The world is becoming a smaller place. Changes in technology and culture have made it easier to do business anytime and anywhere. But what does this mean for local brokers, serving their local community?
I thought I’d try to shine some light on ‘buying local’, by looking at the trends of some of our customers in Birmingham, Bristol, Cardiff, Leicester and Nottingham. While my research is only representative of the kind of customers Hiscox insures through brokers, this did involve looking at nearly five thousand organisations in the professional, technology, media, not-for-profit and venue sectors as well as over 700 private clients*.
The first thing I found was that 45% of private clients, and 21% of organisations, bought their policy via a local broker in these cities. This is a very significant proportion of high net worth household clients and a fair proportion of organisations. However, that’s 9% fewer private clients and 8% fewer organisations ‘buying local’ than there were in 2010.
The second thing I looked at was whether there was a difference between the cities. Are local brokers winning more in some places than others? For private clients, I found Birmingham and Cardiff stood out with over half of the customers choosing a local broker. For organisations, Nottingham was the runaway leader with 28% of customers choosing a local broker.
There were limited differences between the types of organisations buying local, though accountants and venues came out as most likely to and, perhaps unsurprisingly, small businesses were least likely to use a local broker.
So what? Well, I think it demonstrates that the insurance world has become a smaller place in the last five years, with a significant increase in the proportion of customers buying from someone who is not among their local brokers. Despite the local broker remaining very important for many, particularly private clients, the trend overall shows that brokers are getting better at appealing to, and servicing, customers who aren’t on their doorstep. For example, back in 2005, Hiscox insured 33% of our business customers in these cities via a local broker, which is down to 21% today.
So how can local brokers stand out? Clearly they have the advantage of local knowledge, which can help when broking property-based risks to insurers. Furthermore, being local means building a face to face relationship with customers and delivering a personal service that can be a lot more practical and cost effective. Finally, there are a range of networking events in every town and city across the country, all aimed at helping local businesses make connections and supporting local trade.
While technology has made a significant difference to our industry and how we look after customers, there are a very significant number of customers who want to be looked after by a local firm. How are you going to help them find you?
*Research comes from our own policy records, looking at and comparing Q1 2005, Q1 2010 and Q1 2015. Sample size was 708 private clients and 4,549 organisations.