This is what it takes to sell insurance

Intermediaries need to move away from pushing product and begin focussing on selling advice. This was among the key tips emerging during the ‘successful intermediary of tomorrow’ panel discussion, held on the first morning of the 2022 African Insurance Exchange (AIE 2022). The long-awaited return to the ‘real world’ conferencing format saw more than 700 insurance stakeholders descend on the Sun City Hotel and Conference Centre to discuss challenges and opportunities in the industry and network with colleagues and friends.

The triple-digit premium hike dilemma

Pravina Nair, Executive Leader at Willis Towers Watson SA said that the topic of the conference, being ‘Resurgence, Resilience, Revival’, was appropriate given the life-changing 2020-21 pandemic. “The pandemic had a huge impact on an already distressed insurance industry,” she said, adding that the hardening market cycle currently being experienced was the toughest in more than 30-years. Brokers and insurers were facing double- and triple-digit premium increases in many lines of businesses in addition to reduced capacity. How can intermediaries outperform in such conditions? 

According to Nair, non-life intermediaries had to rethink the way they operated and ensure they gained a depth of understanding of their client’s businesses and the risks their clients faced. “Successful intermediaries will be reviewing the way they conduct business to ensure that their value proposition is relevant,” she said. The important question: Are you an insurance broker of yesteryear or are you a true risk partner / risk adviser equipped to serve the future needs of your client? Modern day non-life insurance brokers must work with clients to identify and mitigate both existing and emerging risks before they even consider transferring such risks via insurance. 

The challenges and opportunities are somewhat different in the world of life and financial planning advice. “Five to seven years ago financial advisers were ‘fear mongered’ into believing that [the emergence of Robo-advice] would result in there being no space for intermediaries,” said Theoniel McDonald CFP®, Managing Director at Wealth Associates and Vice President of the Financial Intermediaries Association of Southern Africa (FIA). He noted that instead of accelerating the uptake of Robo-advice, pandemic had refocussed industry stakeholders on the value of personal engagement. According to McDonald, future intermediaries could succeed by focusing on advice over product, and differentiating their services. 

Value of advice back in focus

“There is a definite shift of the inflection point in the value of insurance, [including] moving the risk discussion earlier in the value chain by focusing on risk management and risk prevention,” said Andrew Coutts, Executive Head: Intermediated Business for Santam Commercial and Personal. “If you are about product push only, then there are other non-intermediary channels that can do that cheaper and faster”. He reinforced the key differentiator for non-life intermediary success as advice, and more specifically, risk management advice. In this context the intermediary becomes part of the client’s value chain. 

Another important consideration is to ensure that your practice is visible where “buyers of insurance are actually shopping”. Coutts reminded conference attendees that potential clients were engaging with insurers and intermediaries on multiple channels, often doing research on one channel and completing the transaction on another. He also suggested that commercial and personal lines focused intermediaries find ways to operate higher on the complexity curve so as not to have to compete on price in the commoditised segment of the market. The bottom line: those who build their businesses around advice and risk management will thrive. 

Digitalisation non-negotiable

The panellists agreed that digitalisation was non-negotiable for success. “Digitalisation is critical from a scaling and cost saving point of view; but most of us will probably deploy some sort of hybrid model going forward,” said McDonald. According to Nair, “digitalisation is fast-tracking the claims process, resulting in client satisfaction and lower claims processing costs; it is time to embrace technological changes and [improved] transactional functions to allow more time to focus on client engagement and innovation”. 

Financial and risk advisers face many obstacles presently, including keeping up with the compliance and regulation burden and remaining relevant against the backdrop of changing consumer behaviour and technology. One approach is to turn challenge into opportunity. “Instead [of fearing technology] we should be leveraging it to make advice more accessible to the lower income earners who cannot afford a financial adviser at this point in time,” said McDonald. Digitalisation allows for the scale necessary to offer basic components of financial planning cost effectively, allowing intermediaries to service more customers and, hopefully, expand their service offerings to these clients over time. 

Personal experience for the win

The successful financial or risk advice practice of tomorrow will offer human, personal services while leveraging and maximising the cost efficiency and scale that digitalisation enables. “Your future success requires going beyond insurance and product push to offer differentiated risk advice and risk management; and that is going to require more specialisation,” concluded Coutts, leaving the audience with two final tip, namely: to get involved in ecosystems within your community and to “always fight ruthlessly for your clients’ claims”. 

As the panellists shared their partings thoughts, it became clearer than ever that the value attached to good financial and risk advice was more important than product. In other words, rather than offering an off the shelf product, the environment favours intermediaries who can interpret clients’ needs and assist with appropriate, customised product solutions. A key message was that today’s insurance client expects to deal with an insurance broker that is both risk adviser and partner, someone who is an integral part of their business. 

“We are dealing with sophisticated clients, insurance buyers who want more transparency and greater knowledge; they want to engage with you and be part of the process in designing an appropriate insurance solution,” concluded Nair. “We need to design products for our clients that are outside the conventional insurance solution set”. Her parting comment was that intermediation was no longer about selling from a list of available insurance products, but about designing ‘fit for purpose’ insurance solution. 

An era of specialisation

McDonald agreed: “We are moving into an era of specialisation”. He commented that smaller advice practices could no longer seek to remain relevant by simply taking a tick box approach… “The only way you can accommodate the increasing regulatory pressure and ongoing drive towards professionalisation is to adopt technology to improve your efficiencies and bring your costs down,” he concluded. “Remember that differentiation is not about product, but about what you bring to the table in addition to the product”. 

Writer’s thoughts:
Although financial and risk advice are two unique specialisations, it is possible to identify common traits for success, with the most notable being the value of face-to-face advice. Other common factors include meeting clients on the right ‘platform’ and designing solutions that meet clients’ needs. Are your product providers doing enough to empower you to design needs-appropriate solutions for your clients? Please comment below, interact with us on Twitter at @fanews_online or email us your thoughts [email protected].

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