Build back better
Advice practices that offer risk solutions to business and individual clients had their work cut out to grow their books during lockdown and pandemic. Many of South Africa’s non-life insurance brokers adopted a survival mindset last year. Instead of chasing new business, brokers spent time assisting their personal lines policyholders with premium affordability and navigating their business clients through the sea of uncertainty surrounding business interruption claims. Andrew Coutts, Head: Intermediated Distribution at Santam, says there are five levers that will allow intermediaries to “build back better” in an evolving insurance landscape. His thoughts on taking your advice practice to the next level were shared during a presentation to the Insure Talk 9 webinar.
First: Human needs should inform your business decisions.
The holistic wellbeing of employees and their families are integral to a business’ resilience. “You need to maintain high touch with each employee and provide something that creates meaning beyond today, something that gives them a reason to keep moving forward,” says Coutts. One way to accommodate employees in the current pandemic scenario is to allow them to continue to work from home. This is because employees who have a safe place to work from are better positioned to deliver consistent value to your busines.
Advice practices must ensure that they adopt the tools necessary to enable remote working and operate seamlessly in the digital world. It is also important to address employee concerns about the long term sustainability of their roles. “We have a mantra in our business that we protect the person and not the job; we have to make sure that our staff can be successful in viable roles that will continue to drive our businesses,” he says.
Second: Sense and respond “in the moment”.
It is impossible for businesses to predict and prepare for the economic impact of Black Swan events such as COVID-19. Website Wikipedia.org defines a Black Swan as “an event that comes as a surprise, has a major effect and is often inappropriately rationalised after the fact with the benefit of hindsight”. There has been some debate over whether or not the pandemic meets the Black Swan criteria; but we would argue that it ticks enough of the boxes to qualify. Advice practices need to consider how they might react to future shocks caused by, for example, a total collapse of Eskom’s distribution grid or a reactor meltdown at Koeberg. “We must consider how such events impact our advice and the role we play in providing a risk protection layer for our clients,” says Coutts.
You cannot protect your clients against every conceivable risk; but you owe it to them to start thinking differently about the risk landscape. The process of “thinking about the unthinkable” will reveal opportunities to differentiate your products and services from those offered by your competitors. Your ability to sense and respond to risks “in the moment” will help you to identify multiple points of value in your business. By keeping an open mind you can benefit from the up-selling and cross-selling opportunities that attach to this value.
Third: Embrace “no regret” strategies.
Our response to pandemic has fast-tracked many trends that were waiting in the wings pre-2020. “Many of the changes we have introduced to our businesses today make sense in the long term context as well,” says Coutts. He advocates embracing digitalisation, data-driven solutions and cloud-based systems as part of the new normal in risk advice businesses.
You must accept that remote working is here to stay and appreciate that such a step-change has a knock-on impact across your business. Remote working requires a greater focus on data security across your practice and at each of your clients. An ability to embrace new strategies and technologies allows 21st Century brokerages to become more agile. “Being agile is about making sure that you can push the decision making process as close as possible to the engagement point with an intermediary or client,” says Coutts. Future proof businesses will empower their teams to add value while management can be tasked with removing obstacles that impair the team’s performance.
You can ensure a competitive edge in these areas through a combination of competitive remuneration structures and technology tools. Brokers can integrate automation and artificial intelligence (AI) into their practices by choosing platforms and digital toolsets that operate in data rich environments, at scale. “It is critical that you embrace technology as the greatest enabler of your future success,” he says. You will have to invest in data and data security and have proper data recovery and disaster management plans in place.
Fourth: Evolve your business model.
Your future success hinges on providing value to your clients at every interaction point. The challenge, says Coutts, is how to add more value and find new streams of revenue in an environment where your clients are looking for ways to reduce costs. One way to unlock value is to harness the power in your data. Another is to leverage the digital tools that give intermediaries phenomenal and virtually unfettered access to potential new leads. Advice practices should have a digital platform, social media accounts and web page at a minimum. “You have to find ways to broaden access, generate leads and keep your clients engaged,” says Coutts. Those who struggle to evolve their businesses should review each interaction from the client’s point of view and address any shortcomings in the overall customer experience.
Five: Move beyond insurance. The final lever to “build back better” is to consider client offerings that go beyond insurance. “You can either take your existing product offering to new clients or you can develop new solutions to offer to your existing clients; either way, you achieve evolutionary growth,” says Coutts. He uses the example of a bakery business servicing a few blocks in an upmarket neighbourhood to illustrate the point. The old way of doing business is for the bakery to continue servicing its existing geographic area with a range of tried-and-tested products.
An alternative to ‘business as usual’ would be for the bakery to leverage the power of the internet to offer unique products and services to a worldwide audience. It could, for example, offer branded merchandise online, launch an online cooking school or produce a recipe book, among others. These initiatives would deliver a transformed business with multiple revenue streams without placing existing resources under undue stress.
Writer’s thoughts:
I enjoyed Andrew Coutts’ presentation to Insure Talk 9. But although he made many valid points, I could not help but wonder whether the five levers mentioned during his talk were out of reach for many of South Africa’s smaller risk advice practices. What challenges do small brokerages face in keeping up with the technological changes at their insurance partners? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.
