Groupama’s Laurent Matras asks if the writing is on the wall for traditional insurers.
Brokers deservedly have an excellent reputation for offering high levels of service to their clients, yet if all the research I have been reading is to be believed they are frequently ‘underwhelmed’ by the levels of response they experience from the underwriters they support. So much so in fact, that many are now favouring even greater control over the client fulfilment process that has historically been entrusted to insurers.
Given that it is the broker that carries the can with the client when things go wrong, it is quite understandable that more and more want service solutions that will leave them firmly in the driving seat. Not surprisingly, busy brokers favour processes that are designed with them in mind and this means that managing general agents (MGAs) are becoming busier and more prevalent.
According to brokers, things are little better on the claims side. They bemoan a lack of expertise in claims centres with inexperienced handlers, offshore locations, and service that is more reliant on scripts than common sense. They also question why low cost is the imperative rather than professional employees with a reputation for flexibility, responsiveness and high quality customer service.
With brokers taking greater control of underwriting and some fulfilment functions it might be fair to ask whether the writing is now on the wall for traditional insurers.
It is unfair to tar all underwriters with the same brush, because some (and I think Groupama is one) are doing a pretty good job. They take the whole issue of customer service and satisfaction very seriously. They offer a genuine alternative to those carriers who seem to let brokers down on a pretty regular basis.
I suppose my question must be why are brokers not giving greater support to these better performing companies? When I had a really in-depth look at the various market research reports, it is quite strikingly obvious that, with the odd exception, brokers continue to place large volumes of business with insurers whose service credentials are inconsistent to say the least. Indeed, if what I read is even half accurate, there must be some pretty disillusioned clients out there.
“Close client relationships and expert local advice are still key factors for brokers in ensuring success and a differentiator from the aggregators and direct writers.
Why is this? Brokers still have plenty of capacity available and, therefore, plenty of choice about where they place business. Are we to assume that the real truth is that they are simply not prepared to move from their traditional markets? And if this is the case we must conclude that for all the protestations we read in the pages of Insurance Times, good service might only be a secondary factor in the placing decision.
Now if this is the case, I think that brokers are missing a trick and under-estimating the potential impact on the client. Of course price is important. But ask how important it is when a claim occurs and the customer is getting a rough ride from the recommended insurer. Most clients when offered the choice will probably still opt to pay a little more (up to 10% more according to research) for better service.
Most importantly, poor service simply leads to poor retention and in our post credit crunch world this makes very little business sense when good clients are so hard to come by. Let’s not forget the TCF regime either, because these days brokers have a regulatory responsibility to do a good broking job and to ensure a best fit for the client.
Close client relationships and expert local advice are still key factors for brokers in ensuring success and a differentiator from the automation of aggregators and direct writers.
So what’s a hard pressed commercial broker to do? For the moment, the future remains in broker hands and the choice is still theirs. The good news is that there are still plenty of insurers out there investing heavily in the talent and systems that can make life easier.
I really can understand how frustrating consistently poor service can be and why brokers moan about it. But if they fail to vote with their feet when things go wrong or even worse, actively decide to support insurers that fail to live up to their promises, then we know who must shoulder the blame when complaints rise and customers take a walk towards the competition.