Commercial Affinity Groups: Marketing Financial Services through UK Professional and Trade Associations

Table of Contents

0.0 EXECUTIVE SUMMARY

• Finaccord' s research covers 750 associations classifiable in 12 industry categories
• Affinity programs for commercial insurance are most commonly organised by associations
• … with the number having increased since publication of the original research in 2005
• … although take-up rates among member firms are highest for business banking services
• Business banking services are widespread among bodies in the retailing and distribution group
• … with RBS emerging as a leader in this domain largely by virtue of its ownership of Streamline
• Within a fragmented market, Towergate is a leading partner for affinity insurance schemes
• … although numerous other suppliers are competing for the limited number of mandates on offer
• 139 associations have organised accident and health insurance schemes for their members
• … with BUPA and Private Health Partnership apparently the most commonly used suppliers
• Initiatives for life insurance and pensions are less widespread among trade bodies
• … although Parliament Hill maintains relationships with as many as ten professional associations
• Most offerings for personal lines policies are carried over from business insurance schemes
• A significant number of associations are seeking to introduce new services by the end of 2008
• … with prior research proving the importance of this channel for banking and insurance providers

1.0 INTRODUCTION

• Finaccord
• PartnerBASE™
• Rationale
• The report offers an updated analysis ever of commercial affinity groups in the UK
• … for whom organisation of financial services represents just one strand of potential activity
• Methodology
• The research extends to a universe of 750 professional and trade associations in the UK
• … over 100 of which possess in excess of 3,000 individual or corporate members
• Definitions

2.0 MARKET OVERVIEW

• Introduction
• Overview
• Over a third of associations have established affinity schemes for commercial insurance
• … with the latest survey results proving that affinity initiatives are increasing in all areas
• Gradual if not explosive growth may be anticipated in all areas up to the end of 2008
• Payment processing services achieve high take-up rates among trade association members
• … with affinity schemes for commercial insurance also frequently popular with member firms
• Business banking
• Associations in the retailing and distribution category are most likely to be active in this area
• … with fewer than 10% of those in six industry categories having organised banking services
• Streamline helps RBS to the largest number of association agreements
• … although a further six banking groups have at least two exclusive partnerships each
• Business insurance
• Over a third of associations in four industry groups offer commercial insurance schemes
• Numerous insurance brokers compete for commercial insurance affinity mandates
• … with Towergate emerging as a leader in terms of outright number of partnerships
• … albeit the market for relationships fragments rapidly thereafter among multiple providers
• Accident and health insurance
• Professional associations are most likely to have set up accident and health insurance schemes
• Private Health Partnership and BUPA are the providers most commonly used by associations
• Private Health Partnership has built up a portfolio of around 8,000 mainly corporate clients
• Life insurance and pensions
• Schemes for life insurance and pensions are less frequently organised by trade associations
• Most association schemes for life insurance and pensions are organised through brokers
• … although a significant number of life offices have established direct affinity marketing links
• Personal general insurance
• Personal lines are sometimes offered as a ' carry over' from commercial insurance schemes
• … although for Parliament Hill, they amount to a key element of its member benefits programs

