All eyes are on how the UK economy recovers after nearly 18 months of severe restrictions on trading or even enforced closure. That there will be a recovery isn’t in doubt with the Organisation for Economic Co-operation and Development predicting that the UK economy will grow by more than 7% this year. What’s less certain is what that recovery will look like across the various regions of the country.
According to Ernst & Young’s Regional Economic Forecast, the West of England was predicted to experience a 12.2% decline in gross value added - a measure of contribution to GDP - in 2020 and will experience a relatively slow rate of growth over the next three years.
While the prospects might look gloomy, these sentiments aren’t shared by business leaders. A survey of 500 mid-sized businesses conducted by accountancy firm BDO LLP late last year found that 61% of business leaders in the South West had confidence in the resilience of the regional economy.
And their priorities are cashflow, employee wellbeing and safety and supply chain management; priorities that the insurance industry would do well to note. But one of the features of the economy in the South West and Wales that bodes well for the future is its diversity.
“Traditionally, the South West and Wales were heavily reliant upon farming and tourism but there’s now huge diversity in trades across the region with a strong centre for aviation/aerospace and associated supporting businesses, as well as a flourishing IT orientated trade focus developing around here,” says Ian Bromfield, Regional Manager for the South West and Wales at AXA.
“There’s so much diversity and there’s always been a strong entrepreneurial spirit in the area that has always found and created opportunities,” he adds, citing the example of a company that had to pivot its business model during the pandemic and is now bringing in record sales.
“We have a client that sells specialist produce to high class restaurants but that wasn’t possible when restaurants were closed. But they became more of a wholesaler and have increased their revenue from sales by seven fold. They’ve done it out of necessity but in doing so, found there’s a bigger market out there,” he says.
But whatever the rate of recovery or how individual businesses secure it, the insurance industry is going to be crucial in facilitating it. But like the rest of the economy, insurance has had to adapt to new ways of working and trading and as the wider economy has shifted, so too has the insurance industry.
The most obvious change is the move to remote and digital engagement and trading, something that looks set to become a permanent feature of the market as Alan Scott, Regional Director – South for AXA explains.
“We, like most of our broker partners, have adapted to the new environment and introduced hybrid or smart working,” he says.
“This is the future for us because we have shown that we can maintain our service. But we still really believe in the power of relationships – it will be face to face for some interactions and digital for others.”
And he says that while some insurers and brokers may be looking at their physical presence across the country, a reduction in regional footprint is not something that AXA is considering.
“We won’t be closing any branches, but they will evolve in the future to focus on trading and underwriting with brokers. Nothing else will be done there as we are removing anything that isn’t concerned with underwriting or trading,” he says.
This approach will allow AXA’s people in the South West and Wales to focus on the only thing that really matters at the moment – clients and their recovery.
“It’s really important that we invest more time in end clients,” says Ian.
“That could be providing them with risk management bursaries or looking at the services AXA Health provides to support employee wellbeing as well as how partner firms like rradar can really assist the end client.
“We have the broadest proposition in the market and the advice and expertise we can access is paramount for employee wellbeing, legal and health and safety and we need to apply all of this in the best way.”
Understanding the rate of bounceback in each sector and which businesses will recover fully is one of the biggest quandaries Ian faces but he believes that part of that recovery will see a change in client business models which will require changes in the way the local insurance industry supports them.
Part of that will be operating more efficiently – fewer lengthy journeys for meetings when remote engagement will do – but overall a desire for more engagement than ever before. It will also require a willingness to try new things and experiment with the technology that we have all so suddenly become so used to.
“Let’s be a bit more creative, innovate more and learn together,” he says.
“We are up for it and not all ideas work but the process of exploring these ideas with brokers is always enjoyable and useful, and our relationships will build from that. For example, we are trialling the use of video technology to conduct risk management reviews and potentially new risks presentations.
“The broker and the client can walk around filming the site and our risk managers can see everything they need to and interview the client directly. This breaks down some of those barriers that often exist, gets the client more engaged and crucially, it gives them a voice.”
And it’s that client focus, from a broker and insurer perspective, that Ian believes will see the South West and Wales come out of this lengthy period of uncertainty in good shape. Because despite all the changes to working practices and the growing role of technology in every aspect of insurance, it’s still relationships that underpin everything.
“Despite all the challenges it is about people, trust and relationships and when things don’t go right, brokers have someone they can talk to. And we want to be there to do that for a market that has supported our growth these past years and its client base,” he says.