Covid-19 repercussions to the broking industry
The pandemic has thrown the insurance industry into something of a disarray — but in many ways Edward Halsey believes that in the long term the impact will be positive, with brokers and insurers alike being forced to change and address many of the long-term issues that were holding them back.
The broking industry is going through a lot at the moment. Pedro started by asking Edward Halsey (Ed), what are the Covid-19 repercussions to the way people access insurance?
Ed explained, “the negative impact unfortunately comes from the distrust that has been caused with buyers. At hubb we believe usage-based broking is one of the key ways to rebuild buyer’s faith in their broker in addition to opening up the back office with full transparency. For us, this is very much like restaurants who offer a window into the kitchen — we want you to see every step of the process as we prepare your order, so we aren’t just telling you how we represent you, but you can visibly see every little action that we take.”
“So”, said Pedro, “What is hubb’s “challenger broker way”, effectively disrupting?
Ed was clear in his response, “We believe that with the gradual death of the high street brokers and rise of consolidators, commissions are no longer reflective of the reduction in service that customers are receiving. Instead of paying for the service they’re consuming, customer’s funds are paying for the next acquisition or increasingly high cost of winning new customers. Customers have become a number on a spreadsheet, a name in a CRM and an asset to be leveraged with insurers. We have lost our way a little as an industry as to why brokers are there”.
Ed added, “Instead, we aim to disrupt the market by reimaging broking as it would be conceived were it a new concept today. We believe that customers should pay for the service they receive, but more importantly, we want to see it become more transparent and dealings with insurers to be visible.
That means putting all insurers on a level playing field, removing the temptation to let revenue influence advice and letting customers behind the curtain”.
Pedro then turned the discussion to hubb’s strategy to achieve competitive prices for the end-user?
“That’s a big question”, answered Ed, “Our strategy isn’t anything new per se, but it is perhaps new to insurance. In many other industries, customers expect to pay for the time and advice that they receive. For the seller, their earnings are commensurate with their effort. For example, if you meet with your solicitor, they would bill you by the hour for the advice you’ve received. You pay your hairdresser for the haircut they give you. You pay your local restaurant for the food you order from the menu. The current model is equivalent to forcing a customer to pay for everything on the menu, regardless of whether they order or eat it. The assumption is that they will use the full scope of the broker’s services, every year — but what if they never have a claim? What is they never go to market? That is then just increasing the brokers’ margins. A cynic might suggest it is therefore, in contrast with the customer, in the broker’s best interest not to test the market each year”.
Ed kept moving to hubb’s strategy by go on to say “we will remarket your business every single year: every year we will tell you what quotations are available to you and you will always know that our recommendation is based upon comparing apples with apples. Whether we recommend AXA or Aviva, RSA or Zurich, we will always earn the same amount of money. The only way you ever pay more is if you ask us to undertake more work on your behalf. As a result, typically our earnings will be 20–30% less than our peers, meaning you can obtain the exact same policy, from the exact same insurer, for 20–30% less.”
“In fact, the difference is even greater than that, as insurance premium tax is added to the net premium you pay, meaning your existing broker’s fee also has a 12% rate of taxation atop of it!
Ed emphasised that hubb is “undeniably more sustainable, as our earnings are directly reflective of the service (and the cost thereof) that we’re providing. We aim to win new clients by providing a great service and offering a fairer basis of engagement, not by buying other businesses. Equally, by opening up our back office to you, we ensure everything is visible, nothing can be hidden and you can see for yourself how we are representing you — we aren’t asking you to trust us, we’re inviting you to watch us.”
This an exciting new company, with a ground-breaking original product. However, people are paramount to companies. Ed, can you elaborate on hubb’s culture & career opportunities?
“We take a consultative approach to customer needs and our whole team understands that our focus should always be on what is best for the customer and not on making as much money from clients and insurers as possible. Above anything else, we value honesty in our people. We’re not impressed by long words — we want people whose priority is on communicating in a transparent, clear and authentic manner, but who are both qualified and experienced enough to tackle such a vital service”.
As a last remark on the subject, Ed was plainspoken: “In everything we do, honesty and fairness is at the forefront”.
Finally, Pedro asked about hubb’s approach to technology, and the COO was enthusiastic in his reply.
We believe that the best technology goes unseen and delivers value without you even knowing. It should make the complex seem simple, it should be intuitive to even the most technophobic, technology should be elegant in its delivery. Whilst we don’t consider ourselves as a technology provider, we see it as a vital part of our strategy in removing human, administrative bottlenecks, to allow both you and our broking staff to focus on the things that only humans can address.
As a client of hubb, you will see real savings on premium, security around claims payments and spend less time dealing with insurance.
Our unique technology ecosystem powered by Vesuvio Labs allows our clients to see each step of the process, from start to finish, in-build security enables the smooth transfer of our clients’ data.
hubb provides best in breed advice and insurance professionals. In addition, mutuality is a cornerstone of hubb. In every aspect of our business, all decisions will be mutually beneficial to all parties.
Find out more about hubb’s philosophy at www.hubbinsure.com/what-you-get/
Vesuvio Labs is a Venture builder based in London for the Insurance and Finance sector, helping entrepreneurs by accelerating the process of turning their ideas into scalable products through our flexible, low-code software architecture.
In addition, we can connect entrepreneurs with investors, tax & legal advisors and to the wider tech ecosystem.