Seven features of a winning brokerage

Short term insurance brokers who are keen to build successful brokerages must respond to changes in both the business and insurance environment. Today’s article, which follows on from my piece titled ‘Six things every broker must know’, introduces several features that are crucial in building relationships with your personal lines and commercial clients in the digital age… They were introduced by Andrew Coutts, Head of Intermediated Business at Santam, during his presentation to the Financial Intermediaries Association of Southern Africa (FIA) Virtual Advice Summit. 

There are seven catch phrases that can unlock real value in the non-life intermediated advice discipline by giving fresh perspectives on what differentiates an advised client from someone who prefers transacting for insurance via the direct route. On that point, it is worth noting that advice-led versus direct insurance distribution models are more comparable than ever. Your clients have come to expect digital insurance solutions that respond to their needs in real time. They want similar levels of claims management, policy administration and underwriting regardless of how they transact for their assets cover. 

1. Professional risk advisory

“Broking as a career will increasingly be built on professional risk advisory expertise that will require brokers to evolve into risk advisers,” said Coutts. He observed that commercial clients with complex businesses that required a range of risk mitigation and risk transfer solutions would continue to transfer their risk using insurance, placed through suitably qualified intermediaries. The trend of personal lines clients buying their insurance online will continue; but should not render advice-led broking obsolete. 

Clients can nowadays pick and choose from a wide range of online insurance platforms, offered by both direct and traditional insurers and tech-savvy brokers, when considering a non-life insurance purchase. Coutts noted that while personal lines clients placed a high value on expertise, they were increasingly intolerant of pure middle-men. In other words: Brokers playing in the personal lines space will have to ensure that their value offering is tangible and goes beyond simply facilitating an insurance transaction.

Increased specialisation

Coutts suggested that the “broker as generalist” model would not be sustainable over the long term. “The move towards specialisation will continue,” he said. As a consequence, future-fit risk advice practices will have to offer a combination of individual risk experts who collectively provide holistic solutions for customers. The ‘death of the generalist’ message will not come as a surprise to anyone who has been conducting business in the local market for the past decade or so, as the battle for highly commoditised products such as buildings, household contents and motor insurance has shifted if favour of direct insurers. 

One of the fears facing non-life insurance brokers is that commoditisation is threatening certain segments of the complex commercial insurance market too, with direct insurers offering a range of solutions based on meeting industry-specific needs. Intermediaries will need to leverage technology and administration platforms to remain efficient and relevant to their clients. They should also consider becoming specialists in emerging products categories, for example cyber insurance. 

3. Risk management

Risk management used to be the preserve of executive teams at large corporations. Nowadays the discipline is top of mind at most small and medium enterprises. A non-life insurance brokerage can add value by helping their clients to identify and mitigate their insurable risks. You can reduce your clients’ total insurance costs by assisting them with internal policies and processes to better manage the risks inherent in their businesses. The challenge is to advise clients on sustainable risk management strategies that will reduce the extent of the damage caused by each of the perils they are insured for. According to Coutts, the intermediated channel is perfectly placed to add value to commercial insureds because “the industry is moving from one focused on the fine print in a legal contract, to one focused on holistic solutions to manage risk”. 

4. Client advocacy

Every stakeholder in the non-life insurance industry appreciates that claims management is where the rubber really hits the road. An insurance claim tests the promise that you make to your clients, backed by the insurer, at the underwriting stage. “The value of intermediaries is not only entrenched in the sales process, it is equally embedded in the claims stage,” said Coutts. There is no discounting the role that the intermediary plays in ensuring that the claims process is handled efficiently and equitably, thereby ensuring that their clients’ valid claims are indemnified by the insurer. Client advocacy is also an integral component in both the policy renewal and client retention processes. 

5. The client-broker relationship

A recent debate on financial planning and advice, held during The Collaborative Exchange’s 12-14 October Financial Planning Summit, singled out human relationships, partnerships, purpose & trust as the core components of financial advice. “There are a lot of clients who like technology and are happy to engage in mechanistic ways; but there are many more clients who want to deal with individuals who are [in turn] enabled by technology,” said Coutts. He emphasised the need for interpersonal skills in insurance sales, which is by its nature a negotiated and people-led pursuit rather than something that is purely transactional. 

6. Risk placement

The ability to place a potential insured’s risks with a variety of insurance partners has always been a key differentiator in the broker distribution model. “The real value of advice is that you can build bespoke product solutions; we must not allow our products to become so commoditised that we forget the real value of advice,” said Coutts. Brokers must  embrace technology to assist them in matching their client’s unique risk needs and placing this risk with an insurer that is competent to indemnify it. Your insurance partners’ abilities to assess and price your client’s risks, and put in place the right solution during underwriting, are integral to meeting the ‘value in insurance’ promise. 

7. Technology

So much has been written about the impact of technology on financial services firms, that it hardly bears further exploration. The bottom line is that technology enables brokers to work more efficiently, thereby freeing up time for their important customer-facing role. “We see the role of the non-life broker evolving from one of placing a policy with an insurer to that of a professional risk adviser,” concluded Coutts. He said that advice-led engagement with your clients was a key differentiator in an age where repetitive tasks could be performed by technology deployed in platforms. 

Writer’s thoughts:
The various factors discussed by Andrew Coutts make a compelling case for non-life intermediaries; but seem to steer the value of advice debate away from personal lines insurance and towards commercial. Do you believe that short-term insurance brokers can still write profitable business in the highly commoditised personal lines market? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts editor@fanews.co.za.

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