Long live the broker
Quinten Matthew, Executive Head of Specialist Business at Santam
When one reflects on the catastrophic events that South Africa had to endure in 2017, coupled with a volatile economic climate, most people would not like to be in the shoes of brokers as they are becoming increasingly surrounded by risks.
However, this is the time when brokers are most needed. The fact that there is all of these risks in the industry opens many doors for brokers to show their value and why they are their clients most valuable business partners.
Reinforced outlook
This was the preamble to the 2017 Santam Broker Conference which was held last week.
Edward Gibbens, Executive Head of Commercial and Personal Lines at Santam, said that brokers form a vital cog in the engine of the industry, and that clients would be lost without their valued advice.
“Apart from the complexity of doing business, I’m sure we can all agree that many products in the industry can be difficult to understand if one doesn’t come from the industry, dealing with a broker to make sure that they are covered for all perils is a major source of comfort for clients,” said Gibbens.
He added that one of the most heart-breaking experiences he had to go through was walking through the streets of Knysna after the recent fires devastated the region. He added that this pain was compounded by the fact that many of the losses from the fire were either uninsured or underinsured.
“And it doesn’t stop at Knysna. We have recently seen the devastation that storms in Gauteng and Durban have caused. We are also dealing with drought conditions in Cape Town where business that rely on water (tourism, construction and medical services) may be interrupted. This is the time that clients need to rely on the advice of brokers,” said Gibbens.
Specialist skills
Quinten Matthew, Executive Head of Specialist Business at Santam, pointed out that while the need for advice is vital in the personal lines space, it is just as pertinent when it comes to specialist lines of business.
“The insurance industry is becoming increasingly defined by data. However, a company can have tons of data and still be at a disadvantage because they do not know how to interpret it. Nobody knows clients better than brokers, and they have a role to play in assisting specialist insurers to refine data sets,” said Matthew.
This also plays a role in risk management as brokers have a fair idea of where the majority of their clients are concentrated. If they are concentrated in an area that is likely to face a recurring risk, such as wildfires, then they can advise specialist insurers where resources need to be allocated to.
Technology bugs
Both Gibbens and Matthew warned that technology will be one of the biggest industry influencers in the future.
“One just has to look at the direction in which society is moving,” said Gibbens, “a runner will walk into a sports shop and look at the price of running shoes. He will then compare this price to the price of the same shoes on a digital platform such as Takealot.com. If the item is cheaper online, he will put the item down and order it through the cheaper platform. This price war is similar to the one faced the in the insurance industry and we need to come to terms with it,” said Matthew who added that client’s expectations have changed significantly because of the growth of technology.
Gibbens added another mine to the minefield by pointing out that technologies such as driverless cars and drones are no longer pipedreams but reality. The way international insurers such as Lemonade handle claims is becoming an industry influencer.
Undisputed champion
Does the fact that technology is increasing its influence on the insurance industry mean that the days of the broker are over? Not by a long shot.
Gibbens pointed out that if anything, technology adds complexity which brokers need to assist clients with. “The industry needs to decide how it will respond to issues such as driverless cars, and then it is up to the broker to explain this complex response to clients in a simplified manner. At the end of the day, 80% of the country’s total premiums still come from intermediated insurance models; long may this continue,” said Gibbens.
Editor’s Thoughts:
Complexity is an issue for clients, but an opportunity for brokers. Gibbens and Matthew still see a bright future for the intermediated model of insurance and the value that brokers offer clients. Perhaps brokers should stop worrying about the disruptive force of risk and look for opportunities. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
