Commercial brokers told Insurance Times that a quality claims service is more important than competitive pricing, aligning with the FCA’s refreshed stance around fair value
By Katie Scott, Associate Editor
On 22 September, the FCA published its General insurance pricing practices market study report, which revealed statistics and proposed remedies around the practice of price walking, where new customers are offered lower, more competitive premiums than longstanding insurance customers.
This report was a clear demonstration of how the FCA’s priorities as a regulator have pivoted from being price-centric to instead focus on customer service, with ‘fair value’ being the mantra of choice.
As for commercial brokers, many – in fact – don’t believe competitive pricing is of prime importance.
Insurance Times research shows that elements such as scope of cover and a high-quality claims service trumps competitive pricing for some commercial lines brokers.
Answering ‘competitive pricing is considered to be an important factor to many brokers, are there any other factors that you consider to be more important than pricing?’, our research identified some common responses from brokers, including:
- Quick service and turnaround times.
- Good levels and scope of cover.
- Claims service and a reasonable attitude towards claims settlements.
- Strength and clarity of policy wordings.
- Risk appetite.
- Relationship with underwriters and account handlers.
- Expertise and technical knowledge of underwriters.
- Policy benefits and service add-ons.
- Risk management.
Interestingly, one commercial broker even commented that an insurer’s market reputation and the conduct of its employees is of more importance than competitive pricing, as this demonstrates “their approach to compliance and the fair treatment of consumers”.
In light of the pandemic-driven recession, insurers’ financial stability is also of growing importance to commercial line brokers, with many valuing solvency stability over pricing.
It seems the commercial insurance arena is ripe for a culture shift.
Although competitive pricing will always be acknowledged as a key facet commercial brokers look at – with some still stating this as their primary focus – there is also the appetite to broaden brokers’ horizons beyond the FCA’s previous laser-like price tractor beam to bring other insurance service components to the fore.
This attitude will only be encouraged by the FCA’s recent report and recommendations, despite this concentrating on the home and motor markets.
Undoubtedly, this stance aligns with brokers’ core objective, in wanting to provide the best insurance solutions to clients that are fit for purpose.
Insurers, on the other hand, may need to adjust their mindsets from price being a differentiator to instead focus on some of the above findings.
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