How do brokers outperform direct insurers in this risk-rife world?
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By Andrew Coutts
A pandemic. A worldwide upward trend of natural disasters. Political factionalism and unrest. Risks for individuals and businesses are increasing by the day. In this climate, clients need to proactively prevent risk as much as they need solutions to transfer it. Intermediaries are perfectly positioned to be risk advisers and help make the cost of insurance sustainable, while creating true peace of mind for clients.
Here are some of the significant ways intermediaries can outperform direct insurers in this new normal:
1. Ensuring clients really are properly covered
A big part of the job to be done is convincing clients that cheapest often won’t mean best, rather it will mean least cover. Going on price alone can leave people with gaps in cover or underinsurance. Real value and a good understanding of risk are critically important right now. Intermediaries can help clients navigate a new world of risks by ensuring clients have the right cover at the best price for their needs, and by ensuring they know what their cover does – and doesn’t – include. Buying a pre-packaged product direct from the provider often leaves the risk of gaps in cover, unknown and unidentified, with the purchaser. Let an intermediary understand your needs, source and compare quotes on your behalf, and find the best solution just for you.
2. Ensuring your cover evolves as you or your business evolves
When a policy is up for renewal, there’s also a big difference between direct solutions and broking. In the current conditions, an email announcing an annual inflationary increase isn’t going to cut it. Clients need a trained adviser to guide them through a comprehensive review of whether their cover still answers their evolving risk and insurance needs. And if the unexpected happens in between renewal periods, your broker is there at any time to restructure your cover as you need.
3. Combine the best of digital with a human touch
In this confusing climate, we need the “human touch” more than ever. But we also need to take advantage of tech advancements. Historically, technology has been easier to deploy in the direct channel space, due to complexity and costs. However, that’s shifted with the flexibility and reach of digital. Now, intermediaries are equally able to capitalise on the benefits of digitalisation in terms of offering ease of access and self-service to clients. Multi quote comparison has also never been easier with sophisticated and instant product and price comparison now a hallmark of leading intermediaries. If you want choice, ease and convenience, and a solution designed just for you, all while never losing access to a human touch and the ability to build a relationship over time, a broker is the channel for you.
4. Maximising your claim
Your intermediary is also your independent advocate at claims stage. Not paying out your claim does not give them more profit in their back pocket. They are motivated by only one need, keeping their clients happy, and this includes taking away the pain at claims stage and ensuring the best possible claims payment every time. Your intermediary will explain what you are entitled to claim, help you formulate and submit your claim, and make sure you get the best pay out possible.
5. Think brokers are more expensive? Think again
Tired of getting hundreds of unsolicited SMSes on your phone and phone calls from strangers when you least have the time? The Protection of Personal Information Act (Popia) will stop your data being used without your consent and will stop many of the marketing engines of direct insurers as a result. This means expensive advertising and lead generation for direct insurers will only get more expensive. The value of an intermediary who builds a business by retaining his or her clients and generating new leads through word of mouth has never made more sense and never been as competitive from a cost perspective as it is today.
Across the board, technology makes the industry more accessible, facilitates flexibility and personalisation, and an increasingly customer-centric philosophy, with customised products and optimised claims processes. We’re likely to see the growth of behavioural models, with real-time reward for risk management, an increasing use of telematics, and usage-based, on-demand products that can automatically turn on or off.
Going forward, we will rely on our intermediary partners more than ever as they go beyond being brokers to becoming risk advisers. This means ensuring insurance becomes part of a holistic solution to manage risk. As we move into our increasingly uncertain risk future, intermediaries will be differentiated not just by these factors above, but also by their risk and advice tools and early detection mechanisms that enable risk prevention. By also helping you understand and avoid risk, they help you reduce the need to transfer risk, significantly reducing the cost of insurance and providing true peace of mind.
Andrew Coutts is the head of intermediated distribution at Santam.