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The commercial insurance market has always been characterised by those businesses that are specialists and those which are generalists; think delicatessens compared with hypermarkets. There is value and utility in both of these models, for many different reasons and in many different ways. In the Insurindex rankings we track and differentiate between those brands that offer generalisation – the Power Brands, and those which are more specialist – the Challenger Brands.
There is, of course, a place for both of these types of brand in the London Market. Indeed, the existence of these brands working side-by-side is one of the things that makes the London Market unique – and special. The generalist model enables brands to take advantage of economies of scale and to assign capital to large volumes of standard risks, while the specialist models allows companies to give more involved consideration to underwriting non-standard, unusual, risks.
Larger players want to be able to offer a broad range of products and do try to offer coverage for specialist risks. These specialist arms of larger players can be compared, perhaps, to the Tesco’s Finest range – a boutique, ‘conoisseur’ selection sold alongside more basic, everyday products (other supermarkets are available!). While this model works in the London Market to a certain extent, there is clearly still a space for specialists who add value through their advice and bespoke service as well as delivering the products in a different way – these days increasingly via digital channels.
As the London Market continues to consolidate, a greater share of business is going to a smaller group of larger players who, in turn, compare for a share in the global market. Brand differentiation is becoming ever more important for these businesses as they need to prove their distinctiveness to continue winning share from each other and from the specialist players.
These larger players need to create appeal and recognition both in the boardrooms of corporates and with the person in the street. Their brands need to be well known, credible and have an assumed financial strength and share of the market. These are the Power Brands.
When we think of Power Brands, we measure them on the following criteria:
- Being known and considered; a household name; everyone can relate to the company in some way
- Longevity, having been, and likely to be, around for some time (even if they are the product of mergers), financial track record, heritage
- Scale and share; being able to offer products around the globe in a consistent way, having financial strength, and being ‘institutional’ (which can mean slow)
- Having a clear personality or voice with easy visual recognition – an identity
In contrast to Power Brands, Challenger Brands tend to appear and disappear. They need to be monitored more carefully and somewhat more subjectively because by their very nature they are new and may or may not break through. That said, we are able to closely track them through surveys and the variety of digital social channels which are often the best place to detect the upsurge in the recognition and acceptance of these challengers. They’re also – by their nature – not shrinking violets, so they come to the attention pretty quickly. A good non-insurance example of a Challenger Brand is car hire firm Avis, which positioned itself as a competitor to the incumbent market leader Hertz with a campaign based on the virtue of not being the leader: ‘When you are only number two you try harder.” With this campaign Avis caught up with – but never overturned – Hertz’ market leader position. It did, however, shake up the car rental business making it one that is more competitive and more customer-focused.
The characteristics that we look at in terms of the Challengers include:
- Brands that are neither the market leader nor a niche brand; proving themselves in terms of growth and having no intention to stop anytime soon
- Having a mindset with business ambitions beyond conventional resources and an intent to bring change to an industry; being vocal and outspoken about the status quo and not accepting the limitations of the industry
We also keep an eye on the extent to which the Power Brands are ignoring or nay-saying these challengers – a potentially fatal mistake that keeps getting repeated.
The London Market has the room – and the need – for both of these categories of brand. The Challenger Brands have the ability to evolve, if not revolutionise, the marketplace, to innovate, bring new ideas and new ways of doing things – fast. The Power Brands bring strength, stability and credibility. Both can learn from each other, and push each other to do better for the customer. It is this, ultimately, which keeps the Market relevant.
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