Brokers or Intermediaries receive a commission for their
services rendered to clients.
With the adoption of recent legislation in terms of the Short term insurance
Act, Brokers are now required to disclose any additional fees charged as well
as getting the client to sign a separate
agreement called “ consent to Broker fee”.
Although 40% of Domestic personal Lines business is written
Direct, which means clients prefer to go Direct to the Insurers and self-
manage their own portfolio’s in efforts to save money. The downside to this
method is that clients take on the risk by assuming the role of their own
Broker, so you need to have fair knowledge of the Insurance Market.
60% of consumers still believe in the value they receive from an Insurance
Broker, so let’s look into the role and function of a Broker and how much extra
they do in terms of adding value to the market place.
South African short-term
insurance Brokers play an integral role as go-betweens, between Insurers and
policyholders during times of crisis as well as adding tremendous value in the
insurance distribution process.
Brokers assist personal lines consumers by explaining the types of cover
available and ensuring that all the risks identified during the risk needs
analysis are on cover. Brokers also assist clients by explaining the terms and
conditions in their policy wordings; ensuring that assets are insured at the
correct value (the sum insured); and that the Insurer’s risk mitigation
requirements are met. A record of advice always follows a new contract of
insurance which helps educate the policyholder, making him/her aware of terms,
conditions, exclusions that would apply, that they need to be aware of. This
added advice will highlight cover not selected; that would expose the client,
giving them an opportunity to bridge the gap.
A short-term Insurance broker will interact with his or her
clients on an ongoing basis by conducting annual policy reviews; making changes
to the policy at the client’s request; and offering support following a loss
event, by assisting with submission of a claim and liaising with insurers if
difficulties arise.
Technology on the other hand is changing the world of
insurance and insurance distribution.
Short Term Insurance Brokers face an ongoing struggle to ensure that their
systems meet the evolving needs of the Millennial and subsequent consumer
generation.
To do this they must offer clients affordable, flexible, and transparent access
to their insurance portfolios and be available to clients 24/7 and in real
time.
The integration of technology into a modern short-term
insurance brokerage begins with easy wins such as optimized website design and
the application of social media to assist with marketing and client servicing
functions.
ES Brokers is grateful for the relationships they have built
between their clients and insurers.
It is this very relationship that afforded us the
opportunity to pass a reduction in premiums to all our policyholders during the
COVID lockdown crisis, in times when financial assistance was needed most.
(without compromising/reducing clients cover). Again this is yet another
example of the benefits of having a Broker.
In spite of regulatory changes, COVID 19 pandemic and
subsequent National lockdown as well as Direct competition, on line Avatar
services, Bots, AI technology etc, client’s still find the value in human interaction
and the need for Brokers , especially at times when emotional support is
necessary.
Article
written by Andrew Ensor-Smith , managing member of ES Brokers
written on 9 October 2020
(information source- Graduate institute of financial sciences)