It has seemed a cut and dry conclusion for many years now – the personal lines insurance market is a battlefield long since ceded by insurance brokers to the opposing forces of enigmatic meerkats, confused consumers and financially savvy ‘specialists’.
The rise of price comparison websites and direct insurance providers, and the shift in expectations that has refocused the lens of consumer expectations on a price over advice model in personal lines insurance has long been taken as a warning to the wider insurance broking market. Commercial lines insurance brokers have heeded this warning and the best among them have applied it to their own business models and professional practices – proving the adage that while the wise man learns from his mistakes, the genius learns from the mistakes of others.
Many of those personal lines-orientated brokers that once dotted the streets of towns and villages of the UK did make mistakes when it came to customer communication and experience, and these were compounded by a rapidly evolving consumer market. This has been reflected in the staggering decrease in brokers that the UK has seen over the last three decades or so.
They’re down, there’s no doubt about it, but are personal lines insurance brokers really out for the count? As expressed by Charles de Gaulle, to lose the battle is not to lose the war and now, with so much change in the air for the insurance profession generally, it seems everything is and should be up for debate.
I freely submit that my evidence for the potential resurgence of the personal lines insurance broker is anecdotal at best. It is a by-product of the expanding echo chamber of individuals who are equal parts frustrated and bemused by the newly-found complexities of navigating seemingly simple coverage in an era of hybrid-working, ‘shoffices’ and electric vehicle coverage.
Reckoning with the full implications of the Financial Conduct Authority (FCA)’s business interruption insurance test case is key to understanding these surging frustrations. Today saw the publication of the FCA’s October update on the claims data linked to the case, which found that final settlements have been agreed and paid for over 24,000 claims.
Insurance companies have made significant and impressive headway in the pay-out process, but the fact remains – tens of thousands of policyholders had to await the ruling of a court to see their claims paid and thousands more are still waiting. For those policyholders affected, their opinion of the insurance profession is likely to have changed irrevocably.
And it’s not just the business owners who have seen first-hand the implications of not being certain what your policy covers, it has had a trickle-down effect on every employee at every business affected. Waiting for months while a court decides whether or not there will be a business for you to return to when restrictions are lifted has been an eye-opening experience for many and, it seems to me, a logical conclusion that a renewed understanding of the critical nature of insurance coverage – the right insurance coverage – may well follow.
Enter, stage left, personal lines insurance brokers, but only if they are primed and ready to seize this newfound occasion to prove the value proposition of their impartial advice, product expertise and strong industry relationships. The challenge that is (re)building trust in the insurance profession is matched by the opportunity to (re)introduce personal-lines policyholders to what it means to have a broker on your side.
Tipping the balance will come down to the professionalism displayed by brokers, and the time for more firms to embrace the ‘badge of honour’ that is the Chartered status is well and truly upon us. Working alongside this ever-rising need for professionalism is the call for brokers to actively work in collaboration against threats to their reputation. An example that has been in the news quite a bit recently is that of ghost broking, and brokers need to lead the charge in helping consumers understand how to protect themselves against threat actors.
Brokers working in the personal lines space must also actively fight against the mistakes made in the past – of interacting with customers only at the time of renewal and only through limited communication channels. Technology has moved on so much, especially in recent years, and now there is no excuse for brokers not to promote an omnichannel customer experience and to exclusively contact clients in the way they wish to be contacted. Telephony, online chat, social media platforms, and the like are more accessibly than ever which needs to be reflected across firms of every size.
The beacon of opportunity has been lit for insurance brokers working in personal lines who have something new to say and I believe the times really are changing – because there’s a whole new market out there who are willing, albeit tentatively, to open up that conversation.
