The UK national economic mission is to deliver growth and security, which requires businesses and individuals to take risks to invest in, and attract investment into, the UK.
In these challenging economic times, offering both opportunity and risk, it’s essential businesses and people have the right insurance, both for resilience and for stable, assured growth.
With growing or emerging risks such as cyber, flood, and supply chain impacts, businesses need the right level of support to be confident about financing their growth and investment strategies. Suitable business insurance provides the financial protection to help organisations both survive the unexpected and go on to expand – for example, through innovation or improved productivity – contributing to growth across the economy. Insurance brokers are at the heart of ensuring businesses from the smallest SME to global organisations are protected.
Insurance brokers have a duty to act in their customer’s best interests by ensuring that products recommended fit customer needs. They might also help customers prioritise what they value in their insurance offering such as service, breadth of protection or cost. Their skills enable them to identify solutions using their knowledge of varying risk appetites, and to negotiate an insurance premium on a customer’s behalf.
A broker often has a long-term relationship with customers – an ally who can help provide financial security and aid business survival and growth.
Insurance broking is a leading sector acting as a UK economic and brand ambassador and plays a fundamental role in the economy. It employs many thousands of people across the UK – with around 55% of these based outside of London and the South East8 – and investing in their local communities. The Association of British Insurers (ABI) estimates insurance brokers place 94% of all insurance premiums for commercial business written in the UK and therefore are vital in helping businesses protect themselves making them a crucial part of the UK’s future growth.
Brokers in the London insurance market are global leaders in the design and placement of complex insurance and reinsurance programmes. This pre-eminence needs to be preserved and built upon to retain the UK’s position as a global leader in international insurance markets and sustain the investment this attracts.
The work of insurance brokers therefore is not just important within the context of insurance, but also because of the impact it has on people’s lives, on the success of businesses and ultimately the success of the UK economy.
To maximise this pivotal role in our economy, we need to ensure brokers are supported. We need a more proportionate regulatory system for brokers of all sizes, we need to work with insurers to combat capacity issues (such as seen in Northern Ireland), and we need to work with Government to ensure the cost of insurance is fair and reasonable and does not enlarge the protection gap.
Opinium’s7 2024 research revealed that 94% of SMEs with a turnover between £1m and £2.5m use a broker for some or all their business insurance needs and 75% of SMEs said advice from brokers is useful. It also highlighted how financial protection is fundamental to growth, with 59% of businesses surveyed stating financial protection through insurance enabled them to grow.
Partnering to deliver value:
Views from a leading insurer and a leading broker
Brokers and insurers form part of the same insurance ecosystem and whilst we perform different functions, we retain the same desire to see good consumer outcomes. We are proud of the insurance solutions we offer through our insurance broker channels and support the work BIBA does to highlight the value of brokers.
Aviva
Insurance brokers share the FCA’s mission of ensuring good customer outcomes and this is all about connecting customers with the right products, ones that will perform best at the point of need. Making that connection through providing expert advice is what brokers do day in, day out across the UK. It is in this sense that they bring true value, closing the protection gap, avoiding the underinsurance trap and building economic and societal resilience.
Gallagher Global Brokerage (UK)
Broking in practice
Case Study
Professional indemnity solution for higher-risk work
An existing client recommended my firm’s services to a London accountant seeking help to find professional indemnity insurance in respect of audit work for the FCA because their existing insurers were refusing to cover this aspect of their work. Clearly not being able to undertake this work would have meant the accountant losing income. We were not only able to arrange a separate cover for this higher risk work being undertaken by the new client but also secured a £5,000 reduction in premium in relation to their other activities.
We achieved this through our detailed knowledge of the market and our relationships with insurers who were actively in the market to expand their book of business with my firm. The cover was every bit as good as the terms the business had enjoyed previously, and what’s more, their own clients continued to get service from a trusted accountant and did not have to build a new relationship with a different provider.
Case Study
Marsh finds auto liability solution for motor fleet owners with US exposures
A leading global agri-business was looking to expand its operations but faced a significant challenge obtaining affordable auto liability insurance for their US fleet exposure.
They were faced with an increasing level of self-insurance for their US policy. This $5m insurance gap posed a significant risk to their operations and financial stability, prompting them to seek a cost effective and sustainable solution.
This client operated a large fleet of over 12,000 vehicles in the US, presenting unique challenges, not least limited appetite from insurers for this class of business. Marsh worked closely with data telematics firms to develop a compelling underwriting proposal that allowed them to differentiate the client’s data from blended industry data, ensuring a more accurate assessment of their risk profile.
The result was a customised insurance programme that not only filled the $5m gap in coverage but also generated significant savings compared to the mainstream market. The client benefitted from a longer-term contract providing them with stability and certainty in their insurance programme, crucial for their ongoing operations and strategic planning.
7 The strategic insight agency
8 Nomis BRES 2023, NISRA 2022 SIC66220 activities of insurance agents and brokers