Insurance Intermediary: become risk advisers and build a future-fit business

Insurance Intermediary: become risk advisers and build a future-fit business

As an insurance Intermediary, you need to ask yourself, “What’s the next black swan likely to be?” A black swan is a potentially dire unexpected event – the pandemic being a perfect example. An Eskom grid failure could be next. Or another devastating drought? A massive cyber-attack? The emerging risk landscape is evolving fast. The financial services industry needs to change tactics and focus on providing risk advice to keep abreast with the pace of change.

In the past, risk transfer was the name of the game. Now, insurance Intermediaries need to act as real-time risk advisers, and proactively help clients to forecast and mitigate threats. Intermediaries and insurers must be futurologists – custodians of the future. 2021 was a year of doing. A year of bolstering resilience in the face of a future we’re only now beginning to grasp. 2022 will be a continuation of that journey.

Tricky times offer opportunities for insurance Intermediary innovation

The question is how to ensure the financial services industry is set up to withstand the challenges ahead. The pandemic brought a flash of change and complexity that was not an anomaly, but part of a larger global trend. Risks are on the rise: shifting weather patterns are catalysing extreme flooding or drought; there’s deteriorating water and power infrastructure; and increasing instances of cybercrime, to name a few. 

Other challenges include higher than anticipated losses in certain lines, an industry that’s still mostly dependent on face-to-face interaction for growth, a decrease in new business, a rise in fraud and cyber risk, and shifts in client expectations.

As emerging risk advisers, intermediaries need to explore likely future scenarios for clients and advise on relevant, nuanced insurance offerings accordingly. A move to a proactive risk advisory model is key.

How to become a risk adviser

At Santam, we believe a natural next step is for Intermediaries to monetise their advice offerings, so they can embrace the role of risk adviser without being solely reliant on product sales. The days of intermediaries simply selling generic products are limited. With the escalation of risk exposure, plus affordability issues and cheaper alternative channel solutions, product-push-only business models are ageing.

Remaining relevant is dependent on a real understanding of risk and the ability to tailor relevant solutions for client needs. That means client-centricity will be core. Its imperative intermediaries are armed with the tools and knowledge to know what clients need – now and in the future.

Risk prevention was already a focus in 2021 and will continue to be so in 2022.  During the pandemic, many intermediaries became champions for their clients through strong claims advocacy and a proactive restructuring of policies to cut costs and ensure the appropriateness of cover.  Next, they need to push their client relationships further. This means becoming an everyday adviser; unlocking the power of real-time, personalised data; adopting a nimbler, more responsive approach to clients’ needs, and managing every touchpoint of the client experience.

Spell out policy exclusions

Policy wording is notoriously tricky to understand. Intermediaries will need to continue to focus on building expert product knowledge and keeping a thorough record of advice. Clients must know what’s covered by a product and – equally, if not more importantly – what is not. Policies need to be explained in detail and a record of the conversation must be kept.  

Cybercrime is a prime example of the need for this. Should a client get hacked and have no cyber cover, they may try to claim against another part of their policy, which could create a resource-draining claims dispute. With cybercrime becoming so pervasive, it’s imperative that Intermediaries keep it top of mind as a major risk to mitigate.

Become digitally-led entities

In 2021, Intermediaries also entrenched more digital solutions into their businesses. The demands of regulatory change and the pressures of the pandemic may prompt more consolidation within the industry in 2022. The upshot of this is that it provides the scale necessary for Intermediaries to invest in technology – an imperative in the digital age. Digital marketing and online multi-quote technologies offer a wealth of relatively untapped opportunities.

Entrenching digital ways of working should form part of a ‘no regret’ culture that empowers Intermediaries to make iterative step-changes. Intermediaries need to consider agile ways of working across cross-functional teams, with more automation and AI when appropriate. Crucially, granular client insights will allow Intermediaries to offer hyper-personalised advice and relevant product pushes.

Conclusion

To future-proof their businesses, Intermediaries need to focus on becoming risk advisers with strong product knowledge and immaculate record-keeping. A Intermediary can’t be an expert on everything, so we’re likely to see more industry specialisation in 2022. Insurers and Intermediaries will need to continue to work closely together to ensure a broader selection of relevant cover options at different price points. Client education will also be top of mind as the move to a risk prevention model is made.

Santam is committed to working alongside our Intermediary partners to provide future-fit products, advice, and support. Right now, resilience is key. And Intermediaries that offer clients value through relevant advice will win in the long term. Right now, it’s about making incremental changes to improve existing offerings for current clients, while plotting evolutionary, exponential changes to create new offerings that meet the demands of the client of the future.

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