Finding your niche – a guide to developing your scheme
08 June 2020
Five steps to help develop your idea into a successful scheme.
A delegated authority scheme means underwriting power is in your hands, giving you the control of the risks you write. It empowers you to make decisions for your clients, without always having to be dependent on a referral to an underwriter. And if you specialise in a niche, this expertise will give you an edge over the competition!
Every scheme starts as an idea; and this spark, coupled with hard work and determination can become the backbone of your business. Now, if you don’t already operate in a specialist sector, exploring which niche you should develop into may seem a daunting process. A good way to start is by mapping out a few ideas.
Align your passions and interests
Start the process by thinking about what you’re passionate about outside of work. Something you are enthusiastic about and knowledgeable of. Why not write a list of different clubs/organisations you might belong to, what topics you like learning about the most and ways you enjoy spending your free time? Remember, your staff may have a keen interest in a number of hobbies or pastimes that could be crying out for a specialist insurance solution – make sure you include them in the discussion!
When creating this list, look for the insurance need and identify who from your network could be linked to these areas too.
Simple solutions to complicated problems
Now it’s time to narrow it down. You need to be able to provide your clients with a solution that adds value, but to do that, you need to really understand their needs. You may already know the challenges these sectors face if you’re already active within that group.
Do your research, have conversations with your target market, extract ideas to help you form the basis of your offering. The internet is a great source for online forums related to your niche for you to see what sort of conversations are taking place and what questions/problems they’re facing.
You won’t be able to solve everything, but you’ll note what your end product needs to look like in order to provide value to that group.
Now is the time to find out what the competition is like. In an ideal world, you will have identified a complete gap in the market but realistically things don’t always work out that way. Analyse any competitor you believe to be servicing this market and understand whether or not you have an opportunity to cut through and be successful.
Make sure you can differentiate enough to stand out. Competition is fine, in fact on balance it can be a good thing for all involved but you need to offer something different. If you find that there are a lot of companies offering solutions in your focused sector, it probably isn’t that niche a market.
Research the size of the market you are targeting to be sure that the potential customer base is large enough to create a bespoke product offering. The competition in a sector will largely influence the financial viability of a successful scheme here. If you are looking to target a market that is already heavily dominated by another broker, consider if your concept is unique enough to really disrupt things.
Once you have completed your research, it’s important to collect feedback from your chosen niche. For example what do they think of the covers you’re looking to provide or the service you’re hoping to offer?
Try to find contacts within relevant representative bodies, societies or associations linked to the product you want to offer. These contacts could also help provide a number of leads depending on the strength of your relationship here. It is also a great opportunity to collect honest feedback about whether your product will make a difference and provides them with something that adds value in comparison to their existing solution.
Seek the right collaborator
Following the above steps should put you in a good position to pitch to your preferred insurer
. Insurers will vary in the information they need to start a conversation, but for me, a good solid business plan is a great place to start. Identify the potential size of the market, the types of risks that would be targeted and what levels of cover would be needed.
Speculative schemes are always better when supported by an existing book so also consider if you could start writing this business on an open market wording whilst you build a bespoke product. Remember that whilst the process can be quite involved, it can also really help define your business as a specialist expert.
While these five steps aren’t intended to be revolutionary, following this process can help brokers generate ideas and identify new niches and new opportunities.