FSA regulation offers brokers the chance to reinvent themselves, says Ian Jerrum.
The insurance industry was presented with some huge challenges in 2002. Premiums are likely to continue to stay high - if not rise further. In addition, more companies with large customer databases are diversifying into insurance and financial services.
So brokers must fight banks, supermarkets and high street retail stores for their share of the market. And with the FSA regulations coming into effect from the beginning of 2005, it seems brokers will have challenging times ahead.
However, the future needn't be bleak if brokers themselves become more professional. By enhancing their position from being simply `an insurance broker' and taking a more active role in providing sound financial risk advice, brokers will not only increase their reputation, but also improve the opportunities for their businesses.
In today's competitive climate it is even more imperative for brokers to be able to provide their clients with the best possible service, system and flexibility to meet their needs or they will go elsewhere.
But what makes a good service provider?
Employing professional and helpful staff is ultimately what makes a broker a good service provider. Being able to offer competitive quotes is, of course, still an important factor, but taking the time to learn about a company's business are all vital in order to understand the conditions in which the company is working. And this, together with an understanding of a client's own financial pressures and the impact of insurance costs on their cash flow, will take a broker beyond a mere commodity provider and into the realms of a true `financial risk advisor'.
But knowledge and understanding of a business does not happen in an instant and brokers should not expect staff to provide this added service without training. Indeed, the FSA will demand it.
As part of the 2005 regulations, the FSA will demand brokers to focus on training and competency. Brokers will be required to regularly assess staff competence and instigate training initiatives and then reassess to ensure there is a culture of continuous improvement. Where brokers are unsure of what training should be implemented, business health checks' can help identify needs. Training programmes can be designed to increase knowledge, improve efficiency, effectiveness and hence improve customer service.
One challenge is the shortage of quality training available. Brokers need to look at the breadth of training available and value for money. But the industry isn'tready. Brokers may need to consider distance learning and this is already proving a popular method for a number of brokers.
Looking to the future
Despite world events, interest rates are still low and monthly instalments are still the preferred method of payment. With this in mind, brokers should be looking to capitalise on this still relatively buoyant market and shouldn't view the changes in the industry as a threat.
Brokers should be looking upon them as a challenge and face the opportunities head on. By training staff to take on a risk advisory role brokers can only enhance their service and reputation.
