It’s easy to succeed as a broker. All you have to do is figure out what your clients want and then give it to them. Simple, right?
But as consumer research will tell you, it’s not always easy to know what your clients expect of you — especially if their expectations are constantly shifting.
“There’s a lot that we still need to learn about consumer behaviour,” says Colin Simpson, president and CEO of the Insurance Brokers Association of Ontario (IBAO). “Everybody’s environment changes. Just because you think you understood the consumer yesterday doesn’t mean you will understand them today, depending on what’s going on in the consumer’s world.
“There is an opportunity here for us to step back and look at the way we interpret consumer behaviour and whether…it is aligned with what the broker delivers. I think in a lot of cases it probably is.”
To help brokers enhance their communications with clients, Canadian Underwriter undertook its own consumer research this year in March, right around the time that the World Health Organization declared the novel coronavirus to be a global pandemic.
In Part 1 of our inaugural Trusted Advisor Survey, published in July 2020, we asked more than 600 personal lines home and auto insurance consumers and 160 commercial lines clients what they thought about the service they were getting from their brokers. The survey showed consumers giving their brokers high marks on many key aspects of the broker value proposition — trust, choice and advice.
In this issue, we compare the results of the consumer and broker surveys to spot the greatest opportunities for brokers to get to know their clients better. Our complete list of opportunities, plus a brief description of how we chose them, is explained in our sidebar, ‘Talking Points.’
Three main opportunities stand out for both personal lines and commercial lines brokers to have a deeper conversation with consumers:
Consumers and brokers should talk about what’s involved in “solving” an insurance problem
Consumers want to hear more from their brokers about ways to prevent loss
Consumers need a better understanding of the broker’s role in the insurance transaction
Solving an insurance problem
Brokers solve consumers’ insurance problems every day. Particularly in a hard market, they are trying to find coverage in a market dominated by capacity issues, to say nothing of finding insurance coverage for a low premium. Sometimes just finding coverage is a huge problem to be solved.
But the obvious gap between consumers and brokers on the topic of problem-solving may speak to a difference in how consumers and brokers are defining the “problem” to be solved.
“Brokers are always solving problems,” says Insurance Brokers Association of Canada (IBAC) president Kent Rowe. “But it may come down to whether the solution is acceptable to the client. In the hard market, some solutions may not be as appealing to consumers as they might be during a soft market.”
Rowe cites the example of a client looking for coverage. In a hard market, characterized by higher premiums and reduced coverage options, the least expensive option may be available for $8,500. But the client may have paid only $5,000 for similar coverage last year. And so, when presented with the $8,500 option, the consumer may not be inclined to think the broker actually “solved” his or her problem, which was reducing the price point.
In fact, the broker may have just negotiated with more than seven different carriers to find the insurance in the first place, given the hard market conditions. For the broker, the “problem” was finding the coverage; and so, in the broker’s mind, the problem is indeed solved.
In this example, which is a common conversation between consumers and brokers, the importance here is for the broker to make the client aware of the challenges he or she faced to secure the coverage. If the expectation was a cheaper price, and that expectation is not realistic in the current market environment, the broker does need to manage these consumer expectations up front, by explaining the current state of the market and what it means for the consumer.
Advising on ways to prevent loss
Again, brokers do this all the time, but do consumers know that this is what you are doing?
Context is everything, Simpson says. For example, a broker’s role is to provide access to the insurance product. And so, when a broker advises on how to access a particular product at a cheaper price, a consumer may not realize that the broker is actually providing them with advice on how to reduce their risk.
The broker’s risk advice to a consumer “may just be cloaked in some form other than loss reduction,” says Simpson. “If you’ve been told that you need to improve your lock systems to prevent theft, for example, it may be phrased [by the broker] as, ‘You need to improve your lock system if you want the deductible or a discount.’ But consumers may not see that as loss prevention. They may just see that as some kind of demand from the insurance company [to obtain the insurance product].”
Sometimes the type of product matters, too. Commercial lines products are tailored for specific business risks, and there are many ways brokers can advise on ways to reduce losses. But the auto product is regulated, the options are fewer, and sometimes the only risk advice a broker can give to reduce losses is obvious. “The only auto insurance where you might consider giving advice [on reducing losses] is if you have a telematics device that will tell the consumer to slow down,” as Simpson puts it. Otherwise, “what are you going to say? ‘Stop at a stop sign?’”
Rowe says the role of the person providing the advice also may lead a consumer to interpret whether or not the information is intended as a form of loss control. For example, if a claims adjuster tells a consumer to upgrade his or her roof to avoid water damage — or if a loss control officer at a manufacturing plant says a part needs to be replaced to prevent an equipment breakdown — it may be obvious to the consumer that they are getting “advice on ways to prevent loss.” But if a broker gives the same advice, will the consumer see this as advice on loss reduction or on how to reduce their insurance premium?
In the end, it may come down to brokers having to make it clear to consumers that their advice on coverage or price is in fact providing suggestions for how to reduce their losses, as Rowe observes.
The role of the broker
When conducting our Trusted Advisor Survey, we had to be certain our consumers and business clients were using brokers. To do this, we asked the question: “Who is your broker?” And brokers will not be surprised to learn that we had to de-select the surveys where the respondent listed their “broker,” for example, belairdirect (a direct writer) or Allstate (an agent, but not an independent broker).
Brokers in Canada have long been in the game of public education about what it means to be an “intermediary.” Over the years, they’ve run ads on Hockey Night in Canada; invested in the “Bipper” branding campaign; donated money to community charities; and advocated on behalf of their constituents in the hallways of Parliament. So what more do they have to do to help consumers understand what brokers do for a living?
Ultimately, Simpson says, the answer may lie in a society-wide financial literacy campaign. “I think if you really want to step out of the box to educate consumers, you really have to start when they are young. I think you have to start in high school and university-level age group, so that they understand where they go [to purchase insurance]…It’s really financial literacy generally that needs to be improved across the board.”
In addition, Rowe says, the battle for the hearts and minds of consumers may rest in those one-on-one conversations that brokers are having with their clients in the trenches. “The battle is really won during those front-lines conversations with clients, explaining our role as brokers in navigating the insurance markets on their behalf.”
Overall, Rowe says, “I don’t think there’s such a thing as over-communicating when we talk about what we do for our clients and the services we provide. I’m a big fan of communicating with clients about expectations. They expect us to explain coverage and to advise on loss control. There’s an opportunity here to demonstrate how great we are as brokers.”