South Africa has always been blessed with strong leaders. There is no greater time for strong leadership than now. We are faced with tough economic conditions and a market driven by diverse risk that many companies may look at with blank stares not knowing how to approach them.
The crucial role player
During these times, it is important to remember that the role of insurance in improving your client’s lives is crucial. As an insurer, and as a broker, you exist to give certainty when uncertainty strikes. You are the key business partner in your client’s lives.
But how can we grow in an industry where insurance is often not on the top of everybody’s shopping list? When clients need to implement austerity measures, it is often the grudge purchases that are the first to be cast aside.
Build a union of trust
The most effective way to do this is to build relationships based on trust. Raimund Snyders, Mutual & Federal CEO, believes that the days of the silent broker are long gone and that brokers who engage with their clients will prosper.
“The insurance industry does not operate independently from the world around it. The industry is also trying to survive in a world where there is an added degree of turmoil, anxiety and uncertainty. But this is where we can stand out. We have been through this before, we can do it again,” says Snyders.
In order to be a certain friend in uncertain times, Snyders points out that the trust coefficient between clients and brokers is key. “Our contract is a contract based on trust. We cannot operate as an insurer with mistrust in the industry, and the industry cannot survive if there is no trust.”
Work within your niche
Personalisation is another key ingredient to success. Whether you are dealing with an individual or with a corporate, you need to offer the same level of service, no matter the volume of income they bring into your business.
“Brokers also need to play a role in their client’s ecosystem where they manage their risks in the best possible manner. At the end of the day, clients want to know that their risks are being appropriately managed with the best set of skills that are available to the market.
This applies to brokers as well as to insurers. It doesn’t help trying to carve out a position in the industry just for the company; do what is best for the company. “If you can work with government to offer support in building trust in other areas, then this is where you should be. But don’t be a passenger; step up, don’t just say it, do it.”
A technological future
Technology is a challenge which looks set to have a major impact on the insurance industry. “We need to come to terms with the impact that technology will have on the industry. Insurers in five year’s time will be financial technology companies which will be driven by data. Therefore, it is imperative that insurers build capacity in these areas so that they can work with clean data,” says Snyders.
We have already seen non-traditional companies trying to break into the insurance market. Google has started to offer insurance based on the browsing history of a specific client. But do they have the expertise of an insurer? Snyders suggests that perhaps in the future, such companies will make a business selling data sets to insurers to cover needs.
The future of the UMA
Other challenges for insurers is the unknown factor of cyber liability and the threat it poses. Snyders fears that the industry will see an increase in liability claims and risk; insurers therefore need to build capacity in these areas.
A way to do this would be through seeking the assistance of a UMA where skills in niche areas are plentiful. Snyders points out that some UMAs have done well and have prospered while others have struggled.
Jaco van der Sandt, Finance Director at Mutual & Federal, says that this is because these companies were forced to move away from what they were good at. “UMAs are excellent at product development. But when you introduce the added pressure of trying to run a business, you will struggle. We will see mergers and acquisitions this year as larger insurers are noticing the value that UMAs can offer and are bringing them into the fold where they can develop products without worrying how to run a business,” he said.
Editor’s Thoughts:
While many companies believe that growth in the current economic environment is hard to come by, Snyders believes that investing in technology and showing strong leadership can result in growth. But is it as simple as this? Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.
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