Peter Smits discusses whether brokers are getting a fair deal with insurers
We are currently inundated with insurers offering various deals for an increased share of our business and whilst I’m always flattered by any approach we do have to sort the wheat from the chaff.
I still fail to comprehend why it is that the larger insurers trial new initiatives through their direct arms and then attempt to pacify the broking community by offering them a watered down version 12 months later. Do they not realise that we are two completely different animals?
The normal scenario would be to offer us a deal based on income and to sell it to us on the basis that “they’ve done their research”, “we know it works” etc etc. This after they’ve thrown 99% of they’re annual marketing budget at TV audiences telling them to “buy it direct”!
Before the “spin-doctors” from the insurers get on the phone to justify their direct operations, perhaps I should clarify my position.
I have no problem with direct writers, national operations or aggregators; they have their place in the market, just as I have mine (I’m not convinced they are “treating customers fairly”, however the client pays his price and takes his chance).
Whilst the independent broker will never produce the volumes that the mass-produced markets do, what we can provide and are exceptionally good at is renewal retention. I assume that the appeal of the aggregators is volume, sell it cheap and stack it high, I also assume that as a result renewal retention is poor and that client selection can result in poor claim performance because of the minimal amount of information required to effect cover.
Why not trial new product and initiatives through the independent broker market, these can and should be significantly different from the cheap mass-produced offerings and work to our strengths of generating the loyal customer and give the insurer a chance of achieving better loss ratios.
Actually, whilst I’m at it, why don’t all the larger insurers club together and create a national television advertising campaign to promote the services of your “local” broker, a slogan from a well known brand of European lager springs to mind, “reassuringly expensive”, presumably the resulting increases in the average premium, renewal retention and claim performance would appeal to some?
“I have been involved in a series of meetings recently where new and unique offerings have been made to me and other regional brokers.
We might even be able to convince the client that in the long-term he will end up paying less for his insurance as the market begins to find its natural balance rather than being suppressed by the aggregators.
Now I doubt very much that I shall see a flow of insurers fighting their way to my door, brandishing armfuls of gifts, I also doubt that the next time I turn on my TV I’ll see some b-list celeb doing the door-step challenge on behalf of the local broker, but I live in hope!
There is, however, some cause for optimism. I have been involved in a series of meetings recently where new and unique offerings have been made to me and other regional brokers.
The appeal is that the insurer(s) concerned have been very open with what they are offering and expecting to receive and the broker will have to reciprocate. These are the makings of real partnerships with shared goals and results all geared to the achieving better performance and consistency. These initiatives will not suit everybody and are tailored to the strengths of the regional independent broker.
Whilst this may all seem like a bit of a rant, I don’t waste time worrying about elements of our industry that I cannot affect or influence, why bother? These factors, good or bad, are here to stay and in some instances formed as a direct result of our inability or failures. My efforts and energies are geared toward those elements that I can affect, my staff, product range, local marketing etc.
All I ask is that all providers, not just those I’ve met over the past few weeks, take time to understand what the independent broker channel can offer and if serious about their support then provide us with initiatives that are tailored to our strengths, rather than re-brand what they already deliver direct on-line, after all we have completely different clientele.
Peter Smits is group managing director of Ashbourne Insurance.