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Survey reveals brokers remain confident

01 June 2010 | Surveys, Reports and Ratings | General | CIB Insurance

The latest CIB Broker Confidence Index Survey, which measures the confidence levels of insurance brokers on a number of issues showed that brokers remained confident about the outlook for the economy and business conditions over the next twelve months.

The survey for the first quarter of 2010 revealed a confidence level of 65% amongst insurance brokers with regards to their outlook for the South African economy over the next twelve months - unchanged from the previous quarter.

It also showed a 67% confidence level amongst brokers that they would see an improvement in business conditions for the local insurance industry over the next 12 months, down marginally from 68% in the fourth quarter of 2009.

Jonjon Smit, Sales Director of CIB Insurance Solutions, says these relatively confident outlooks are consistent with the more positive economic data that has emerged over the past few months. “GDP growth is back in positive territory for the first quarter of 2010 following three quarters of negative growth and equity markets performed well in the first three months of 2010. I think brokers can feel justifiably confident about the prospects of selling insurance right now.”

However, the survey also showed that there are still some concerns amongst brokers about the impact that the tough economic conditions are having on the industry.

When asked about their ability to retain existing clients in the next 12 months, the confidence levels of brokers dropped by 4% in the first quarter of 2010, from 78% to 74%. In contrast, broker confidence levels of attaining new clients over the next twelve months increased by1% to 77%.

Smit says that with consumers still feeling the pinch of the recession, policy covers and premiums are being reviewed to the absolute minimum. “Individuals and businesses are shopping around for the best deals and there is a lot of movement by policyholders between insurers. In addition, the direct players and ‘aggregator ’ type websites are becoming more of a threat to traditional brokers.

This is further backed up by the fact that more than a third of brokers in the latest survey believed that direct insurers would be their biggest challenge in the next 12 months.

Smit says brokers will increasingly need to add real value to clients, in order to justify their commissions and fees. He adds that whilst direct insurers will always have a target market and personal lines insurance will continue to be bought and developed online, commercial and industrial insurance has always been a sector of the market where a broker’s experience and expertise will be called on to ensure clients are adequately covered and advised ..

When asked where they feel the bulk of their business will come from in the next 12 months, 46% of brokers in the latest survey said personal lines, 5% higher than the last quarter. In contrast, the percentage of brokers who said businesses would make up the bulk of new business was down 5% to 51%.

According to Smit, not too much should be read into this as personal lines tends to be a volatile business, with price being the deciding factor for many potential clients.

Finally, when asked what they think the biggest opportunity will be for brokers during the next 12 months, improved systems remained top, above the economy and access to new demographic markets.“Improved systems have become vital to brokers over the last few years as they have enabled them to streamline their businesses, reduce overheads and focus on their primary role of providing advice to clients.”

Survey reveals brokers remain confident
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