Davey's Blog: Through thick and thin

I’m hoping never to get the chance to test out this theory, but I believe that in the event of a nuclear holocaust it will not just be cockroaches that survive. Sitting happily alongside these little critters will be insurance brokers who have continually shown themselves to be incredibly resilient.

No matter what the changing market environment throws at them, brokers have shown the flexibility, ingenuity and entrepreneurial flair to reinvent themselves and keep the client’s needs as the central focus.

In the personal lines market, the advent of direct insurers was meant to spell the end for brokers. In the commercial market, the fervent consolidation we have seen was, similarly, meant to bring about their demise and yet they are still here. Indeed at least 4,000 of them are operational in the commercial market alone.

Clearly brokers have faced some significant challenges, but what is it that keeps them coming back for more and what is it that means they always have something valuable to offer?

In simple terms the answer is that customers value their relationship with the broking community, particularly in commercial insurance. Customers are worried that they might not get the cover they need if they buy without advice and that they might not get the best deal available.

Research has also found that customers find much of the commercial market confusing and complex and like the reassurance that dealing with a broker offers. Many also have security worries when asked to pay over the phone or online and prefer to deal on a face-to-face basis with a broker they trust.

Insurance in the SME sector is not about simply getting the cheapest cover because it is a mandatory requirement. It is about getting a level of cover that fits with the business and genuinely helps it cover its risks, particularly when protecting a business which might represent a clients’ livelihood, their pension and their life’s work, not just a chunk of metal like a car. Talking these risks through with an experienced professional will also help mitigate them and put businesses on a better footing for the future.

In recent years as IT in the insurance market has evolved dramatically, a fallacy has taken hold through which some commentators believe that a traditional face-to-face broking model is low tech, while only unadvised sales can operate in a sophisticated IT environment. This is not the case.

IT is something that should help firms speed up their processes, create consistency in their business, improve the information they have at their fingertips and lower the cost of doing business. However, it should never impair the service enjoyed by a customer in any way. Indeed by using IT effectively brokers should be able to free up more time to service their clients as they have always done.

Often the picture painted around IT is very simplistic. People fear that it destroys the human side of modern day life and takes the soul out of commercial relationships. Where technology is applied appropriately this is simply not true. If it were, then brokers would have no chance of survival in the modern world and as we all know that just isn’t the case.

Jonathan Davey is a director at SSP.

See his first blog: The seven year itch