Identifying groups of clients with shared specialist needs and developing a purpose-built scheme allows brokers to differentiate themselves and showcase their expertise. But where to start, when’s the right time and who should you talk to before launching a scheme?
1. Think like Jeff Bezos, start with your customer
When setting up a scheme, Amazon's Jeff Bezos mantra of starting from the customer and working backwards remains of the upmost importance. Schemes are all too often introspective and focused on the experience or knowledge of the broker, rather than what people – the customers – are actually looking or asking for.
Ask yourself what is it that you can offer that will solve a real want or need for the customer? Does their existing insurance not cover the specific risks that their trade or profession is exposed to? Trying to see it from their point of view will stand you in good stead as a starting point.
2 .Establish how it will help your business
Next, take a cold-hearted look at the opportunity from your point of view. Of course, you wouldn’t want to set up a scheme unless you thought it would help your business, but what exactly can you expect in terms of growth in premium, profitability and exploiting efficiencies?
If it’s not going to add anything to your business then think again, or think how the scheme needs to be different to make a meaningful difference. Managing expectations is also critical – don’t oversell the opportunity to management or other stakeholders.
3. Timing is everything
This one’s simple. Ask yourself why you want to set up a scheme now? What has changed? What are your competitors doing? And crucially, is the timing right for your business?
4. Know your USP
It’s a competitive market and therefore unlikely that you’ve discovered an uncontested area. So what are you doing that sets you apart from the rest? Better pricing, wider cover, higher limits, superior claims service and highly responsive customer service could all make the difference. As will demonstrating that you talk the customer’s language – rather than dealing in insurance jargon.
It’s also important to remember that we operate in a 24/7 culture, so your scheme always needs to be open. And make sure that people can pay in the way they want to pay, rather than the way it’s always been done before.
5. Do your research
You wouldn’t set up a scheme for a profession that has very few practitioners as, ultimately, there wouldn’t be enough premium to make it viable. So what insights can you gather about the size of the market you’re trying to access? The more you know, the better you can set your expectations in terms of scheme size and, therefore, profitability.
6. Revisit the solution
Are you still solving the customer problem? Have the goalposts shifted? It’s crucial to check in with this time and time again to ensure that you haven’t lost sight of the customer.
Think laterally, too. It might not just be wider insurance cover that your customer needs – they might need a claims service that does more than just pay for replacement parts. Perhaps the specialism of their product or service means that helping them to source those replacements could make the difference when they’re choosing their insurance.
7. Don’t underestimate measurement
Continually monitoring your scheme and the landscape in which it operates is integral – your product needs to stay fresh and be relevant to your target market if it’s going to be successful in the long term. And remember that a good customer proposition is also important from a regulatory perspective. If the process of getting to know your customer has been thorough, your scheme will have been designed with their needs and best interests at the very heart of the proposition.
8. Collaborate with your insurer
It can be beneficial for you to form a strong relationship with the insurer backing the scheme. Do you feel that you are aligned with them and that you’re working in the most collaborative way possible? It should be a partnership where you are both working towards the same end; a successful and profitable scheme. Or as Jeff Bezos says: ‘Put the customer first. Invent. And be patient.’
Launching, developing or even approaching us with a new idea for a scheme is the start of an ongoing relationship. Find out more about Hiscox Schemes