A matter of trust
Consumer trust is in a difficult place today. Research across various indicators suggests there is a great deal of distrust in the overall business and institutional landscape today, and the insurance industry trend is particularly concerning.
In the 2019 Edelman Trust Barometer, the financial services sector was at its highest level since the measure started in 2012. But that level still makes it the least trusted sector in the report, and Australia shows the second lowest trust score in the insurance industry across 26 global markets – though the score is on the rise.
For the clearest view of trends inside the Australian insurance industry, National Insurance Brokers Association (NIBA) CEO Dallas Booth says he looks to the Vero SME Insurance Index, which measures numerous important factors in relation to the way clients feel about their brokers.
The 2019 SME Insurance Index reflects the results seen in reports like Edelman’s. All the relevant measures of trust worsened in the 2019 study, with around 33 per cent of respondents saying they can’t trust brokers. The 2019 research window was in the midst of the Banking Royal Commission, a factor that would likely increase negative sentiments.
But Booth agrees this research shows there are lessons to be learned. “This indicates that brokers are going to need to work hard to rebuild trust in a sensitive environment if they want to improve client satisfaction levels and, therefore, retention,” the report says.
What can brokers do to win back trust?
Demonstrate value in a strong process
The 2019 findings show that SME managers who work closely with brokers have a good understanding of the role and importance of those brokers, Booth says. In such cases, Booth continues, the broker becomes “rusted on” to the business because they regularly demonstrate value.
“The real strength of the broker is in the fact that they become the advocate for the client, and in doing so produce tremendous outcomes,” he says.
In fact, a good broking process, by its very nature, should engender trust.
“The business owners are very good at running their business, but they don’t give much thought to risk,” Booth explains. “The first thing a broker does is sit down with the client and analyse the nature of the business and its risks. They talk about how those risks could be managed and they demonstrate deep knowledge of the client’s industry.”
The SME Index research backs up the importance of this step. “Brokers should think about undertaking more analysis and risk profiling on behalf of their clients, because this is correlated with increased trust,” it reports.
Next, a broker develops a unique insurance program after gathering market intelligence to identify the best cover, terms and price. Then, on their client’s instructions, they put that cover in place.
“The last thing a broker does, if an insured event occurs, is become a client advocate and help the client with the claims process,” Booth says. “The broker acts for and on behalf of their client at all times, not for the insurance company.”
All about communication
Outside the broker/client relationship, there is also work to be done. NIBA is currently working with Deloitte on a report that identifies, and will be used to communicate, the measurable value of the role played by an insurance broker for clients, for the insurance market and for the national economy.
“When risk is managed properly, the community benefits enormously,” Booth says. “In the SME environment, if a major loss occurs it is likely the business will go under unless it has an insurance program. That is the difference a broker will make, and that must be communicated to the business market.”
Brokers can improve their value offering in various ways, for instance by providing regular industry intelligence updates to clients, or by helping clients network with related businesses.
Finally, brokers should always seek further education, Booth says. Many training programs run by insurance-related bodies, like the Suncorp Learning Campus, offer tailored learning experiences that include soft skills specialisations. Such skills help brokers to be less transactional and to instead become a vital part of their clients’ success.
Disclaimer:
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
