Insurance Business forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Notify me of new replies via email
Insurance Business | 21 Apr 2015, 08:03 AM Agree 0
An industry expert has taken the stage at the 2015 Steadfast Convention to warn brokers that focusing solely on price could lead to an unpredictable future.
  • Paul | 21 Apr 2015, 09:51 AM Agree 0
    The extraordinary number of rejected claims reported by the FOS yesterday should ensure brokers remain relevant. Every broker should feature those statistics on their websites. How much does a cheap premium really cost? What are the potential consequences for Gen Y purchasing professional and business cover directly. There are plenty of war stories just spend some time trawling through the FOS reports.
  • Leeanne Farmer | 21 Apr 2015, 10:11 AM Agree 0
    Good broking never changes, it has always been about risk management. Know and understand your clients and offer them solutions. I work on the basis that Price is only issue in the absence of value. The key is to show your value, this will differentiate you from the average or poor broker who only focuses on price.
  • Laurie Feather | 21 Apr 2015, 11:40 AM Agree 0
    Allan Manning correctly identifies the threat to insurance brokers with the advancement of technology.
    What insurance buyers through technology, don't fully recognise is that they are not a client of the insurer but little more than a policy number because insurers who have opted to offer insurance in this space consider that what ever they lose out the back door is replaced by what is replaced through the front door,all they have to do is advertise their product(s) particularly Motor and Home and Contents covers.
    Those insurance buyers may also not be aware that insurers have a precise automated record of all conversations and web generated emails so any thoughts of not disclosing information can and will be challenged.
    Brokers must break the often perceived shackles of "Tyre Kickers" so as to be accepted with the same recognition as the client's accountant or lawyer
    A good start is perhaps to dispense with the words Quote or Quotation to clients.
    use instead 'Insurance Submission"
    Laurie Feather
  • Johnny | 21 Apr 2015, 02:36 PM Agree 0
    The direct market with no advice vs broker with advice argument that Dr Manning proposes here & as has been expounded elsewhere is too simplistic.

    I personally believe that advice is important & should be a broker's focus but I don't believe that the debate playing out in the media is the right one.

    From this clients infer that if they don't want specific advice we can't help them. There are still lots of times when a client only needs rudimentary advice or assitance in arranging a policy but then appreciates that service.

    Brokers do many other things that aren't fully blown advice, such as cover for many clients that the direct market will not cover, access to hundreds of alternative avenues, higher quality policy wordings, explanation of other policies, convienience etc.

    Just because an Australian insurer could sell it's products direct 30% cheaper doesn't mean that the broker couldn't secure similar or cheaper terms through a different avenue, such as an underwriting agency. This maybe proves that brokers should be less beholden to Australian insurers.

    Private motor & home & contents are currently cheaper in the direct market, that is self evident. But the same isn't true of commercial insurance. I regularly beat direct insurers on price for business & office packages, motor, PI & PL. The direct insurers would have to drop their rates significantly to cut brokers out of this market on price alone.
  • John | 21 Apr 2015, 03:29 PM Agree 0
    It's not hard to add value when competing against a direct insurer. Take for instance most direct client's business interruption figures. I'd say over 10 year of broking about 80% have been grossly underinsured as they've received no advice.
  • Terry | 22 Apr 2015, 10:21 AM Agree 0
    There is no doubt that small brokers will diminish like Travel Agents. Allan is 100% correct in his assessment that a large (very) proportion brokers focus purely on price. I deal with a panel of brokers and every one without exception wants (1) a Tailored policy (2) A discount. Buyer groups like Austbrokers, IBNA, Steadfast etc have some of the best policies available but the truth is the clients are not made aware of the benefits.Most brokers are poor salesman . Poor salesman always focus on price beating.Sorry guys its the truth. Take the current market for example. Brokers are actually megaphoning to their clients that its a soft market and they can expect premium reductions (focus again is Price). Its an absolute ridiculous approach, espcially long term as we all know the steeper the fall -the steeper the rise in a hardening market.
  • Peter | 22 Apr 2015, 12:17 PM Agree 0
    Whilst all the discussion about brokers adding value on forums like this is all well and good, how many actually do this when requesting terms from the underwriters. In my experience, very few brokers these days even understand what the underwriters differentiators are in respect of the various products. Renewals are marketed every year to get the best "Terms" (read premium) regardless of claims, relationships or proposition. If they were confident that they were providing superior advice, recommendations, service to their client, then they would be recommending the best program and policies that suit the client and not need to market so regularly. Rest assured insurance buyers are far more informed these days and will start to buy direct and know the differences in covers so this will be the future.
  • Johnny | 22 Apr 2015, 01:39 PM Agree 0
    Broking is a combination of policy & price, these two concepts are not mutually exclusive. The nuts & bolts of broking aren't broken, it just needs to be better communicated to the general public what we do beyond price or intrcate advice.

    Plenty of brokers do focus on price when negotiating with insurers but that doesn't mean it's what they discuss with clients. I hammer insurers about price, so what, it doesn't mean that's what I speak to the client about.

    Direct insurers aren't cheaper on commercial insurance, broker markets are cheaper, so brokers competing on price will still prevail in commercial insurance in the present market.

    Most insurers have no real value proposition themselves anyway if compared. 80% of them are just selling middle of the road policies at middle of the road prices. They have similar risk appetities & policy wordings. For clients who fit this criteria, a broker's value add is likely to be quite subtle but can still constitute value.

    If a broker sources 5 sets of these terms that all cover the client's requirements & then presents the cheapest one, so what, good on them. If there are differences between the policies, highlight them, if a client has a specific need, identify it & cover it.
  • Phil McGuire | 23 Apr 2015, 12:44 PM Agree 0
    Laurie makes some very good points as does everybody else. My take on Dr Allan Manning's words are a warning about the emerging digital age and nothing will stop it evolving into a threat to the intermediary. For those of us that have been around long enough to remember previous soft market cycles, the damage done and the restoration time required for the insurance market means it does not happen overnight. Previous soft market cycles were not up against emerging digital insurance technology that micro SME and Gen X,Y & Z are now tapping into. Perhaps the emphasis on the price could be changed somewhat by calling ourselves Insurance Advisers Vs. Insurance Brokers. The industry is changing and changing fast and now has external factors unprecedented in an emerging soft market cycle. There will be pressure on both the intermediary and insurers - intermediaries to demonstrate value for money to their clients and insurers to prevent COR creep as a result of falling rates, Cats etc with eventual pressure on commissions so it is a veritable moving climate of change that we need to adapt to.
  • Tina Dean | 24 Apr 2015, 09:42 AM Agree 0
    Johnny makes a good point. Underwriters - just because a broker leans on you about your price, this doesn't mean that is their primary focus when they are talking with their client.

    They will already know what kind of claims service your company provides - better than the underwriting division does, I suggest.

    For a lot of SME business, there is little real differentiation between policy wordings these days. If you think your wording is superior to the market in some way that will benefit the client, point it out!
Post a reply