The new Insurance Times premium finance survey is out – and it comes with some surprising findings. We find out what Elliott Hayes, our head of corporate, thinks lies behind some of the survey’s key conclusions
With everything that has happened in the past year, from the uncertainties surrounding Brexit to the continuing disruptions of the coronavirus pandemic, brokers might be forgiven for admitting to a lack of confidence in the immediate future.
But not a bit of it.
According to the 300 brokers who took part in the Insurance Times premium finance survey conducted at the end of last year, broker resilience is breeding bullish confidence – with fully 60% expecting their business to grow by 5% or more over the coming months of 2021.
So what lies behind this surprising finding, and some of the other insights unearthed by the report? We caught up with Elliott Hayes – head of corporate at Close Brothers and the man responsible for managing and overseeing relationships with commercial and corporate brokers – for his expert view.
Q: As well as a clear majority of brokers expecting their business to grow by 5% or more in the coming months, 15% are forecasting growth of 20% or more in 2021. Are you surprised by such levels of optimism?
Elliott Hayes: It's interesting, isn’t it? It’s clear from the survey that the broker community is extremely resilient – they have been able to adapt and respond to what has been an unprecedented set of circumstances.
I know that the brokers I deal with were pleasantly reassured at how well they had managed to navigate those challenges. Not only were brokers, at an operational level, able to mobilise staff to work from home – but they also showed an ability to adapt. They were able to maintain high service levels, retain client relationships and even win new business in what was a unique and suddenly virtual world.
This ability to evolve and innovate has meant brokers are ideally placed to maximise future opportunities as the UK economy plans its recovery.
So it’s encouraging – and in many ways not surprising – that there are such high levels of optimism.
Q: The survey reveals that 45% of brokers say that the pandemic accelerated their use of technology. How have things changed?
EH: Before Covid-19, I think most of us would have found it hard to believe that so much of the industry’s workforce could work from home – that our systems could deal with it. But even some of the largest brokers were able to mobilise pretty much all of their staff to work virtually within a handful days.
When it came to client relationships, we all went on a bit of a journey in terms of adapting to technology, adopting new digital solutions and developing innovate ways to stay connected. But one of the benefits has been the ability to increase the level of activity or visibility a broker has with their customer base.
Technology has also allowed brokers to bring in their support expertise more readily. Rather than having to coordinate geographically, they’ve been able to bring in expertise virtually as and when required.
Q: Seven out of ten brokers are expecting an increase in both client growth and premiums in the year ahead. Do you agree?
EH: I’m not surprised that client growth is seen as one of the key drivers – given that the current situation allows good brokers to benefit and take advantage.
Although a hardening market puts brokers in a difficult and arguably delicate situation when it comes to client relationships, those brokers who can maintain high retention rates will also benefit from rising premiums.
Q: 65% of brokers who sell premium finance expect demand for it to increase in the coming months. Do you see premium finance as something that can be good for customers as well as helping brokers achieve their confident growth expectations?
EH: Premium finance has only become more important in the past 12 months – and not just in those sectors that are more distressed such as hospitality and construction (the latter hit further by the hardening market, with premiums increasing as much as 50% in some cases).
Businesses everywhere are finding themselves under pressure every day, and the level of demand for premium finance reflects this and remains higher than it was pre-Covid.
I don’t see that changing in the short-term.
Premium finance can make a huge difference to a customer in helping them manage cash flow – and support their recovery, too.
From a broker’s perspective, it’s a great tool to help them ensure that customers remain protected – and that they have the right levels of cover.