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A leading figure in the insurance space has called on brokers to discuss rising levies and reinsurance with their clients, saying a greater understanding would benefit everyone in the industry.
“Most people genuinely don’t know what costs an insurance company actually has to incur when they sell a policy,” says Richard Deakin, head of insurance sales at CoreLogic.
“They look at the bottom line of the premium renewal when it drops in the letter box, they see it’s risen and they think the insurer is just gouging and trying to maximise profits.”
What they don’t necessarily see, he argues, is the rising cost of reinsurance as well as large overheads and obligatory levies imposed on insurers.
“As an industry, I think we’re not doing enough to educate end users and help them really understand the costs that are going into the product,” he tells Insurance Business.
“It’s not about creating sympathy or trying to find an excuse for rising prices – I don’t think anyone’s going to get the violins out for any part of the financial services industry – but I do think there’s an opportunity to explain to consumers where their money is going and if we can do that, they’re more likely to trust you and become loyal.”
Helping consumers develop that understanding is also a way for brokers to differentiate themselves and deliver greater value add, says Deakin.
“As a broker in a changing market, where there is a lot of direct-to-consumer activity and brokers are looking to create more value to the relationship, then providing some of that information and education could be a very good thing for brokers,” he says.
“That could well become a lot more important especially with some of those disrupters potentially trying to drive the price point down – to actually explain that it’s not just about the price, it’s about the service. Consumers could go to someone cheaper but if they’re not investing in the right level of reinsurance then that could be an issue should they need to claim in the event of a loss.”
