Do intermediaries still add value?

Our main story in last week’s Moonstone Monitor was on what the latest Santam Insurance Barometer has to say about the changing role of intermediaries. Andrew Coutts, Santam’s head of Intermediated Business, emphasised that intermediaries who want to stay relevant will have evolve from a product-centric to a client-centric role as risk advisers. He believes that intermediaries who offer their clients value, in the form of advice, will struggle less in the price-versus-value debate.

How do we contribute?

In his presentation at the launch of the Barometer, Coutts spoke to how intermediaries have added, and can continue to add, the most value. His main points were:

• Intermediaries are essential players in the insurance value chain, making material contributions across the advice, sales, marketing and claims-handling functions. The role of the intermediary will become even more important as the risk landscape evolves. Their relationship with the end client puts them at an advantage to explore and thoroughly map out the risks that businesses and individuals face.
• The true value of an intermediary is recognised in difficult times – during the pandemic, many intermediaries proved their worth through strong claims advocacy and the proactive restructuring of policies to save costs or improve the appropriateness of cover.
• Intermediaries have the means to play a critical role in helping clients understand intricate policy details, in demystifying complex policy language, in handling claims, and in sourcing solutions that meet client needs.
• Knowledge and expertise are the most important ways an intermediary can add value. This includes helping clients to understand what is covered by a product, what the exclusions are, and the intention of the product at the time of sale. In the commercial sphere in particular, intermediaries are needed who can identify risks and find solutions that match client needs.
• Managing client expectations. One of the ways to achieve this is by keeping thorough records that clearly state the purpose and extent of insurance provided. This will reduce claims disputes and foster healthy working relationships with insurers.
• Intermediaries’ in-depth client knowledge and insights gained from direct interactions will be invaluable to insurers for the development of affordable, bespoke insurance solutions that meet client needs.

Additional insights for intermediaries on personal lines

• The upward trend of clients using direct channels to buy insurance continues, from 74% of respondents in 2019 to 82% in 2020/21. However, the number of survey respondents using an intermediary also increased, from 26% in 2019 to 34% in 2020. “Direct insurers are acknowledging the value of the intermediary; many now employ tied agents to provide additional support to their clients,” say Attie Blaauw, Santam’s head of Personal Lines Underwriting.
• To remain relevant in the personal lines market, intermediaries should explore new distribution methods, such as the referral model where they source quotes on behalf of clients and then, for a fee, hand over the client to the insurer, which manages the administrative tasks, says Blaauw.
• There is evidence that multi-line intermediaries have fared better during the pandemic because of their diversified services across both life and short-term products, says Coutts.

In making the mind shift from being product- to client-centric, one should perhaps also consider one’s attitude to legislative requirements. While continuous professional development, for instance, is regarded by many as a grudge obligation, seeing it as a means to really become a professional will, in a manner of speaking, help the medicine go down in a much more delightful way as you reap the benefits. Even more so, product specific training.