Brokers to focus on retaining clients this year
The CIB Broker Confidence Index (BCI) is a weather-vane that tells us which way financial winds are blowing. Judging by the results for the first quarter of 2013, we’re in for a tough year, with brokers losing confidence in the economy generally and the b
Confidence levels regarding the economy, for example, fell from 61% a year ago to 59% while confidence levels regarding business conditions fell from 63% a year ago to 60%. Not dramatic figuresbut telling nevertheless.
“The economy is under pressure and last year’s strikes contributed to the perception that South African conditions have taken a ‘turn for the worse’,” says Jon-Jon Smit, sales director at CIB Insurance Administrators. “The industry is also changing – legislation has a major role to play in the short-term space and there is a lot of consolidation going on, so some brokers feel they need a ‘Plan B’ to survive. We’re looking at a price-driven market in which a lot of clients are leaving brokers to go direct. There’s a great deal of uncertainty.”
“For all the gloom and doom, brokers can make much of some growth areas showing potential,” says Smit. Although the survey reveals that 64.6% of brokers believe the bulk of their business during the next 12 months will come from individuals, Smit says he feels there’s a lot more potential in the SMME sector. “Only 23% of brokers felt their business would come from SMMEs, which surprised me,” says Smit. “It’s highly unlikely that SMMEs would choose to go direct, so brokers should be thinking about the potential inherent in the small to medium business environment.”
Only 11.5% of brokers felt that business for the next year would come from the corporate sector, while 0.9% felt it would come from government.
The broker’s time to shine
In terms of which business initiatives brokers said would take top priority this year, 47.8% said they would focus on retaining existing customers. A full 79% said they were confident they would be able to retain their clients over the next 12 months, which is positive and slightly higher than the 78% recorded last year.
“It’s the broker’s time to shine,” says Smit. “Showing clients that they can add value and they will be there for the customer at all times is a big plus because it’s good news for consumers. The younger generation may be content to speak to a different call-centre agent every time they have a query, but generally speaking consumers like peace of mind, which often comes from communicating with someone you know and trust that has the experience and expertise.”
Smit says he’s seeing a trend whereby consumers are shopping around, more as a marketing exercise than anything else, testing their brokers and giving them a chance to retain business. “Brokers should use this opportunity to learn what their clients need,” he says.
A cost-effective service offering
Smit also says he’s noticed that brokers are moving more towards commercial business and high-net-worth individuals in their pursuit of profits.
Brokers are aware of opportunities – 35.4% believe accessing new demographic markets will provide them with their biggest opportunity over the next 12 months. “Brokers are tapping into different markets in the hope of attracting business,” says Smit. “What is interesting is that, even with all the consolidation going on within the industry, brokers are seeking new potential partnerships in the financial and not just the short-term space .”
The biggest challenges facing brokers
Data shows that 31.9% of brokers believe legislation and regulation will pose the biggest challenge for brokers this year, down from 47.8% a year ago. Other pressing challenges include the economy and direct insurers, which loomed large last year, too.
Editor’s thoughts:
The decreased confidence levels of brokers are broadly consistent with economic data that shows us that South African consumers are struggling as the economy, too, struggles to pick up the pace. Do you anticipate a tough year, or are your confident that you can retain your customer book and grow your business at the same time? Comment below or email [email protected].
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