How to maintain a competitive advantage in the insurance industry (when you can’t compete on price)
It’s getting tougher for commercial lines brokers to compete on price alone.
Harsher economic conditions have created a hard market, with insurers setting higher premiums and less generous policy terms. This is due to increased risks in the business environment caused by Brexit, the pandemic and Russia’s war with Ukraine; plus double-digit inflation hiking the cost of replacing stolen or damaged items.
In this more complex market, brokers are finding it harder to win new clients and keep them. They are also having to justify premium hikes in a way that doesn’t damage hard-won and important relationships with their clients. All of this makes maintaining a competitive advantage in the insurance industry a challenge.
Cheapest doesn’t cut it
Before the pandemic and in other times where the market was much more buoyant, some brokers felt they could win and retain customers simply by looking for the cheapest quote for them; however, in the hard market currently being experienced by the industry, brokers need to do much more to remain competitive, compliant and attractive to new/existing clients.
Price will always be important, of course it will, but there are other, more innovative, ways to achieve a competitive advantage in the insurance industry. In-depth market-led customer service is becoming key. Brokers wanting to remain competitive in a market where premiums are increasingly expensive should focus more on advising clients about the best scope and terms of cover, with regular communication and data-led insights.
They should delight the customer at the onboarding stage and continue to offer them vital data and insights through the policy term. The days of engaging with the customer at the onboarding and renewal stages are well and truly over. This article will discuss broader means than simply premium costs that will keep clients engaged and help your insurance brokerage establish and maintain a competitive advantage in an increasingly hard market. So where do you start?
Tactics for a competitive advantage in the insurance industry
Boost your know-how
Holding chartered status with the Chartered Insurance Institute (CII) is a good sign that the broker prioritises technical knowledge and understanding.
Customers know that, while many excellent brokers do not hold Chartered status, not having Chartered status can sometimes skew the focus onto price, rather than all-round advice. Customers realise that focusing on price only could ultimately hurt them if the policy doesn’t cover their needs fully.
Competitive insurance brokers can have much better conversations with clients by building their know-how and understanding of:
- Key issues impacting the underwriter
- Their specialist industry
- Each client’s situation
- Technical terms, contracts, and risks
A Customer Lifecycle Intelligence (CLI) platform is critical as it provides good data and insights on companies, sectors, risks and much more. It can alert you to any changes and allow you to intervene if one of your clients is flagged as potentially being in trouble.
Get friendly with your underwriters
The commercial lines insurance brokers with a competitive advantage tend to have fostered good relations with underwriters to ensure they get fast and favourable quotes. This includes taking time to understand what’s happening in each underwriter’s world. Like any business, having a good relationship with your contact and developing a solid track record of excellent conduct will keep you front of mind. The hard market makes it even more important in the relationship building/maintenance between underwriter and broker.
Take the Financial Services and Markets Bill, currently moving through the House of Lords. This bill will attempt to improve the UK’s global competitiveness post-Brexit by repealing some EU financial services laws with the aim of making the legislation meet the specific needs of insurers and other financial institutions based in the UK.
This includes replacing the Solvency II regulations with a proposed Solvency UK regime that aims to increase flexibility for UK insurers and free their capital for investment in technology and infrastructure. In theory, it should allow insurers the opportunity to be more price and risk-friendly which will certainly offer competitive advantages.
Brokers will need to have an in-depth understanding of how UK-based insurers are responding to the Financial Services and Markets Bill, and who could quote them better prices and terms as a result.
Target underinsurance in your specialist sector
Underinsurance is a massive threat in the current market, and can leave companies significantly exposed. Challenges such as war in Ukraine, inflation and more extreme weather could mean companies unwittingly have much less cover than they need in policies from property and asset insurance to key person cover. One example of this is a policy that covers the company for a pre-agreed insured sum in the incidence of a fire but has not taken into account how double-digit inflation has increased the cost of materials.
Gaps are widening between the sum insured figure and real time replacement costs and it’s vital to keep on top of how this is impacting - or exposing - your clients.
Brokers wishing to maintain a competitive advantage in the insurance industry will avoid fear-mongering around these issues and instead discuss, collaboratively, the importance of protecting against those risks at the right level. They use real time data-driven insights to support that conversation and, where necessary, ask the client for more details to ensure they get the right cover for the next year.
A good broker will also keep an eye out in case companies become underinsured mid-term, advising them of this accordingly and having a solution ready and waiting.
Up-to-the-minute data insights could help with cross and upselling to your portfolio as well.
A CLI platform can help you stay competitive
In-depth data from a CLI platform could, for example, show how growing export turnover is the perfect time to discuss marine insurance. Falling cash reserves should spark a chat about trade credit insurance.
If data shows that client’s revenue and profit are growing fast, you can talk about increasing cover in their business interruption policies. A good knowledge of the client’s previous revenue and profit figures over several years can help guide that conversation, as it shows their growth trajectory.
All these data-led conversations can boost loyalty by ensuring your client makes well-informed decisions. A client facing unique worries in their particular sector will appreciate your looking out for them and keeping their needs at the forefront. Plus you’re more likely to keep the business at renewal if you’re giving data-based advice that is based on up-to-date information.
Rival brokers without that capability will not have anywhere near as much to work with when trying to demonstrate their value.
Grow your customer service
Competitive commercial insurance brokers build their reputation as trusted advisers with a continuously proactive approach throughout the policy term.
Don’t go silent for 12 months until it’s time for renewal. Keep in touch with clients to find out if there have been any relevant changes. Customer service is more than simply reacting when your client needs something. The level of customer service that you need to achieve to remain competitive in a hard market is proactive as well.
Using data and insights to inform them of events that might affect their policies, such as new regulations or legal amendments, will showcase your value and engender the kind of trust and relationships that will be beneficial, come renewal
Check in with your clients regularly, even if they only have time for a 15 minute call. This allows you to temperature check and gauge how your contacts are feeling while adding value to those conversations with tailored, real-time data and insights.
Track important company events and personnel changes
When policies lapse or are lost to other brokers, it can be due to a senior management change - for example, if the new finance director’s previous broker follows them to the new organisation.
Many brokers with a competitive advantage in the insurance industry make use of a CLI platform that alerts them if any senior managers leave their commercial customers. This allows them to call up, advise that they are aware of the change and request a meeting with the new senior manager to ensure the cover remains up to date.
A platform can offer a long list of customisable alerts, including for events that may trigger potential claims, from floods to health and safety investigations. This enables you to proactively reach out to clients and help them. It gives you genuine reasons for getting in touch and building credibility.
If possible, as well as a regular status check, have quarterly in-depth catch-up meetings with the client, and involve insurers where necessary. Build tripartite relationships, working together with the client and insurer to get the best terms. This improves trust and confidence with the client because they know whoever looks after their policy and any claims personally.
How FullCircl can help you maintain a competitive advantage
FullCircl‘s revolutionary CLI platform helps you sharpen your focus on the companies that fit your specialisms and sector.
It empowers your team with rich, contextualised information on every business in the UK and Ireland, and can boost your sales capacity tenfold. It provides everything you need for precision prospecting, with real-time data on filters from geography to turnover, headcount and fleet size.
FullCircl provides tailorable filters that alert you to key client events – such as management changes, expansions, or changes to risk profile. It also offers real-time information on claimable events, such as disasters in filtered regions, and legal changes.
This helps you give prospects and clients the right support and guidance when they need it, and in turn gives you a competitive advantage.
Drop us a line to find out more.