3.0 INDUSTRY CATEGORIES

• Introduction
• 3.1 Agriculture and forestry
  • Introduction
  • Business banking
  • Three bodies in this category have organised business banking services for members
  • Business insurance
  • Nearly a quarter of respondents operate an affinity scheme for commercial insurance
  • Accident and health insurance
  • Two trade bodies in the agriculture and forestry category offer accident or health insurance
  • Life insurance and pensions
  • Personal general insurance
  • The AA maintains relationships with two trade bodies in the agriculture and forestry category
• 3.2 Business and personal services
  • Introduction
  • Business banking
  • Streamline lays claim to four exclusive deals in the business and personal services category
  • Bank of Scotland has linked with LogBuy to widen the audience for its card processing service
  • Business insurance
  • Programs for business insurance are common in the business and personal services category
  • … although the supply structure in this sector remains subject to extraordinary fragmentation
  • Accident and health insurance
  • Private Health Partnership is the dominant partner of trade associations in this category
  • … with only two other providers having established more than one exclusive deal in this field
  • Life insurance and pensions
  • The supply structure for marketing to trade associations in this category is highly fragmented
  • … with only Legal & General having established more than one exclusive relationship
  • Personal general insurance
  • Both the AA and the RAC possess a pair of affinity marketing agreements in this sector
• 3.3 Construction and engineering
  • Introduction
  • Business banking
  • The Scottish and Northern Ireland Plumbing Employers Federations owns a captive company
  • Business insurance
  • Over one third of trade bodies in this category have organised business insurance schemes
  • … with no provider claiming more than three exclusive relationships with bodies in this sector
  • Accident and health insurance
  • Provision rates for accident and health insurance are slightly below the overall average
  • Welplan is a wholly-owned subsidiary of the Heating and Ventilating Contractors Association
  • Life insurance and pensions
  • B&CE Benefits operates the UK' s largest stakeholder scheme with around 400,000 members
  • Personal general insurance
  • Few associations in the construction and engineering category offer personal lines policies
• 3.4 Food, drink and healthcare
  • Introduction
  • Business banking
  • Six trade associations in this category have initiated affinity schemes for business banking
  • Business insurance
  • Giles Insurance Brokers is the only provider with more than two exclusive deals in this category
  • Accident and health insurance
  • HMCA is the partner for accident and health insurance of two associations in this category
  • Life insurance and pensions
  • Personal general insurance
  • A number of affinity marketing arrangements exist in this category for personal lines insurance
• 3.5 Manufacturing and packaging
  • Introduction
  • Business banking
  • BHF Finance is used by several trade bodies in addition to the British Hardware Federation
  • Business insurance
  • Over a quarter of bodies in this sector have established a commercial insurance scheme
  • … with AXA' s Layton Blackham maintaining links with the highest number of associations
  • … although the use of Miles Smith by METCOM is likely to be a particularly large affinity deal
  • Accident and health insurance
  • BUPA, CBG Financial Services and Layton Blackham are the dominant providers
  • Life insurance and pensions
  • … with the relationships of the latter two firms also extending to life insurance and pensions
  • Personal general insurance
  • The AA has established five relationships in this category, four of which are exclusive
• 3.6 Media, marketing and entertainment
  • Introduction
  • Business banking
  • HSBC maintains a trio of affinity deals in the media, marketing and entertainment category
  • Business insurance
  • This industry group is characterised by a fairly low incidence of commercial insurance schemes
  • Accident and health insurance
  • Just one scheme for accident or health insurance was identified in this industry sector
  • Life insurance and pensions
  • … with interest being similarly limited for both life insurance and pensions
  • Personal general insurance
  • … and for personal non-life insurance
• 3.7 Mining, minerals and utilities
  • Introduction
  • Business banking
  • Elavon Merchant Services has created an affinity link with the Federation of Petroleum Suppliers
  • Business insurance
  • Associations in the mining, minerals and utilities category display the lowest rate of activity
  • Accident and health insurance
  • BUPA, Health Matters and Private Health Partnership all lay claim to one deal each in this field
  • Life insurance and pensions / personal general insurance
• 3.8 Professional services
  • Introduction
  • Business banking
  • Lloyd & Whyte intermediates card payment processing services as a part of its affinity package
  • The Professional Contractors Group collaborates directly with a trio of banking partners
  • Business insurance
  • Through Parliament Hill, Trafalgar Risk Management is a market leader in this sector
  • … with only four other brokers possessing two or more exclusive partnerships in the field
  • Accident and health insurance
  • Almost a half of associations have organised accident or health insurance for their members
  • BUPA and HMCA rank among the foremost providers to the professional association sector
  • … although a variety of other protagonists, including WPA and several brokers, are also active
  • Life insurance and pensions
  • Over 20 providers compete for appointments on an exclusive or shared basis in this sector
  • Personal general insurance
  • The supply structure for personal general insurance to this constituency is also very fragmented
• 3.9 Retailing and distribution
  • Introduction
  • Business banking
  • Almost a half of associations in this category have established deals for business banking
  • … with HSBC and RBS, including Streamline, accounting together for a majority of these ties
  • The National Market Traders Federation works with a pair of mobile payment solutions providers
  • The tie of Alliance & Leicester Commercial Bank with the NPA has passed its third anniversary
  • Business insurance
  • Commercial insurance schemes are also comparatively prevalent in this industry grouping
  • Leading providers include Giles Insurance Brokers, Jardine Lloyd Thompson and T. H. March
  • Accident and health insurance
  • BUPA, CBG Financial Services and the Private Health Partnership each hold a trio of deals
  • … with AXA PPP and HMCA having established a pair of schemes each in this sector
  • Life insurance and pensions
  • A number of assocs. in this category have organised schemes for life insurance or pensions
  • Personal general insurance
  • In several instances, commercial insurance programs have been extended to personal lines
• 3.10 Technology and telecoms
  • Introduction
  • Business banking
  • Only two entities in the technology and telecoms category have arranged banking services
  • Business insurance
  • … a number that rises to five in the case of affinity programs for business insurance
  • Accident and health insurance
  • … and to four in the case of accident and health insurance
  • Life insurance and pensions
  • Personal general insurance
  • Hiscox has secured the United Kingdom IT Association as an affinity partner in this field
• 3.11 Transport and tourism
  • Introduction
  • Business banking
  • Through Pelican, a buying company, the British Institute of Innkeeping works with two banks
  • Business insurance
  • Towergate Underwriting is the sole partner of two bodies in the transport and tourism category
  • … with all other competitors active in this field restricted to one exclusive partnership each
  • Accident and health insurance
  • BUPA and the Private Health Partnership each lie behind a pair of schemes in this arena
  • Life insurance and pensions
  • Only the British Institute of Innkeeping and UKinbound are active in life insurance and pensions
  • Personal general insurance
  • Six trade associations in this category distribute personal non-life insurance to members
• 3.12 Other miscellaneous
  • Introduction
  • Business banking
  • Chamber Payment Services is organised through Bank of Scotland' s First Data division
  • Business insurance
  • Two major trade bodies offer free legal expenses insurance as a part of the membership fee
  • Accident and health insurance
  • The British Chambers of Commerce has endorsed both AXA PPP and Westfield Health
  • Life insurance and pensions
  • The Federation of Small Businesses has established a service that utilises its own members
  • Personal general insurance
  • The British Chambers of Commerce is tied to the AA in the context of road assistance

