How the landscape of commercial lines insurance is changing

There is no doubt that personal lines insurance has rapidly grown online over the last decade. This evolvement has been largely driven by the consumer who wants more choice, competitive pricing and real-time access.

This trend is now being reflected in commercial lines and similarly is a result of the change in SME buying behaviour. Over the course of the last 12 months, the number of SME’s has continued to rise in the UK, with 99.9% of SME’s accounting for the private sector. Their expectation in terms of choice, affordability and insurance being available at the touch of button doesn’t really differ from the average consumer.  As this demand increases, the traditional approach of using an insurance broker to sell SME insurance is coming under threat.

Looking at the commercial lines market as a whole, currently there is a £15bn written premium opportunity that brokers continue to dominate to the tune of around 85%. When you segment that commercial lines opportunity into SME and even further into micro-SME – then the broker starts to lose market share. On the micro-side, insurance brokers have gone from controlling 90% of that written premium down to 60% for various reasons.

Over the last 5 years, since PowerPlace came into the market to support insurance brokers, a shift has occurred and now the broker community is able to trade in an efficient way that was not previously possible – online. What PowerPlace provides is a technology platform that gives brokers accessto an online marketplace to compare a range of SME product lines at the touch of button.

Currently the platform supports 1,200 brokers across the country and continues to drive forward the change to encourage more and more brokers to adopt an e-trading strategy as part of their business mix.

Even with the support PowerPlace provides, the pace of adopting online trading has been somewhat slower in comparison to personal lines. The complexity of cover for SME’s has meant that it is not always possible to adopt a pure e-trading approach and there is still a requirement, in particular for larger and medium risks, where a broker and e-trading go hand-in-hand. UK businesses still need that diagnostic support a broker can offer which isn’t available online.

But an area where brokers are at risk of losing market share is to the micro-SME consumer where their needs aren’t as complex and an e-trading approach can be applied to meet their needs. The dynamic of this end of the market has changed over the last 12 months and brokers have become savvy and want to be equipped with more technology to sell directly to this audience group. The technology available via PowerPlace allows brokers to now have an online shop front to sell commercial lines products via their own websites supported by mobile connectivity.

The future journey for commercial lines supported by online trading presents a massive opportunity for the insurance broker to find new business, shape business growth and more importantly offer a better service for the SME consumer. The e-trading rush is on and the next few years will certainly shape how the commercial lines insurance arena evolves in a highly competitive market place.

For more information about Open GI:

Helen Andrews
Group Head of Marketing & PR

Notes to Editors:

Open GI is the leading technology partner to general insurance brokers in the UK and Irish markets. Its Core broking platform provides multi-line, multi-channel, multi-brand trading capability complemented by innovative ecommerce and mobile technologies. Open GI is part of the Open International Group alongside sister companies PowerPlace, Open GI London and Blue Fire Communications.

PowerPlace is an online commercial insurance marketplace, which distributes products electronically using technology from sister company, Open GI. PowerPlace is part of the Open International Group. The online marketplace is backed by leading insurance providers including AXA, ACE, Ageas, Covea, e-Underwriting, LV=, NIG, RSA, Zurich, and Towergate Underwriting.