Thursday, 3 September 2020
As a Broker working in a hard market, it is more important than ever to ensure your customers fully understand the market situation.
In tough times customers may be blinded by price and get cover that doesn’t fully meet their requirements. Customers need to understand why their policies may be more expensive or harder to place, the benefits of using a broker and how you will help them secure the cover that is best suited to their needs.
Below are a few key steps to best help your customers:
Make them aware of what is happening behind the scenes. Explain that the market is cyclical, they can’t expect their premium to be the same year to year.
Currently, insurers are not making a lot of money and this will have a knock-on effect on policies. Rather than your customer be surprised when you issue a quote, it’s best to set expectations from the start.
Help your customers understand the benefits of, and invest in, risk management. Explain to them the steps and measures they can put in place and how these will positively impact their premiums.
Insurers are going to be increasingly picky about the risks they are willing to place and active steps taken by a customer taken to minimise their risk exposure will increase an insurers likelihood to write higher risk trades.
This is particularly important if your customer has had previous claims. Any steps taken to avoid or minimise the risk of this happening again will have a positive impact when securing cover. For example, if your customer has previously suffered a theft, the addition of CCTV and enhanced alarms would be a good moral hazard, therefore, making them more desirable to insurers.
Many insurers can assist here, either with online training, template documentation, or for larger clients risk management funds.
Offshore solutions may pose as a tempting alternative, however, these are far more vulnerable than insurers based in the UK.
The gap they have to get to solvency II is far greater than UK FCA/PRA regulated insurers. Because of this, they are far more vulnerable.
Proactively placing risks with only trusted insurers remains the best way to proceed, though sometimes an offshore market is the only option so be selective about the ones used.
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