Over the past 10 years, the schemes market has boomed. Today it is stable, mature and effective, with high demands from insurers, brokers and customers alike.
Although it is flourishing, getting a scheme just right can still be a tricky task.
It takes more than an idea and capacity to make a scheme a success in the long term. It takes trust, expertise, deep sector knowledge and willingness to partner openly and for the long term.
To explore these issues, AXA Commercial held a special panel event at Broker Expo last November with two leading schemes brokers. The aim was to understand how they make it work and how other brokers should prepare and approach insurers to get their scheme idea off the ground.
Chairing the event was Joel Markham, Head of AXA Schemes Sales and Marketing and he was joined by Lee Scott, Head of Schemes at Aston Lark and Trevor Allsopp, Account Executive at Marsh Commercial.
Joel started the discussion by asking a very simple yet fundamental question – what makes for a good scheme?
“When you put a scheme together, you have to be answering a problem that exists in the sector,” said Lee.
“That might be a cover issue or an aspect of distribution. You must bring a strong level of expertise into that market, because you are always going to be guiding the insurer in the decisions they make.”
He added that the best route to go down is finding an affinity group or a trade association as they will not only help with distribution, but they can also help the broker keep up to date with what is going on in that sector.
Key to a getting a scheme off the ground is establishing a strong and lasting partnership with a carrier and to secure that, brokers must convince the insurer of the merits of their scheme.
“The insurer has to buy into what you are trying to do, particularly if it is a sector they’ve never been in before. You must explain and convince them about what you are trying to achieve with the scheme,” advised Trevor.
That need for expertise works both ways though. As Lee pointed out, when you are administering a scheme, you are operating on the edge of what is normal or standard market appetite, and as such, that scheme requires a non-standard approach to underwriting.
“You can’t have underwriters who are doing an open market quote one minute and then trying to do a scheme quote the next. I look for an insurer that has a dedicated scheme unit - from claims to underwriting to the salespeople on the road,” he said.
“But the trust element is at the top of the pile. Each side is bringing different expertise. We know a lot about the sector, how it works and the challenges it faces. So we hope to see insurers will trust our ability to respond to the challenges we get.”
Continuing with this theme, Joel asked the panel what attributes they looked for in a capacity provider and what makes one insurer stand out from the other in what is an increasingly crowded field.
“Every scheme we’ve put together started with one client and to get an insurer onside when you are starting a new facility with a small pool of customers takes bravery.”
“An insurer that has dedicated schemes underwriters is fantastic and if claims is set up in the same way, even better. But if they are already writing 90% of the market I’m targeting, there’s no point in engaging.”
And as with any healthy relationship, getting a successful scheme up and running takes lots of give and take on both sides. After all, trust has to be earned.
“We need to help insurers understand the data we collect, how we use it, and, perhaps most importantly, that we use it for positive reasons” said Lee.
“Of course we want to avoid areas of high claims but also, we want to focus on areas where we have the right rates and are not exposed to a great deal of business in that area.”
Ultimately, all this work, all this preparation, all this partnering and trusting is for one thing and one thing only, the benefit of the end customer. And to that point, Joel asked the panel what exactly do customers get out of it all?
“It comes back to understanding what goes on in their sector and the challenges it faces,” said Lee.
“If we are always thinking about that and communicating with the focus groups we have, we are always going to be representing them correctly in front of our insurer partners. And we’ll always be pushing our insurer for additional covers that take some of the risk away from them running their business.”
The new-found maturity of the schemes market came through loud and clear from the panel discussion. To ensure continues success, it is vital that both parties in this equation are trusting and willing to collaborate openly on pretty much every issue.
Without that, a scheme is likely to fail. But with all of that, it has every chance of being the next growth driver of any broker’s business.