When it comes to selecting an insurance broker, clients often default to one simple question – “how cheap a policy can they get me?”
This focus on price not only undervalues a broker’s proposition and level of expertise, but also the amount of time it takes to properly research the market and secure the best deal. So how should clients be encouraged to approach the situation from a better angle?
NZbrokers partner services manager Simon Moss says that often, a client will underestimate the broker’s role and see it purely as a money-focused transaction. He says clients should be choosing their brokers based on relationships and expertise, and not doing what clients sometimes like to do – pitting brokers against each other to see who can bring them the cheapest price.
“The fact is, a broker’s work starts with the renewal phase and negotiation with the insurer,” Moss explained.
“It moves through a 12 month period where they’re delivering broker, insurance or risk services to their client, and if a complex claim arises in that period, that will absorb even more time. The broker will complete all of that work as they should – but for just one commission amount that they’ve received at the start of the year. Clients often underestimate that, and they usually select their broker on the criteria of price only.”
“Clients also often don’t use brokers the right way,” he continued.
“They use brokers to compete with one another to achieve the best outcome for them – or, what they believe is the best outcome. What they’re actually doing is dividing the market by sending two brokers out to do a job with many insurers, and in New Zealand, that’s not a lot. They send them out to deal with many insurers when they can’t actually promise that they’ve got the work.”
Moss says that for the broker, this is simply not an influential position to be in. Clients should instead be encouraged to select a broker on the basis of the relationship that they can develop, their skills and their knowledge of the industry. That way, they have someone firmly on their side who has all the power to negotiate for what they need.
“Once you’ve selected them, send that one broker out to deal with the insurers so that they have all the power,” Moss said. “That broker can then say to the insurer, ‘I’ve got the business, give me the deal.’ That’s a far better outcome for the client.”
