Insurance is all about risk – but what are brokers doing tactically to ensure clients are well-educated on risks related to natural disasters? Are brokers doing enough to fully explain what the insurance policy does and doesn’t cover?
“Brokers should be opening a dialogue with their clients to ensure they are well educated on risks related to natural disasters, and in general, discuss what is and is not covered by their insurance policy,” says Jay Sproule, the owner of Sproule Insurance in Calgary, Alta. “There are direct and indirect opportunities for brokers to educate clients. Tactically, direct communication with a client is always the most effective form of educating clients. Pitfalls of direct communication include frequency of contact with the client and ensuring the broker/staff is using the time effectively to discuss relevant topics.”
Opportunities to open a discussion can present themselves at any time, whether it is when a new policy is being put together, an existing coverage is revisited, or through the constant contact that the internet has made so much easier.
“At the time a new policy is obtained, an existing policy is renewed, or at the time a claim is made, brokers can use these direct opportunities to educate the client about a policy,” says Sproule. “Use the face time to talk about insurance, and create a conversation, rather than simply processing a transaction. Indirectly, brokers can use ‘customer touches’ to keep an ongoing connection with their clients, blogging about particular policy features, benefits, exclusions and changes, direct mail outs, emails, newsletters, or using social media in an attempt to get the client to engage.” (continued.)
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Making mistakes is part of putting together a policy. Recognizing where those potential pitfalls are can be crucial to ensuring the client receives the proper coverage, without getting caught up in the game of pricing that usually occurs in the sales process.
“When brokers explain an insurance policy, they tend to slip up in usual areas,” says Sproule. “I think brokers do a good job explaining to their client what a policy covers, especially at the time of sale. It feels good to tell a client all the perils and types of coverage included in an insurance policy. However, little time is spent explaining exclusions and conditions of a policy even though it’s probably the most important thing to do. Price and policy features tend to rule the sales process.”
A commonplace error can creep into a policy when amendments and subamendments are introduced to an existing policy.
“Policy coverage changes and the introduction of sub limits or other limitations of coverage on renewal can become an issue if it is not properly explained to a client,” says Sproule. “Each broker needs to develop a process to ensure these amendments are properly relayed to their clients, whether by direct email alert, a phone call, or a direct mail out.”
He also points out that brokers also have difficulty explaining a policy when they don’t fully understand their clients' risk exposures and insurance needs. (continued.)
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“Often times, coverage for a particular peril is available but the broker may not know the client needs the coverage, or the client is unaware the coverage is available,” Sproule adds.
Explaining an insurance policy is a time consuming process, and brokers cannot rush the process – even if the client is pushing for a ‘quickie’ that inevitably leaves both parties unsatisfied with the coverage.
“Communicating policy details and properly explaining an insurance policy breaks down when a client requires coverage quickly, or when a client believes insurance is a necessary evil,” says Sproule. “Sometimes, as a broker, I have to decide whether taking on one of these clients is a good idea. Sometimes, getting a client to hear what you’re saying, means choosing the right client.
Navigating a policy can be daunting, so it is very important that the broker clearly and carefully explain the coverage to a client.
“Generally speaking, the language used for policy wordings is reasonably clear. But there are instances where wordings can be ambiguous, confusing, or unclear, but it’s our job to assist the client when that issue arises,” he points out. “Policy wordings can be cumbersome and hundreds of pages in length, or wordings booklets can have multiple policy forms outlined within them, and I find some clients just need assistance navigating the policy.”
Sproule believes educating the general public about insurance is a shared responsibility, internally with our broker colleagues, and externally with our clients. (continued.)
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“We are competing with each other on various levels but I think we can all benefit from an informed consumer. Some insurers have taken the initiative to use their marketing campaigns as educational opportunities rather than direct selling ads,” says Sproule. “I think brokers have the ability to do the same. Aren’t we all tired of hearing price based marketing from brokers? Aren’t we an advice-based business? Indeed brokers should do a better job networking with one another to share other ways to inform all our clients about insurance. Spending shared broker resources and information with one another, educating existing and future clients, will ultimately attract the advice based consumers our broker brand needs.”
With the debate over mandatory overland flood insurance once again on the front burner, especially in the public eye, brokers need to tread carefully when offering coverage on this particular risk, or on the increased danger posed by wind and hail.
“Determining what types of coverage should be included as part of a standard offer can by a tricky subject. If you look at overland flood coverage, a large portion of the population doesn’t need, or wouldn’t purchase that type of coverage if offered,” says Sproule. “Cost too becomes a concern as premiums are already climbing dramatically from natural disasters that are covered, like the catastrophic hail, wind, and sewer backup claims we’ve seen in Alberta over the last few years.”
Sproule believes that brokers need to rethink how they are communicating with clients, with better focus and purpose.
“I genuinely think brokers are good teachers, but we spend so much time on other aspects of our complicated business,” says Sproule. “We need to make a shift. We are in a relationship, advice-based business, and should be building authentic connections with our clients with advice, information, and education.”
