MARKET REPORT 17
“

Broker feedback strongly
suggests many are in favour
of increasing rates despite
the current pressures on
policy pricing. What has come
through in our own ongoing
consultation with brokers
is that they are keen on
staggered incremental changes
introduced over time.
”
The price
the industry for riding the runaway train that Cumbrian fl oods serving as a stark reminder the experts. In fact this view of insurance is
must be right
is commoditisation because it is now on a that claims do happen. preventing many people from obtaining the
collision course with dissatisfi ed customers. right products and arguably they have never
Brokers can point this out and also what is been in more need of brokers to guide them.
Some would no doubt argue that every not included in the cheaper products clients Many policyholders have already come to
company or industry has dissatisfi ed may source themselves. This can further rue the day they bought a cheap policy and,
customers at some point and that as long help brokers tackle a misconception which much like DIY in the home, DIY insurance
as complaints are kept within acceptable undermines them, namely that a policy can leave novices feeling they ought to
limits this is not a problem. All of which is is cheaper direct because it bypasses the have gone to an expert in the fi rst place.
true enough in theory but, with prices being broker. In reality the difference in price By initially directing customers’ attention to
kept as artifi cially low as they are at present, between a commoditised product and one the small print of lesser policies brokers can
insurers are running the risk of broad-scale that a broker would sell is not just what the strike up the conversation to press the above
customer dissatisfaction and beyond that broker takes but because the product itself line of reasoning. By this, brokers ensure the
reputational damage. is of a lower quality. Brokers are perfectly client is properly covered and demonstrate
entitled to point this out while steering why their expertise is worth paying for.
In short, pricing has been too low for too clients to the right product. After all in doing
long and in high net worth and many other so they are preventing them from potentially This, plus increases to correct prices by
classes of business price corrections by throwing the baby out with the bathwater by insurers, is a vital part of an industry effort
insurers are now badly needed. Brokers buying a cheaper policy. now required to ensure that what the public
also play a vital role in this by ensuring the buy from our industry will actually perform as
customer gets the right product which will Generally people accept the idiom ‘you get they think it will in their hour of need.
perform as they expect when they need it what you pay for’ and, although insurance
most. is not readily thought of in those terms by Make no mistake, insurance, as part of
customers, this is as true for insurance as fi nancial services, has been implicated in
Broker feedback strongly suggests many anything else. If a broker can demonstrate the public eye by the recent turmoil that
are in favour of increasing rates despite the that taking a lesser policy is actually taking a has seen the sector singled out for harsh
current pressures on policy pricing. What gamble this naturally raises the question do criticism. Treating customers fairly, by
has come through in our own ongoing they really want to gamble with their home giving them quality advice and the right
consultation with brokers is that they are and possessions? products at the right price, is vital if the
keen on staggered incremental changes strong reputation which the high net worth
introduced over time. Modest increments, Part of the problem is the internet and insurance industry currently holds is upheld
they feel, would not lead to a an excessive other direct channels often give people into the future.
number of clients leaving – especially with a misplaced confi dence and sense of self
recent high profi le events such as the reliance and that they can do better than
February 2010 Insurance Brokers’ Monthly
Focus 12-19 FEB.indd 6 1/2/10 13:45:25
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36