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Rationalising Broker Placement: The Untapped Opportunities in Market Utilisation

Broker Insights

In today’s competitive insurance landscape, brokers face increasing pressure to streamline their placement strategies. Yet, as new data reveals, many brokers fail to rationalise their agency base effectively, leaving significant opportunities on the table.

Inefficiency in Broker Placement


Analysis of regional brokers of various sizes uncovers a common theme around the underutilisation of agencies: overextension. Brokers are engaging with a large number of markets but often without the resources to build and maintain the necessary agency relationships and utilise those markets effectively.

Larger regional brokers with over £20m in gross written premium (GWP), engage with a vast number of markets—averaging as many as 163 agencies (average size of broker being £53m).

As the graph below shows, the number of agencies engaged with grows in line with GWP, ramping up for brokers with £20m GWP+, which is likely due to growth through M&A. It also shows that, taking an average for brokers with up to £20m GWP, the average number of agencies being managed is 75.  

Broker Insights


Managing such large number of markets effectively is a challenge. It has an impact on relationships, TOBA management, product knowledge, commercial benefits, client outcomes, and involves increased fair value assessment requirements.

Further analysis of the data shows that a striking portion of these agency relationships are also underutilised. For example:

  • Brokers with up to £5m GWP are only actively using around half (49%) of their agency relationships, by placing five or more policies per market.

  • Even among brokers with over £20m GWP, with more policies to place as a result, more than 40% of markets fall into the low-utilisation category.

The Missed Potential of Preferred Markets


But the number of policies does not tell the whole story. We need to look further into how these markets are then utilised.

While brokers typically place five or more policies with a larger proportion of their markets, these higher-utilisation agencies account for only a fraction of their total placements.

Analysis of the number of markets with more than 5% share of wallet (SoW) per agency shows that the larger the broker, the lower the percentage of markets that exceed 5%:

  • Brokers up to £5m GWP have the highest percentage of market utilisation, with 9% of their agency base having in excess of 5% SoW.

  • Conversely, brokers with £20m GWP+ have the lowest percentage, with just 3% of their agencies capturing more than 5% SoW.
Broker Insights


The data paints a picture of brokers struggling to focus their efforts on building deeper, more valuable relationships with their preferred markets.

The Benefits of Rationalisation


By rationalising their agency bases, brokers stand to unlock several key benefits:

  1. Stronger Market Relationships: Consolidating placements in fewer, high-value markets can lead to better terms, stronger collaboration, and more tailored products for clients.

  2. Operational Efficiency: Reducing the administrative burden of maintaining relationships with underperforming markets allows brokers to focus on strategic growth.

  3. Improved Client Outcomes: A streamlined placement strategy ensures brokers deliver competitive pricing and better risk placement for their clients.

Charting a Path Forward


The findings highlight a critical need for brokers to rethink their placement strategies. Rationalising agency bases does not mean reducing options for clients; instead, it is about focusing efforts where they matter most.

Insurers have a role to play in this transformation too. By providing brokers with the support and direction to consolidate placements, they can encourage more concentrated and mutually beneficial partnerships.

Conclusion


The insurance sector is evolving, and brokers must adapt to keep pace. As the data reveals, the potential in market utilisation and placement rationalisation is immense—but only for those taking the right action now.

Broker Insights VisionTM is the most powerful tool available to brokers to help rationalise placement strategies and embrace a more focused approach to market utilisation. Vision also supports our partner insurers in identifying consolidation opportunities with brokers and setting placement strategies which strengthen relationships. In doing so, both brokers and insurers can unlock significant growth opportunities while delivering better outcomes for clients.

Contact your Broker Relationship Manager or Strategic Account Manager to discuss how Vision can help you make more of market and placement opportunities.

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