Embracing a Niche

The theory of good business practice often points to focusing on a niche. The more laser-focused you are on a niche, the easier it allegedly is to succeed. And, that is no different when it comes to underwriting.

There is often a direct correlation between the size of a target audience and the probability of success. If there’s an opportunity to serve a healthy niche, then it makes good business sense. Yet, there is also the school of thought that you need to diversify a book of business to ensure there is a balance of risk. The question is: should you focus on a niche?

Over the past few years, we’ve collaborated with a number of brokers to hone in on a niche and provide a bespoke product that adds value to the policyholder. Identifying risks, market trends and bespoke products has enabled us to provide differentiated underwriting solutions and clearly shown there are benefits to focusing on a niche.

Servicing a niche makes you stand out in the crowded market. It ensures you can be an expert in your field. With a dedication to a specific niche, you can really understand the needs of the clients, what problems they encounter and what cover they truly need.  You start to understand the industry or sector, getting into the real minutiae and it’s that which allows you to start to become an expert and provide real value to policyholders.

The more time you invest, the more you know, the more value you can add. Being customer-centric results in providing exceptional levels of service. Spending time getting to know the customer and their business pays dividends and allows us to understand what’s important to them and the risks they are actually facing – at Probitas, we truly put the policyholder at the heart of the product. Without that kind of insight, you can’t design a bespoke solution that adds value.

With a valuable proposition comes the added benefit of making the purchasing decision about more than just premium. As an industry, we have become too accustomed to policyholders comparing products on price alone, but that’s usually for the simple reason that they can’t see what value a particular policy is adding to them versus any other policy. By demonstrating your understanding of their business and the bespoke nature of your policy, you enable them to truly understand the value of the policy they are purchasing.

Focusing on a niche means that you can heavily invest time and effort into due diligence. Taking a deep dive into understanding the policyholders, their business, their sector. Getting into the nuts and bolts of the inner workings of a book of business can be really rewarding for us as underwriters. It gives insight and understanding which allows us to be strategically poised to help a broker grow their book as well.

Yet, even when focused on a niche, there are still further levels of granularity you can segment and focus on. For example, within the niche of Buy-to-Let, there are a variety of customer types – fully fledged property businesses, accidental landlords, student lets, holiday lets, so on and so forth. Therefore, you must spend time sense checking any niche and sub-section of a niche, to ensure you can truly identify the customer needs appropriately.

For both the underwriter and broker, a deep dive assessment also allows an evaluation of whether the niche is commercially sound, is it large enough to make developing a product economical and can you build critical mass effectively enough?

Proven specialist brokers have years of data at their disposal, enabling analysis of the track record of the book, identification of trends and proposals for a specific underwriting strategy. It’s detail like this that has allowed us to produce policies that offer the right level of cover at the right price. We’re only able to do so because we’re confident we understand the industry and client bank.

It’s therefore, critical to partner with brokers that view their portfolio through the same lens and really understand the sector, perhaps with industry accreditation for their expertise in that sector. Because collaboration is strengthened by experience.

Working closely together helps to maximise the potential opportunity in the book of business. Where a broker’s experience lies, we know we can add further value. Our underwriters are experts in their own field. Bringing together the vast experience, as well as our own analytics team, can pay dividends. We’re not afraid to explore opportunities but the knowledge we have in the syndicate means we don’t do so recklessly.

We live in an age where expertise is highly prized; where insight can add value and establish both the broker and underwriter as being relevant and valuable. Successful brokers who focus on a niche, will usually also be innovative and offer high-quality products, rather than cost-cutting or discounted solutions.

The more value you offer, the more likely the policyholders will appreciate and understand that value. This promotes customer loyalty and therefore, product longevity.

As underwriters, we are here to provide a solution to the clients’ problem. Providing protection so that the policyholder can continue to grow their own businesses. By utilising our own expertise, focusing on a niche and adding real value, we lay the foundations for a successful and sustainable partnership with the broker.