Friday, 9 December 2011
Niche brokers occupy sweet spot in increasingly specialised world claim German experts
German risk managers may increasingly prefer the services of small and medium-sized brokers to those of the market leaders despite the increased time and workload involved with spreading the net, because they provide individual support and better service, according to two market experts interviewed by Commercial Risk Europe.
“In my experience large broker companies try to overly impress their customers during the period of winning customers, but in the day-to-day business they slow down and send staff with very little experience to their clients,” said Klaus Braukmann, Chief Risk Manager at Hannover-based tyre producer Continental. “The medium-sized brokers always send their best specialists.”
In addition, smaller companies also take special wishes into account unlike the large brokers who only do so very reluctantly, Mr Braukmann said. They answer to enquiries faster and do not take several weeks to reply to simple questions as the big brokers can do.
For this reason, Continental places a large part of its risks via regional brokers such as Greco in central and eastern Europe or Franklin in the United States. “Of course, this requires more administration and organisational efforts than cooperating with only a single broker, and in some regions such as Asia or Mexico one cannot avoid the market leaders,” said Mr Braukmann. “But in our experience, the cost is compensated by better conditions and service,” he added.
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Mr Braukmann said that he believes that specialising in niches can put regional suppliers on the road to success.
A broker who specialised a long time ago is Würzburg-based insurance broker Thomas Dittmeier.
He is one of the most important niche suppliers who offers insurance cover for buses and coaches. His office supports more than 600 bus operators in Germany. “I am interested in ecology and used to build nesting boxes when I was younger,” he said. “Therefore it seemed obvious to specialise in a domain which is also good for the environmental balance.”
The business model has proved successful for him. “Companies aiming to be successful on the highly competitive market have to know their field very well,” Mr Dittmeier said.
He and his colleagues not only support operators with hull own damage, pollution or liability cover, they also organise the complete risk management service for clients including positioning systems for the buses, video cameras to record accidents and training courses for drivers.
For some time now brokers have competed intensely for corporate customers.
Large companies such as Marsh, Willis and Aon have the same targets as their medium-sized challengers Funk, Südvers or Ecclesia. That is to win more clients in small and medium-sized industrial enterprises.
The competition is tough, because premiums for corporate insurance coverage are low. This also affects brokers given that their turnover depends partly on commissions which are linked to the premiums. In addition, industry is not willing to pay higher fees.
Although the competitors seem to be superior, broker Mr Dittmeier is not impressed. “We are not afraid of the large brokers,” he said. “They have their special experience in corporate insurance business, but little knowledge in the niches we deal with. We are much better in this line of business.”
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