The insurance industry is currently navigating a challenging trading environment, with mid-market brokers facing numerous pain points. In a recent discussion between AXA UK’s Sarah Mallaby and AXA XL’s Hannah Hosking, the key challenges and potential solutions were explored.
Current Market Conditions
Hosking described the current market as “really difficult” and “unpredictable,” with brokers facing challenges in renewals and new business enquiries. The unpredictability of the marketplace is causing brokers to be nervous about their renewals and new business prospects. “A lot of people say it’s a soft market,” Hosking said, “but I’d say it’s not even properly soft, it’s just very unpredictable.”
Challenges Facing Mid-Market Brokers
Several issues are impacting mid-market brokers in the UK. Consolidation is a significant concern, with increased acquisition pressure from larger brokerages and private equity firms reducing the number of independent brokers. This can lead to reduced competition and customer churn. Regulatory pressures are another major challenge, with brokers struggling to comply with FCA regulations around fair value, consumer duty, and conduct risk. The cost and complexity of meeting these regulatory standards disproportionately affect mid-sized firms.
Talent attraction and retention remain an issue across the insurance market, with smaller mid-market brokers facing additional challenges in competing with larger firms on compensation, career progression, and training opportunities.
What Brokers Need from Insurer Partners
In a competitive environment, brokers need insurer partners who can support them with complex propositions. According to Mallaby, the value placed on real expertise remains unwavering, even in softer market conditions. “Not all customers, especially in this segment, just want the cheapest quote,” Hosking said. “They want a full-service proposition, from risk management to claims.”
The Power of Expertise
One area where brokers are seeking more support is in the care sector, which presents unique challenges due to its high-risk profile and complex regulatory, reputational, and operational exposures. Insurers with deep sector expertise and specialized underwriting capabilities are better positioned to support brokers in this segment. “It’s not an area you go into without a lot of technical expertise,” Hosking noted.
To provide truly differentiated propositions, insurers must go beyond standard risks and develop tailored solutions that address the nuanced needs of challenging sectors like care. This requires building specialized products and supporting brokers with credible advice and meaningful capacity.
