Communication and partnerships build trust between brokers and insurers

Peter Todd, CEO, Constantia

Constantia Insurance lives by the motto of ‘insurance made personal’, and recently hosted an innovative webinar to demonstrate this commitment. Constantia’s UMA and Broker partners were invited to submit any business-related questions, which were then answered live by CEO Peter Todd, who took up the reins in February 2020.

Todd was expertly interviewed by Lizelle, van der Merwe, CEO at the Financial Intermediaries Association (FIA) who was also asked to pose any additional questions that she thought would be insightful and add value to the webinar viewers.

Such an authentic and open approach is to be commended and the questions and conversation was both engaging and informative.

 Open communication

Todd, got the ball rolling by reminding the audience that he was one of a handful of insurance company CEOs who had spent proportionally more of his career as a broker. “I have spent most of my career as a broker and have a great understanding of the challenges that brokers face,” said Todd. He has previously headed up Mutual & Federal, since rebranded Old Mutual Insure, and has served as a non-executive board member at Constantia, both being intermediated and partner-driven insurers. He told Van der Merwe that Constantia’s business was built on partnerships and that his immediate focus would be on reinforcing existing business relationships and ensuring shared value in all future partner interactions. An important starting point was to realign the insurer’s vision with those of its partners.

Strengthening the balance sheet

The tie-up with Trustco, which is a dual-listed financial services firm listed in Namibia and on the JSE, will bring much-needed support to Constantia’s balance sheet and hopefully address lingering concerns among brokers about the insurer’s longer-term sustainability. It makes sense for Trustco to seek growth opportunities in South Africa. “They saw the opportunity in Constantia, through the multiple insurance licenses that we hold, to make us part of a much larger organisation,” said Todd. Final regulatory approvals for the transaction are expected by the third quarter of 2020; but in the interim Todd expects ‘business as usual’, spiced up with the benefits introduced by a strong partner with an entrepreneurial mindset.

Some of the toughest questions posed during the interview related to the internal restructure that played out at Constantia recently. “We have emerged from the process ‘leaner and meaner’; but our focus has been on making sure that we have the right structures to support our partners,” said Todd. He observed, for example, that it was not necessary to maintain internal resources to perform functions that were carried out by binder holders. The insurer’s focus now shifts to monitoring binder holders to ensure that their performance meets regulatory requirements.

The restructure also sought to address the disconnect between what the insurer was offering and what its partners required. “We were trying to do too many things and seeking to develop products without understanding what the demand was, where the need was, and how we were going to take those products to market,” said Todd. The solution, he said, was to refocus on partnerships and empower partners to grow their businesses, and thereby improve Constantia’s long-term outlook too.

A highly technical issue

Van der Merwe asked Todd how he saw the insurance industry emerging following pandemic? Todd, who admitted being passionate about the insurance industry, said that it was unfortunate how the business interruption (BI) and contingent BI matter was playing out in the media. “Businesses are under pressure and are looking to insurers to support them based on policy wordings; but it is a highly technical issue,” he said. The challenge for brokers is to navigate the current crisis while still advising clients, many of whom are justifiably upset following their pandemic claims experience, on the evolving risk landscape.
Another issue arose from certain direct insurers going public with a “we will pay all BI claims” message. “We do not know what their workings are; but we know their exposures are small,” said Todd. He added that these insurers were “simplifying a complex issue” and, in so doing, might encourage business customers to expose themselves to more risk by purchasing cover without the benefit of advice from a Broker. The future, post-pandemic, may well result in insurance market interventions similar to what happened in South Africa in the 1970s; or following the Chernobyl nuclear disaster; or the September 2001 Twin Towers terrorist attacks.
Van der Merwe observed that the negative media around pandemic-related claims deflected from the overall positive contribution that insurers made to the broader economy: Can insurers do more in the media to support the brokers that operate at the customer front-line? Todd responded that insurers could be doing more and admitted that brokers were often left “high and dry”, trapped as it were between angry customers; apparently apathetic insurers; interfering regulators; and a menacing media.

Brokers, insurers, and ethics

“I have seen commentary on social media where the brokers get the flack, with one comment claiming that the words broker, insurer, and ethics cannot coexist,” he said. He admitted that insurers had failed in communicating tough decisions, and the reasons for those decisions, to all stakeholders: “If we fail [to communicate effectively] the risk is that people will jump to their own conclusions”. Communication and a focus on partnership were strong themes throughout the interview. “Brokers are very much relationship driven, that is how they build their businesses and service their customers; but as an industry we have to realise that it is not business as usual anymore,” concluded Van der Merwe.

Relationships are critical, agreed Todd, as is two-way communication between insurer and broker, especially during times of crisis. “As a broker you have to have a relationship with your insurer, we need one another,” he concluded. “There is opportunity [in the South African insurance market as we emerge from pandemic], the challenge is in ensuring that we take advantage of these opportunities together”.

Writer’s thoughts:
One of the facts that emerged during the discussion was that although Constantia operates under both long term and short term licenses, its business is predominantly in the short term space. It has a large exposure to the gap cover market, which it believes will be more insulated from pandemic than other lines of business. Will Todd’s commitment to communication and a focus on partnerships be enough to build trust with brokers? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

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