Mark Cliff says that while the electronic revolution will strengthen the broker-insurer relationship, AXA is already committed to greater understanding of broker and client needs
The past 12 months has been an interesting time in the world of general insurance, with many changes brought about as a result of the introduction of regulation earlier this year.
While originally viewed by many as a burden, I believe that operating in a regulated environment can only bring long term benefits to the industry as a whole. Regulation has put the spotlight on the challenges that currently impact on the relationship between brokers, insurers and clients; strengthening the need for insurers and brokers to work together.
FSA regulation has forced both insurers and brokers to reconsider their existing trading arrangements and agreements, and has provided the opportunity for both parties to formalise their terms of business.
One of the key areas is making sure that we have efficient processes and systems in place. As a result the electronic revolution has finally extended to the insurance industry.
Over the next few years, we will definitely see the move to e-commerce.
It will accelerate as we see more and more business being transacted online.
This will not only help to greatly improve our service standards but will help to drive down costs and provide the transparency required within the regulatory framework.
The development of software solutions to help cut costs from the intermediary distribution channel is focusing minds on both sides. Initiatives like imarket, full cycle EDI and indeed our own service AXAbusinessrisk, will be critical to the long-term profitability of the intermediary channel generally and for AXA specifically.
The challenge for intermediaries will be to fully embrace the benefits in terms of functionality and speed that these solutions can bring. Insurers will need to co-operate with each other to deliver the infrastructure and standards.
This is a win-win situation for both brokers and their clients. Good news for an industry, which is often perceived as 'lacking in innovation' and pilloried for its customer service efforts.
As we go forward it is going to become increasingly vital that we can demonstrate we know and understand our clients, and we recognise the risks that they face.
For example, according to research conducted by AXA, the majority of commercial insurance brokers believe that their SME clients are under-insured. Around half believe that their SME clients do not have enough insurance for their working premises and 56% of commercial brokers that we interviewed felt that their clients were under-insured against loss of income that might occur as a result of a fire or theft of stock on a large scale.
If we know that this is the case then insurers and brokers need to work together to find a solution. Risk management tools, such as our own building valuation service, and Risk Analysis Service, can help the broker to build premium income, while ensuring that their clients' risks are insured to a realistic level.
The offer of specialist knowledge maintains the relationship between the broker and the client in the event of a claim. Furthermore, we are providing them with the very reason that they buy insurance - 'peace of mind'.
To achieve this, risk management must be a core discipline for any business.
While the size of some businesses prohibits the idea of offering clients one-on-one consultation, as insurers we can pass on our expertise to our end customers by producing free guides and leaflets to help smaller businesses to take steps to help mitigate the threats they face.
Brokers are a key part of encouraging all clients to use these services.
By being able to work together to provide our customers with the help and advice that they need, in the format that they want, it will go some way in improving the reputation of the industry.
It is important that we keep abreast of the risks of today and the future, to ensure that we can provide valuable advice to their clients. It's good for business and it's good for the image of the insurance industry as a whole.
FSA regulation also requires that we demonstrate that all staff and managers not only are currently competent, but also remain competent as the market changes.
In this highly competitive climate, staff training is a high priority for all brokers: firstly, as it helps establish a reputation with customers for expert advice and knowledge; and secondly it has the benefit of offering key staff the opportunity for career development, which in turn helps to develop a stable and happy workforce.
However, it is clear that many local brokers, while having the ambition to train their people, do not always have the access to highly specialised courses, especially if they only have a small number of people to train - in a way that is manageable and affordable. This is a challenge that we as insurers can help brokers to face.
Training and support
At AXA we are firmly committed to supporting our broker partners to develop and maintain the necessary competencies in all of these areas, which is why we have created a comprehensive programme of training and support initiatives that can be accessed either online or face to face.
If the intermediary channel is going to continue to remain the preferred route to the market of commercial customers, it is vital that insurers and brokers continue to work together to tackle the challenges they face for the mutual benefit of policyholders and shareholders.
Collaboration is the best outcome for all concerned.