The imperative role intermediaries play
There is a greater demand in the industry for advice. Post-pandemic, opportunities and challenges have presented themselves for intermediaries.
Karen Rimmer: Head of Distribution at PSG Insure speaks about the opportunities and challenges they face, why intermediaries play an important role and more.
Opportunities for intermediaries
The industry, according to Rimmer, has become a lot more complex than before the pandemic.
Not just because of the pandemic but also due to the increase in climate-related claims, riots as well as limited availability of electricity due to the challenges at Eskom. Even the war in Ukraine had an impact on the insurance industry.
“The pressure on insurer claims and the response of re-insurers necessitated changes to insurance products, which in turn, increases the importance of advice. This presents a huge opportunity for intermediaries, but also a great responsibility to provide the appropriate advice in challenging times,” said Rimmer.
If the adviser’s practice is well positioned, Rimmer emphasised that this is a time to grow their client base.
The challenges they face
“Intermediaries have to operate in an industry with several changes. Insurers interpret the market challenges differently and their responses therefore also differ. An example is the reaction of insurers to electricity grid failure and the extent to which they will provide cover and which exclusions will be applicable. Policy wordings differ quite a bit and intermediaries need to be able to provide guidance on all the different product offerings,” said Rimmer.
According to Rimmer, intermediaries must be in constant communication with clients to ensure they are aware of the changes to policy wording and understand the impact.
“Due to the additional administration responsibilities, advisers are faced with capacity constraints, which leads to the need for more staff and eventually an increase in costs, without a direct increase in income,” continued Rimmer.
Why do intermediaries play an important role?
Rimmer believes clients simply cannot keep up with all the changes and need the guidance of qualified intermediaries.
“This is important for individual clients but even more so for businesses. The aspects mentioned earlier can have a devastating effect on smaller businesses and they are very important in the growth of our economy,” said Rimmer.
“Given the potential negative effect on individuals’ and businesses’ cash flow, it is necessary to reconsider the insurance cover required and ensure that insurance premiums are spent wisely. This will include a payoff between premium, excess and self-insurance. Insurers are placing more responsibility on clients to take due care to prevent losses. Clients don’t always understand these requirements and intermediaries play an important role in explaining this to their clients and preventing the potential repudiation of claims,” added Rimmer.
Actions to take to pivot and thrive
According to Rimmer, intermediaries must:
- Stay updated with industry changes and, more specifically, changes to policy wordings from insurers;
- Structure their practices to provide capacity to give advice and not get bogged down by administration;
- Maximise renewal interactions with existing clients to provide appropriate advice (retention), but also use the opportunity to attract new clients that need advice (referrals from existing clients);
- Surround themselves with technical experts that they can call on when they need clarity on the details of a specific aspect; and
- Limit the number of product providers they use and ensure that they understand their solutions very well and can rely on their support.
Final words to fellow intermediaries
“Make sure that you can evidence that you considered your client’s needs and that your record of advice indicates why a specific provider and solution were proposed. Keep communication lines with your clients open and give them peace of mind. Clients have never needed insurance advice as much as they do now, use the opportunity to strengthen and grow your practice,” concluded Rimmer.
Writer’s Thoughts
Great insights into the dynamic landscape of the insurance industry and the pivotal role intermediaries play in navigating challenges and capitalising on opportunities. This emphasises the importance of evidence-based decision-making, effective communication with clients, and leveraging the current high demand for insurance advice to strengthen and grow intermediary practices. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me - myra@fanews.co.za
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