If an insurance broker offers something for free, do clients value it?
Everyone loves a bargain. Clients will always want to make sure they are getting ‘best value for money’. The popularity of ‘compare and buy’ personal insurance purchases over the internet is proof of that. The proliferation of budget airlines and the meteoric growth of value supermarkets such as Aldi and LIDL are evidence of this. But as you’ll know, there’s a difference between ‘cheap’ insurance and ‘best value’ – the old adage that “saving money can sometimes cost a fortune” is something you’ll be aware of as an insurance broker. But do your clients fully understand what an insurance broker does, and how do you get them to place value in it?
Taking the ‘false economy’ principle even further, do clients sometimes assume that if something is ‘free’, it must have no value in it? Or even worse, mistrust or abuse it? Away from insurance, take the ubiquitous all inclusive holiday as an example. For those of us that have been on one, was your champagne Moet and your gin Hendricks? We suspect not!
Do your clients and prospects understand the value of your insurance broker services?
Here at Quotall, we speak to our insurance broker partners daily on the subject of remuneration for services and it is interesting to note that all brokers take commissions but relatively few charge for their professional services such as claims advocacy; in other words they do this for free. Yet for clients faced with managing a claim, advocacy and support is highly valued. It’s also something brokers end up doing rather a lot of. Only last week, an article in the Financial Times referencing the Mactavish report stated that 50% of commercial claims are disputed by the Insurance Company.
“Insurers dispute almost half of claims made by businesses and typically take three years to reach settlements…Research to be published this week by insurance governance specialists Mactavish will say that nine out of every 20 claims described as “large” or “strategically significant” by the company making the claim have been contested by insurers since 2008.” (Grey, A 2014, ‘Insurers ‘Dispute Half of Business Claims’’, The Financial Times, 20/07)
So the client understands and places value in the insurance broker service only after an incident. This would suggest that there are a lot of brokers out there doing a lot of work for “free”.
The communication challenge – how to get clients to see the real value in using an insurance broker.
Recently a Quotall broker told us of a situation where a client had actually paid an adjuster to work on his behalf to assist with a claim when the broker had told him he would do it for free as part of the service. The reason? The client assumed that the third party adjuster, who was charging, would offer a better service. Our broker was keen to point out that the adjuster had indeed done a good job – but was frustrated that his client was wasting money – he’d have done a good job too!
Our view is that all the insurance brokers we meet are hard working, professional people and work hard on behalf of their clients. But many find it really difficult to communicate the value in what they do. If the Mactavish report is anything to go by it would seem they spend a lot of time working for free on ensuring claims are paid out fairly and in a timely way.
Other professional service businesses – solicitors and accountants, for example, charge by the hour. It seems we are universally accepting of this principle as they are professionals. Are brokers any less professional? Is broking any less a profession? Based on the principle that brokers consistently give their services away; perhaps they think so?
There is a significant challenge for brokers in getting their clients to grasp just what an insurance broker does and how that extra £20 on a premium might just be the difference between adequate cover and no cover, or a claim being managed for them rather than a significant further investment to get a claim successfully paid.
If you want to know how you might successfully market your insurance broker brand and get clients and prospects to understand the value in using you as a broker, why not get in touch? We do offer an initial consultation free of charge. After that we will charge you for our advice – Like you, our services are excellent value for money, not simply ‘cheap’.