Brokers must close perceived value gap

Respondents to Canadian Underwriter’s Trusted Advisor 2021 survey sent a clear message to brokers: many, they believe, should improve their service.

Rating on a scale of zero to ten under the category Net Promoter Score (NPS), the likelihood they would recommend their broker to a family member, friend or business colleague, only 34% of business respondents and 28% of consumer clients awarded ‘promoter’ scores of nine or ten.

Another 39% of business respondents and 45% of consumers gave ‘passive’ support – scores of seven or eight. Detractor scores from zero to six were registered by 28% of business respondents and 27% of consumers.

The NPS section of the survey is a very good measuring tool, said Adam Mitchell, president of Mitchell & Whale Insurance Brokers Ltd. in Whitby, Ont.

“You really want nine and ten scores to indicate clients are completely satisfied. Otherwise, there’s a lot of room for improvement,” he added.

Based on those criteria, Mitchell noted, brokers need to significantly improve service to 66% of business clients and to 72% of consumers, “This is relatively bad news for brokers and brokers should be thankful for the opportunity to improve on this,” he said.

New strategies can help change perceptions

To improve on the detractor perceptions held by a significant minority of clients, “my view is that the days of the generalist broker, where they are going to serve every type of customer, are numbered,” said Danish Yusuf, founder and CEO of Zensurance Inc. in Toronto.

“Brokers have to pick a segment to specialize in, and really understand their customer base as to what they truly value,” he added. “Adding more value is the only way smaller brokers are going to be able to compete in a world where large, highly automated providers can offer great insurance policies for cheaper given they have the advantage of scale.”

A plurality of those who provided detractor scores, including 37% of business clients (up from 22% in 2020) and 29% of personal clients (up from 22% in 2020), gave the amalgamated description “not satisfied with services/broker/lack of communication/unprofessional” as their main reason.

This shows “the people that were previously dissatisfied deepened their dissatisfaction,” said Mitchell.

A significant number of detractor scorers also suggested they believe the service they receive is mediocre. The description, “Good but not great/average/same as others/no difference,” was noted by 12% of business respondents (the same as in 2020), but by 23% of personal clients (more than double 2020’s 11%).

“I think the challenge for the insurance industry overall and brokers in particular is to differentiate ourselves,” said Yusuf. “We have to up our game to not just be the fastest to get clients the best insurance package. We also have to think of ways to add more value to customers beyond the insurance policy.”

Adding value beyond price

For example, he noted some U.S. insurance providers are delivering home insurance policies that provide incentives and recommendations to improve home security, such as a backwater valve, a sump pump or surveillance cameras.

Some will also arrange for an annual or semi-annual inspection of water pipes as a preventative measure.

“That not only reduces the chance of a claim, but if a claim were to happen perhaps the severity could be less,” Yusuf explained.

While certain negative factors like the current hard market are beyond the broker’s control, there are things they can do to improve their scores, especially in terms of how quickly and accurately they communicate with clients, said Mitchell.

“We’re working on responding to clients’ needs, making sure that the wait time and availability of our team are optimized. We’re making big investments in technology, both for the clients’ as well as for our team’s convenience,” he added. “The other big investment on our side is on education and training to help us continue to strengthen the experiences we create for our clients.”

Yusuf added, “Our target customers are small business owners,” and noted his clients’ needs include convenience, transparency, speed, choice, communication and competitive pricing.

As a result, his firm has made a significant investment in its technology platform “to make our brokers super efficient and able to work from anywhere, and to respond quickly.

“That’s how we choose to differentiate ourselves. Our goal is for the machines to do all of the data entry, the paperwork, the document issuance – so that our people focus on advising our customers. Good coverage is table stakes, but trust, speed and tailored advice is a differentiator,” he stressed.

Glimmers of light in the survey

Mitchell noted the NPS for business clients in 2021, calculated by adding the promoter score and subtracting the detractor score, was six, representing a seven-point improvement over 2020, when the promoter score was minus one.

“To move that needle during these times is good. This has been a really hard insurance marketplace for business clients. Not many businesses are saving money or getting better coverage on their commercial insurance right now,” he said.

Feature image by iStock.com/Olivier Le Moal