Authored by RSA
Insurance schemes represent a great solution for serving customers with specialist requirements or niche commercial risks. For a scheme to stand the test of time, however, it requires a deep understanding of the evolving risk and a true partnership between broker and insurer. If a scheme hits the mark, though, the rewards for customer, broker and insurer are hard to match. Steve Hedge, Delegated Director and John Dawe, Strategic Partnerships Director at RSA Insurance, explain more.
The world is changing all the time. This uncertain environment means businesses really value insurance protection to give them peace of mind as they seek not just to survive, but to develop, expand and grow.
Within the diversity of the UK’s smaller businesses there are groups of customers, who have similar needs and traits, that could get even more value from their insurance if they’re served by a tailored scheme arrangement. The risk and insurance needs of anything from boutique gin distilleries and micro-breweries, to costume jewellers or horticultural nurseries – and everything in between – can be catered to in a bespoke manner.
Making a scheme a reality
That is not to say that every new idea for a scheme will come to fruition; many will not see the light of day and others may be short lived. A successful, long-lasting scheme needs certain ingredients to be present, starting from before it is even launched.
The seed of an idea for a new scheme needs to be developed into a credible concept. The scheme will need an insurer to back it, and for that to happen the concept needs to pique their interest. One sure fire way for a broker to grab attention is to demonstrate that the scheme will bring something to the table that the insurer can’t do on their own. That might be a deep understanding of the risks associated with a customer niche, or a distribution channel which would otherwise be inaccessible to the insurer.
The concept will need to scalable too. A scheme with delegation of authority to the broker will drive some oversight activity for the insurer that comes at a cost, so selling only a handful of policies will be uneconomic. A scheme with a sizeable opportunity, however, will create some real excitement.
Developing a credible concept that can be deployed at scale is the hardest part of the journey, but it’s not the end. For the scheme to flourish, it needs to be the fruit of a genuine partnership between the broker and the insurer – with the end customers’ needs at its very heart.
Partnership for the longer term
A successful long-term partnership needs to start on the right foot. Whether creating a brand-new scheme, or just embarking on the journey with a new insurer for an existing scheme, the foundations to be laid are the same. Broker and insurer need to agree clear, well-structured processes and open and honest communication channels. Be clear on respective responsibilities for the critical activities; referrals, product governance, and pricing, performance monitoring.
Solid foundations then pave the way for the scheme to evolve over time
Some of the best schemes arise where the broker becomes increasingly tuned into the needs of their target customers. These brokers live and breathe the sector they are serving; they understand and even anticipate the customers’ evolving needs, allowing them to work with underwriters to ensure that the product, coverage, documentation and pricing adapt to remain relevant.
Take, for example, a scheme created for the education sector that then had to adapt to more educators working from home during the lockdowns – a subtle but significant change in risk profile that called for adaptation, to be addressed collaboratively.
Indeed, it’s crucial that the scheme continues to meet the needs of all parties; broker, insurer and customer. Ignoring performance issues, for example, can eventually lead to more drastic corrective action that could prove damaging to the scheme. Regular reviews and small tweaks in cover or price can keep the scheme in rude health and steer it away from the dreaded process of performance remediation.
Reaping the rewards
A scheme done well is a hugely valuable asset for a broker. Customers that are served well, with a proposition tailored to their needs, are likely to show a level of loyalty not seen in the open market. And a well-targeted scheme can achieve deep penetration into its target customer base, allowing a broker to maximise the return on their investment of expertise and effort.
So, whilst it may not be easy to build a scheme from its initial seed of an idea to a burgeoning, successful proposition, the hard work is very often rewarded with a scheme that delights all parties; a win-win outcome in anyone’s eyes!
For more information on Schemes at RSA visit: Schemes | RSA Insurance