Get your slice of this untouched premium

06 May 2024 Gareth Stokes

There are millions of rand in additional non-life insurance premium up for grabs for brokers and financial and risk advisers that do the necessary soul-searching, and take action to improve their client outreach. In this writer’s view, commercial and personal lines insurance brokers could enjoy a field day if they just delivered on their unique selling point of building trusted advice relationships with their clients.

An unfulfilled promise

The problem, dear reader, is that much of the advice industry believes it is client-focused when in truth, it is patently clear they focus almost exclusively on client experience. Rather than reaching out to clients by way of face-to-face calls or in-person visits, advice (sic) has morphed towards deploying digital systems that allow clients to complete policy-related activities with the minimum fuss and administrative expense. Brokers and insurers may be excellent enablers of policyholder onboarding, renewal, claims management, billing, etc but have lost sight of a critical component for business success: being the unfulfilled promise of a trusted advice relationship. 

This writer started thinking about how non-life insurance is bought and sold upon his return from a trip to New Zealand. He had arrived safely at OR Tambo International airport, but his luggage remained stuck somewhere between the departure terminal in Auckland, the transit airport in Sydney, and South Africa. PS, at this early stage there was no expectation of damage or loss to the personal effects contained in the writer’s suitcases because they merely missed the transfer window following a parking bay hiccup at Sydney International Airport. Besides, if these suitcases did end up being lost, the writer had adequate insurance cover. Or did he? 

Your writer, like most 21st Century globe trotters, had purchased his tickets online using a credit card that promised free travel insurance. Like most of his peers, the writer had little idea what the free insurance policy covered. Even so, he resisted the rather ‘soft’ attempts to get him to increase the cover limits on this policy due to having additional, confirmed coverage from his medical scheme. My point, dear reader, is that in the absence of a real world interaction with a broker or insurance agent, even a client experienced in many aspects of non-life insurance remains ‘in the dark’ as to what is on cover, and whether additional cover should be bought. 

Think about the sums at risk

As is often the case, your client will only dive into his or her insurance policy after a loss event, or the potential occurrence of same. Flipping through his 21-page schedule of insurance, this writer wished he had paid more attention when taking out the cover. Yes, he found a section titled “Luggage Delay” which offered a limit of R2 000,00 for reimbursement for essential items provided the luggage was delayed for more than a stated period, subject to the usual terms and conditions. In the event the luggage was mislaid for a period of seven days or longer it was considered a total loss. But alas, the total loss of luggage section was entirely omitted from this ‘free’ policy cover. Ah well, you get what you pay for. 

Imagine, the writer thought, if the insurer had offered a courtesy call to discuss the policy and cover at the point of sale. And if someone had whispered in his ear to do a quick back-of-a-matchbox calculation of the total cost of replacing the contents of said suitcases. Argh. After doing the just-in-case assessment the total replacement cost soon topped R25 000,00 including clothing; some mountain biking kit; noise cancelling headphones; the two suitcases; and a mouse and keyboard that is essential for anyone writing 1000-plus words per day. At least, dear reader, the R60 000,00 in laptop and smartphone were safely in the cabin. 

The R25k in two suitcases shocker

Before you lambaste the writer for making up numbers, consider the following new-for-old breakdown which does not even include jocks, socks and toiletries: 

  • One pair denim jeans: R800,00
  • Three pairs short pants: R2 100,00
  • Five t-shirts: R1 000,00
  • Work shoes: R2 000,00
  • Running shoes, hiking boots: R6 000,00
  • Headphones: R2 250,00
  • Keyboard, mouse: R1 200,00
  • Mountain bike gloves, helmet, shorts, shirts, shoes: R6 500,00
  • Suitcases: R3 000,00 

The opportunity that brokers could avail of involves realising that their clients need help in taking out the right cover at the right time in addition to the fast and simple administration processes that digital platforms allow for. This writer questions whether the industry has ever really met this requirement. Certainly, in more than 20-years of having buildings, household contents and motor insurance, your writer has never once been visited by a non-life insurance broker. Self-initiated phone calls and emails aplenty; but never an interaction that falls squarely within the trusted advice relationship that was promised.

 The premium is there, you just have to ask for it

The potential for inadequate or incorrect insurance coverages on personal lines buildings, household contents and motor cover are staggering, and the premium that brokers and insurers could claw back from addressing these shortcomings could run to millions of rand. And that means the broker or insurer who figures out to reverse engineer the trusted advice relationship into their businesses will be handsomely rewarded. Obvious wins include BREAK addressing underinsurance for buildings and household contents and ensuring that your clients understand what they should include under the ‘All Risks’ sections of their policy schedules. 

A visit to each of your commercial insureds will likely expose countless more cover-to-risk mismatches. Such visits will help in ensuring that clients are appropriately covered for the risks they face while creating opportunities to verify that the risk mitigation requirements on their policies are met, pre-solving all manner of potential issues at claims stage. This writer’s guess is that the reward in re-establishing trusted advice relationships with clients will extend far beyond getting existing business correctly insured, opening doors to new business and successful renewals. 

Writer’s thoughts:

There is an old English adage that holds you get what you pay for. Does free travel insurance introduce a risk of underinsurance. More importantly, do you agree that modern insurance sales and distribution practices fall short of the trusted advice relationship promise? Please comment below, interact with us on X at @fanews_online or email us your thoughts


Added by Joe Kotze, 06 May 2024
Dear Gareth. Reading this very sensible article, I now realise why I shy away from Gucci, Pierre Cardin and Jimmy Choo shoes that you are fortunate to invest in. My travel insurance for a weekend at Bronkies tallied to R27.50. The insurer commented that they do not always insure clothing bought at AC Kermans. Point taken however.
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Added by Gareth, 06 May 2024
Cost is a major issue @Colleen, and I doubt many South Africans could afford an optimal (full cover) basket of life and non-life covers - let alone retirement savings. Your job is done if you have engaged with the client, illustrated the various shortfalls, and ensured a best-of-affodability-v-coverage outcome. In a perfect world, anyway. :)
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Added by Gareth Stokes, 06 May 2024
Good point @IR Tinsley. Perhaps the face-to-face 'real world' meeting is a stretch too far. But my premise remains that by paying more attention to clients, you could certainly have a better return per client and / or per client interaction.
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Added by IR Tinsley, 06 May 2024
The cost of a visit to a Personal Client, probably in the evening 1-2 hours and dependent on distance : R 500 - R1000 ?
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Added by Colleen Suttner, 06 May 2024
I am a broker and could not agree more with this.
HOWERVER, clients are not interested in the cover they are only interested in the bottom line UNTIL that claim happens. Then they blame everyone and everything except themselves. It is a catch 22. The old adage that if you insure through a broker you pay more is futile. If you feel you can navigate your way around the policy on your own good luck to you. There are certainly those that can and do but most are looking at the premium.

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