|How do we define value? Value is emotional, not logical. Each individual has his/her own standards, expectations, needs and wants to determine the value of a product. If a client believes that she has made a profitable exchange and received more in return for what she paid for, the product becomes more valuable to her. On the flip side, other clients whose personal needs or expectations are quite different from the first client will not rate the same product as valuable.
For some clients, buying the cheapest insurance is of great value because they believe that they have received a great product at a low price. They have profited from this exchange. They are not concerned with the quality of service or coverage, etc. For such clients, direct writers, call centres, and banks are ideal choices.
But on the other hand, there are people who want to have a personalized, tailor made, fast and efficient service. A knowledgeable and experienced broker to take care of their insurance needs with peace of mind, they are willing to pay more to have that kind of service. The broker channel is the only logical choice for them and that’s the kind of clientele we need as well.
But there is a problem. How can we offer the same great personal value to our clients in today’s fast paced, technology driven, smart phone society? Neither the client nor us have time to meet in person and discuss insurance portfolios on a frequent basis. The insurance industry is changing rapidly and the traditional broker system with one on one service is getting increasingly expensive and time consuming. Insurance is getting more and more complex and demanding. Today, a P&C broker interacts with far more clients and more complex issues than a broker 15-20 years ago.
Brokers are traditionally slow adapters of technology. We look towards the insurance companies to take the lead, invest in technology and software because we are just brokers, we can’t afford such a huge investment. That’s the wrong approach in today’s highly competitive market.
Small mom & pop, community based brokers are fast disappearing and soon they will be extinct if they fail to adapt. There is no doubt that their traditional practices and ways of doing business were very successful in the past, but in the 21st century environment, it has to change. To provide the same great high value service to our clients, they must adapt and invest in new technologies; treat technology as their partner in success. That’s the only way to stay ahead of the direct writers and maintain our market share in the years to come.
A successful general insurance broker offers great value to his/her clients instead of low prices. Selling on price is a race to the bottom, and the winner is the biggest loser. There will always be someone cheaper than you. The biggest drawback in this model is the product pricing is not in our control. It’s the insurance companies who set prices. If one insurer is offering lower prices today, a broker cannot claim that next year prices will not go up. Then we have to re-market the same client to another insurer, if we have any, who is lowest in price at the moment and then on and on, ultimately, we will lose that client. It is much easier and more profitable for us if we offer great value, a relationship and ease of doing business to our clients and they are convinced that they are receiving far more value for what they paid for. They will be loyal to us and send their friends and family to us as well. Please read my earlier blog Loyalty, we demand.
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” – Charles Darwin
Ehsan’s pick of the week: This week, I have picked another best seller Human+Machine. Great insight on the partnership between human & machine Intelligence and how it is changing our jobs, businesses and lives in today’s world. This book is not a science fiction, it’s even better. I hope you enjoy it!