GRAPHICS / TABLES

• Professional and trade assocs. contacted for the research, segment. by ind. category and member numbers
• The top 100 professional and trade associations in the UK ranked by member numbers, 2007
• The top 100 professional and trade associations in the UK ranked by member numbers, 2007 (cont.)
• Professional and trade assocs. offering financial services: current pen. by broad sector of financial services
• Trade associations offering financial services: possible future penetration by broad sector of financial services
• Trade assocs. offering financial services: average member take-up rates by broad sector of financial services
• Professional and trade assocs. offering business banking svs.: penetration by industry category
• Professional and trade assocs. offering business banking svs.: operating models and partner market shares
• Professional and trade assocs. offering business insurance svs.: penetration by industry category
• Professional and trade assocs. offering business insurance svs.: operating models and partner market shares
• Professional and trade assocs. offering accident and health insurance: penetration by industry category
• Professional and trade assocs. offering accident and health ins.: operating models and partner market shares
• Professional and trade assocs. offering life insurance and pensions: penetration by industry category
• Professional and trade assocs. offering life ins. and pensions: operating models and partner market shares
• Professional and trade assocs. offering personal general insurance: penetration by industry category
• Professional and trade assocs. offering personal general ins.: operating models and partner market shares
• Trade assocs. in the ag. / forestry cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the ag. / forestry cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the ag. / forestry cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the ag. / forestry cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the bus. / prs. svs. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the bus. / prs. svs. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the bus. / prs. svs. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the bus. / prs. svs. cat. offer. life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the bus. / prs. svs. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the const. / eng. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the const. / eng. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the const. / eng. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the const. / eng. cat. offering life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the const. / eng. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the fd. / dnk. / hth. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the fd. / dnk. / hth. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the fd. / dnk. / hth. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the fd. / dnk. / hth. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the man. / pack. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the man. / pack. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the man. / pack. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the man. / pack. cat. offering life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the man. / pack. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the med. / mkt. / ent. cat. offer. bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the med. / mkt. / ent. cat. offer. bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the med. / mkt. / ent. cat. offer. acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the med. / mkt. / ent. cat. offer. life ins. and pens..: pen., op. models and ptr. mkt. shares
• Trade assocs. in the med. / mkt. / ent. cat. offer. pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the min. / mns. / uts. cat. offer. bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the min. / mns. / uts. cat. offer. bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the min. / mns. / uts. cat. offer. acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the retail. / dist. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the retail. / dist. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the retail. / dist. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the retail. / dist. cat. offering life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the retail. / dist. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Professional associations offering bus. bank. servs.: pen., operating models and partner market shares
• Professional associations offering bus. ins. servs.: penetration, operating models and partner market shares
• Professional associations offering acc. and hth. ins.: pen., operating models and partner market shares
• Professional associations offering life ins. and pens..: pen., operating models and partner market shares
• Professional associations offering pers. gen. ins.: penetration, operating models and partner market shares
• Trade assocs. in the tech. / tel. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the tech. / tel. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the tech. / tel. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the tech. / tel. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the trans. / tour. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the trans. / tour. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the trans. / tour. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the trans. / tour. cat. offering life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the trans. / tour. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the other misc. cat. offering bus. bank. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the other misc. cat. offering bus. ins. servs.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the other misc. cat. offering acc. and hth. ins.: pen., operating models and ptr. mkt. shares
• Trade assocs. in the other misc. cat. offering life ins. and pens..: pen., operating models and ptr. mkt. shares
• Trade assocs. in the other misc. cat. offering pers. gen. ins.: pen., operating models and ptr. mkt. shares