acquisitions remain popular Brokers are keen to pursue organic growth More than one fifth of the brokers surveyed have acquired a fellow broker More than a third of brokers surveyed are considering planning an acquisition in the next 12 to 18 months Increasing premium turnover and regional growth are the key motivations for planning a broker acquisition The broker network model remains popular as many brokers wish to gain access to a larger panel of insurers Over a third of brokers are part of a broker network Many brokers joined a broker network to gain access to a larger panel of insurers The proportion of brokers considering joining a broker network has decreased since the H1 2007 survey Customer Focus Introduction Larger companies are more likely to have switched brokers between 2006 and 2007 while Jardine Lloyd Thompson performed well in terms of acquisition and retention Companies with a large turnover are more likely to switch broker Commercial clients are more likely to switch from a multinational than any other intermediary but overall those who switch are more likely to move to a smaller broker Jardine Lloyd Thompson leads the pack in successfully acquiring and retaining customers, with Willis a close second, whilst Marsh and Aon in particular suffered negative net retention Aon was the largest net loser of clients between 2006-7, shedding clients to brokers from both within and outside the top four SMEs buy mainly through brokers and long-term relationships are the norm In general SMEs are content with their insurance providers and satisfaction levels remain high Retention levels among SMEs remain high with most staying with their provider for longer than two years Almost 90% of SMEs are not considering a change of provider in the next year A small group of SMEs are willing to switch provider in search of lower prices Only 16 per cent of SMEs have changed insurance provider in the last two years Premium costs are particularly a concern for those that have switched recently One in 10 SMEs are considering switching their insurance provider in the next 12 months Recent switchers show lower loyalty levels than other SMEs Price is the dominant concern for potential switchers Most SMEs would approach a broker if switching but some are open to alternatives Brokers remain the top choice for SMEs to approach if they had to switch provider Many SMEs are willing to consider alternative channels when prompted Up to 44% of SMEs would consider using a bank as an insurance provider Almost three quarters of SMEs would be willing to consider direct insurers, in the hope of cost savings Many SMEs are open to purchasing insurance by telephone Even more SMEs are willing to buy their insurance via the Internet, showing the potential of this platform Commercial motor and property insurance are most likely to be purchased through alternative platforms Alternative distribution channels face a number of challenges in attracting switchers A core group of SMEs will not buy direct, as they believe that direct insurers are more expensive Brand awareness in the commercial sector remains low, hampering progress for direct insurers Over 50% of SME will not consider buying from bancassurers Direct insurers and bancassurers also have to overcome the unwillingness of some SMEs to buy by telephone or Internet Two thirds of SMEs consider purchasing commercial general insurance too complex for the telephone A majority of SMEs view commercial general insurance as too complex for the Internet Competitive Dynamics Introduction The market saw a number of mergers and acquisitions, many involving brokers AXA acquired numerous commercial brokers in 2007, reinforcing its position in the SME sector Groupama acquired a majority stake in Lark Group in August 2007 Direct Line began to offer business insurance in 2007 Equity Insurance Group recorded a large number of small-scale acquisitions Towergate continued to acquire numerous brokers in 2007 Other brokers acquiring included Jelf, Giles, Broker Network and Oval The top ten brokers have a market share of 96% of client turnover The greater the turnover, the greater the market share of the multinational brokers Of the companies in Datamonitor’s Insurance Broker Database, 22 arranged their insurance in-house Aon acquired Footman James in 2007 and is looking to improve its claims process Aon to use InterResolve to revolutionize claims process Aon acquired specialist motor insurance broker Footman James in 2007 Willis is planning to grow its SME business and introduced a new commission structure in 2007 Willis aims to grow its UK SME business Willis alters remuneration package by introducing 2.5% commission on top of all fees Jardine Lloyd Thompson is to establish a new underwriting division and has said that a transformational deal may happen in future Jardine Lloyd Thompson asserts independence from big 3 JLT bought niche personal lines broker Pavilion in 2007 JLT to establish an underwriting division The Future Decoded Introduction The broker channel is dominant in UK commercial insurance distribution, however its share of the market is declining Brokers are forecast to see a 1% decline in market share between 2007 and 2011 The direct channel will see its commercial insurance distribution share rise to 11% by 2011 It is anticipated that insurers will make more affinity deals with retailers and associations to sell commercial insurance Banks are expected to retain a distribution share of around 1% between 2007 and 2011 Company staff and agents will see slight reductions in market share APPENDIX Definitions SME Definitions of ABI terms Brokers National brokers Other intermediaries & brokers Chain brokers & telebrokers Direct Other company agents Utilities/retailers/affinity groups Company staff Banks/building societies Written premiums Methodology Datamonitor’s UK Commercial Insurance Broker Competitor Database Source of data Industry sectors Further reading Ask the analyst Datamonitor consulting Disclaimer Browse complete UK Commercial Insurance Distribution 2010 Report Browse all Banking and Financial Services Market Research Reports Browse all Datamonitor Market Research Reports RSS Browse all Latest Report Related Reports: UK Commercial Insurance Distribution 2009 Distribution in UK Commercial General Insurance 2008 UK Personal Insurance Distribution 2010 About Us: Contact:
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