Mike Ellis, Managing Director of BNU, explains why Mid Net Worth represents a big opportunity for Broker Network Members.
Within the household market, most customers buy standard products directly from the insurer or broker. High Net Worth individuals, though, have had access to bespoke products for many years. The market long ago developed propositions based around the lifestyles of extremely wealthy people, such as bespoke wording that removes the usual warranties that may prohibit being away from home for longer than 30 days – allowing clients to stay in their holiday home for three months of the year, should they wish.
“They need something scaled down a little. The Mid Net Worth option offers a competitive solution.”
But what about the middle ground? Mike Ellis, Managing Director of BNU, explains that a few years ago the market came to the realisation that there was untapped potential in the space between the extremely wealthy, and those looking for standard products. “What we had was two ends of the spectrum, with standard products and High Net Worth policies, and we were finding at BNU that there was a massive group of potential clients in the middle that we weren’t able to cater for,” says Mike.
He adds that these clients might be someone with ‘new money’ who has become wealthy due to business success; or perhaps someone with an aspirational lifestyle who owns expensive jewellery or watches, keeping up to date with what they’ve seen on Instagram. Directors of SME businesses certainly fall into this segment, he says. “These kinds of clients would need special protections, but they may not be prepared to pay the levels of premium required for a High Net Worth policy,” says Mike. “They need something scaled down a little. The Mid Net Worth option offers a competitive solution.”
It’s an area that Mike feels is ripe for the picking, but it’s important for brokers to have the right products at their disposal. “More business is going into the MNW arena,” says Mike, “but some insurers are going direct to consumers now, and what we want to do is offer an opportunity to fight back. We want to provide brokers with the tools to compete.”
“At BNU we are working hard to maintain and establish relationships with respected insurers.”
“Several High Net Worth and Mid Net Worth insurers pulled out of the market earlier in the year, and others have had a change in capacity provider,” Mike explains. At BNU we are working hard to maintain and establish relationships with respected insurers.” The MGA has a long-established relationship with Chubb of over five years, and have worked with Artsure for over two years. “We’re soon to launch a new relationship with Azur, who are well known in the market and have more than 20 years of experience, ,” Mike adds. “They are well respected and difficult to gain access to, so this is a real coup for Broker Network Members.”
Mike stresses that there is lots of opportunity within the Mid Net Worth arena. “Commission is usually around 20%, and with a typical premium tending to come in between £1500 to £3k, that represents between £300 and £600 per policy” says Mike. “When you consider that this is purely on home business, that’s a significant opportunity for profit, as well as opening doors into areas like motor where there is more money to be made.
“If you’ve engaged at that level, it makes it less likely that they will move. It’s about owning the whole relationship.”
“It’s an opportunity to provide a more comprehensive service to the customer – looking after personal cover as well as business,” Mike adds. “Many High Net Worth policies have home, motor, jewellery and travel all built in, making it easier for the client. If you’ve engaged at that level, it makes it less likely that they will move. It’s about owning the whole relationship.”
Could this be an untapped market for Broker Network Members who have not pursued Personal Lines business? Mike thinks so. “I would say that if you have talked to a customer about High Net Worth, and they have shied away from the premium, it’s worth discussing Mid Net Worth as it is much more competitively priced, while matching the client’s lifestyle aspirations.”
Broker Network Members, to find out more about how the BNU team could help you to trade in Mid Net Worth business, please pick up the phone to talk to your usual BNU contact. If you’re not part of the Network and would let to find out more, please get in touch.