Where quality insurance providers cannot differentiate on price, they must demonstrate their value to potential clients
In a recent survey by QBE, a third of the UK’s small to medium-sized enterprises (SMEs) said they would be prepared to cut out the broker to reduce business insurance costs by going direct to the insurer. A further tenth of UK SMEs said they were uncertain of the benefits of using a broker service.
These startling figures confirm that, with sustained economic uncertainties, SMEs continue to feel cost constraints and this is impacting on their insurance-buying decisions.
It is clear that insurers and brokers must pull together to minimise costs and maximise value for our clients.
As an industry, we have embraced both reform and technological progression, but there is a need for us to now think beyond our own backyards. With the advanced levels of technology we use, surely there are approaches we could take to align our systems and share our processes to decrease outlay and increase efficiency, while maintaining the highest standards of confidentiality and data protection for our clients and partners.
Where we cannot differentiate on price, we must do so on value. In the current ‘every penny counts’ environment, an insurer’s advice on risk assessment and preventative measures is as valuable as their ability and willingness to pay on a valid claim, if it can prevent an incident, and therefore a resulting claim, from occurring in the first place.
While it might be tempting in the current economic climate to keep the spotlight on survival, the recent election has served to refocus us back on the importance of supporting business development: a movement where the insurance industry could play an important part. Quality insurance partnerships should not only provide protection against the worst, but also help businesses to profitably develop and achieve their potential. The insurance partnership should see itself as having a virtual board presence where its role is to help its client.
There is one further piece missing from this jigsaw. There are many examples in the broking community of those that go the extra mile to ensure they are offering added value, yet the survey findings showed that one in ten SMEs perceive broker service to be a low-value area where they can reduce spend.
This would suggest that together we also need to better communicate the benefits of a quality broker offering and of a tripartite relationship between the client, the broker and the underwriter. The logical alternative to this is to take the broker from this space and commoditise our products.
While this is easier said than done, it is important that we work to better publicise the benefits of our industry with its respective differentiations. This, in turn, relies on an improved understanding of the businesses we are trying to reach. When we consider, for example, that today’s generation of decision-makers is becoming increasingly web-capable, and that the next generation will almost certainly be web-dependent, it is essential that we develop our methods of communicating with our target audiences.
If businesses are unable to pay more for their commercial insurance, we have a responsibility to our balance sheets, our business partners and our industry to adapt. This does not mean abandoning our discipline and making irresponsible pricing choices, but finding ways to operate more efficiently to reduce costs, to add value to our services and, crucially it would seem, to communicate the full worth of our proposition to those with whom we want to do business. IT