SchemeServe, a leading cloud-based provider of insurance software, has today released the results of its bi-annual Index, tracking trends and performance of the insurance schemes market.
The second half of 2020 has revealed that premiums have risen across many insurance lines and commission levels have broadly dropped across the board, with a few exceptions, reflecting market trends and increasing pressure on remuneration.
Whether as a result of the hardening market, or the impact of the Covid-19 pandemic, average premiums for many lines in the schemes market have risen sharply at renewal, whilst others have fallen. Premiums for event insurance schemes for example have increased three-fold in the last 6 months to end September. Since September 2019, average premiums for event insurance have risen from £92 at first premium to an eye watering £804 at renewal.
Other business lines experiencing a huge increase in premiums at renewal include Public Liability (up 77% on September 2019 premiums), CAR has doubled, Cyber and Excess of Loss Liability have both more than doubled and Personal Accident has gone up three-fold.
SchemeServe founder and chief executive Adam Bishop comments: “The coronavirus has clearly had a massive impact on schemes and as predicted there have been winners and losers. For example, in the first half of the year, based on the figures we expected cyber to be a high growth area and this has certainly been the case. In the last 12 months from the Cyber policies on the SchemeServe platform, new business has risen 180%, GWP has increased by 250% and average commission at renewal has doubled.
“New business volumes are also up dramatically for Caravan and Trailer policies (255% increase), reflecting the nation’s current demand for staycations. The number of first premiums has risen 217% for Pet Insurance, and 171% for Mobile Insurance – perhaps indicating that during Covid we are spending more time and money safeguarding the things that matter most to us in our home/working environment. Our clients have real time access to the data on the SchemeServe platform and continue to analyse it to track these and many other evolving trends with interest.”
From April through to end of September, Commercial Combined schemes have delivered the most commission, bringing in a total of £1.5m of commission from gross written premium (GWP) of £15m. The Index reveals Commercial Combined schemes had an average commission rate of 13% at first premium, dropping to 9% at renewal.
Commercial Property Owners came in second with a total £1.3m of commission from GWP of £11m, a commission rate of 9% at first premium jumping to 21% at renewal – one of only three lines to exceed 20% commission at renewal, the others being Residential Property Owners and SME Package (21%).
Residential Property Owners delivered the highest levels of commission as a percentage of premium, with a renewal commission rate of 22%, up from 17% at first premium.
Per policy, Residential Property Owners’ was by far the biggest earner over the period. It scored high on new business volumes and good commission levels at first premium, as well as good overall average commission levels, making it the most profitable scheme for brokers and MGAs in the second half of the year. Contractors All Risks, the strongest performer earlier in the year delivered £1.5m in commission from £10m GWP giving a 15% commission rate at renewal, but this is down from 22.5% in the first 6 months of 2020.
The data comes from the SchemeServe Premium Index which is an annual pulse check on the Schemes market. Established since 2001, SchemeServe designs and operates schemes for brokers, insurers and MGAs via its cloud-based platform. It offers an agile platform for operating delegated authority schemes, allowing them to get schemes up and running in a matter of days and make any updates (rate changes, changes from regulatory demands, or launch new products, for example) quickly and securely.