The benefits and potential pitfalls of broker clubs

Industry experts have agreed that broker clubs are largely beneficial for the market, and they can offer vital support for independent brokers. However, brokers have also highlighted that these clubs should not be an excuse for insurers to become complacent when it comes to focusing on service.

Zurich officially launched its Zurich Club Blue in early May. Georgina Davis, head of sales and distribution at Zurich, told Insurance Age that it had been developed to help brokers overcome challenges in areas such as diversity and inclusion, and the war for talent and sustainability.

“We recognise the challenges faced by smaller, independent brokers in finding their own solutions for all these things.

“As a large corporate, we have already worked through many of these challenges, and it’s really about sharing our learnings,” Davis noted. 

The consensus, when speaking to people in the market, is that broker clubs are good and they give independent regional brokers access to resources, including training and development, that they otherwise would not have in-house – something that is increasingly important in response to the high volume of mergers and acquisitions in the sector. 

The clubs are also a way for insurers and brokers to build relationships and, if they work as they say they should, then clubs can provide brokers with airtime with composite insurers to discuss their needs and challenges.

Feedback from brokers

Aviva launched its offering, Club 110, in 2008 in response to feedback from regional independent brokers, which had led the insurer to question whether it was doing enough to support them.

Ryan Birbeck, regional distribution director at Aviva UK, explained that the roots of the proposition had remained the same over the years, and it is structured around three aspects where the provider offers support: emotional, tangible and commercial.

Birbeck said: “It’s around actually having it within our DNA to understand brokers and their needs, and to make them feel that we listen and respond, and that we’re open to challenge where needed.”

It’s having it within our DNA to understand brokers and their needs, and to make them feel that we listen and respond, and we’re open to challenge where needed.

Ryan Birbeck

He added that broker members have access to Aviva employees at all levels, from frontline traders to senior management. The provider offers learning and development for brokers in areas such as recruitment, providing staff with mental health support and succession planning.

Meanwhile, Axa launched its Premier Partner programme in 2015, with the aim to help regional independent brokers improve their online presence and invest in staff development.

According to Axa, the focus is on having a “positive local trading relationship with mutual ambition for long-term profitable growth”.

The programme has evolved since its launch, and now focuses on helping regional independents to “grow their people and their business”, offering more training and educational support.

Allianz, on the other hand, does not have a club offering. Instead, it uses a segmentation model, where brokers are divided into Strategic Partners, Prime Partners and Broker Partners. 

Strategic Partners are made up of the large global international brokers and the consolidators, while brokers that place less than £1m in premium with the insurer are Broker Partners. 

The Prime Partners are those in the middle with slightly bigger accounts that are still handled on a local level rather than nationally.

Mike Thomas, director of broker distribution at Allianz, said it wanted to work with as many brokers as possible rather than having a “closed club”. Thomas added that the focus was on building strong multi-level relationships with its Prime Partners to give them access to people within the business.

The brokers’ view

Most of the big insurers have a broker club or a similar type of proposition dedicated to working with brokers and providing them with useful resources. When speaking to brokers, it becomes clear that they do value these offerings.

Nick Houghton, CEO of Leeds-headquartered broker JMG Group, stated that most independent brokers are likely to be in one or more broker clubs because of the way that the market is structured.

He believed these propositions can help an insurer stick out in an otherwise competitive field, where the other two tangible levers that providers can pull to drive more volume are commission and price.

“Looking at a policy wording, it’s very difficult to distinguish or create competitive advantage from an insurer’s perspective.

“There might be a few small differentials, but at the end of the day the most significant lever that an insurer has to pull for a broker is on price and nobody wants to sell on price.

“So, continually adding things into a policy wording that a broker or customer might not even notice doesn’t necessarily encourage more premium inbound for the insurer,” Houghton explained. 

If insurers wish to have a varied distribution chain for their products, they need to support smaller and medium-sized independent brokers. A great way of doing that is with these clubs.

Brett Sainty

Brett Sainty, CEO at BLW Insurance Brokers, noted that broker clubs are a way for insurers to support a varied distribution chain. While larger international brokers and the consolidators have less need for clubs, they offer services to the smaller regional brokers that allows them to remain competitive.

“The customer needs to be presented with choice, and if insurers wish to have a varied distribution chain for their products then they need to support smaller and medium-sized independent brokers. A great way of doing that is with these clubs,” he added.

According to Sainty, it is the wider industry’s responsibility to present customers with choice. One way of doing that is to help smaller brokers fill any skills gaps, so they can better serve their clients.

“The smaller regional brokers are really important because it’s a very different service and a different atmosphere to larger international brokers and consolidators,” he said.

Changing needs

Over the past few years, brokers’ needs have constantly changed, first in response to the Covid-19 pandemic and again, more recently, in dealing with the impact of high inflation and the cost-of-living crisis.

Birbeck noted that Aviva had recently created an advisory council, where a few brokers are responsible for representing the views of all Club 110 members in discussions with Aviva around how the offering can be improved in response to the challenges that brokers are facing.

He added that the Covid-19 pandemic had resulted in a need for talent, with brokers asking for support around how to fill their vacancies.

Meanwhile, Axa recently launched its Brokerwise Passport programme, which is aimed at new starters taking their first steps in the insurance sector, and is set to develop this offering with help from brokers over the next 12 months.

Sarah Mallaby, Axa UK director of trading and distribution, said the provider would continue to develop its broker club to give new starters access to practical guidance that can help them progress.

Davis added that Zurich wanted to use its new club to build stronger relationships with brokers using regional support and local expertise, and this would allow it to be more responsive to the evolving needs of their broker partners.

Insurer service

It all sounds grand, and as if insurers have cracked the code when it comes to providing regional independent brokers with the support they need. But surely it can’t all be sunshine and rainbows? The short answer is no.

Houghton warned that simply having a club was not enough if insurers did not also focus on their overall service levels, particularly when it came to access to underwriters.

“An insurer can put all the value adds in the world on the table, but what a broker wants more than anything is an underwriter who will answer the phone and deliver a quote or a renewal in a timely fashion,” he said. 

“I genuinely see the clubs as good for the market, but they should never lose sight of the fact that while it’s nice to have, what’s absolutely mission-critical is having underwriters and quality systems that allow the broker to trade with you in an efficient fashion.”

I see the clubs as good for the market, but what’s mission-critical is having underwriters and quality systems that allow the broker to trade with you in an efficient fashion.

Nick Houghton

Houghton argued that what is fundamental for a broker is the ability to trade – and sometimes insurers miss that point. He further criticised the general level of insurer service in the market, stating that it has been “pretty poor over the past three years”.

He continued: “It’s [now] going in the right direction, but it’s not any way near what the average broker would desire from their trading relationship with an insurer. Whether these clubs translate into better trading or not, the proof will be in the pudding.”

Minimum placement

Ultimately, the main reason that insurers need to have a club in the first place is to encourage brokers to place more business with them.

Another aspect about clubs that annoyed brokers is that some require members to place a certain amount of premium with an insurer. They warned that this could be a dangerous game to play.

One reason is that it can be excluding, particularly for smaller brokers that would really benefit from accessing the resources available to members, but who would not be able to place enough business to join. However – more importantly – it can negatively impact customer choice.

If a broker must move business from another insurer to get the benefits, then sometimes that’s not the right thing for the customer.

Brett Sainty

“If an insurer is showering brokers with gifts and benefits and value adds, then the broker needs to be absolutely sure that it’s not influencing the placement decision. 

“Whatever you get invited to you can’t lose sight of the fact that when deciding whether to place business with an insurer it comes down to one thing – and that’s what’s the right answer for the client,” Houghton said.

Sainty argued that having a minimum premium threshold is limiting and prohibiting, and added: “If the partnership works, premium growth will come quite naturally, but I’m not entirely comfortable that minimum placements are treating the customers fairly.

“If a broker must move business from another insurer to get the benefits, then sometimes that’s not the right thing for the customer.”

Sainty urged insurers to step away from having a minimum premium threshold, and to be mindful of consumer choice. Aviva’s Club 110 used to have a premium threshold, but it has been removed as the club has evolved.

Birbeck believed it is more important that there is an alignment of values between the insurer and the broker.

“If we’re committed to building a long-term partnership and a multi-layered relationship across both of our businesses, then we’ll welcome a discussion. We would say that it’s exclusive, but it’s not excluding, because any independent broker can join,” he added.