Brokers ought to be the trusted adviser but are rated so low?
There is clearly a disconnect with the public’s perception of insurance brokers and the vast majority of brokers that I deal with who deserve the title of trusted adviser.
Why? There are two key reasons.
- Having the right insurance protection is so important when a claim occurs. Price does not enter into it at this point. It is the quality of the coverage, the financial strength rating of the insurer and the claims service.
- General Insurance has arguably the most difficult product range in the world. I have been a student of general insurance for over 40 years and I do not know it all. A business owner or financial controller simply does not know what they do not know.
I genuinely believe that the insurance policies that a business owner signs up for are the most important contracts that they enter into in their business life. They are there to protect:
- the assets of the business;
- the net profit and on-ging business expenses of the business;
- the personal liabiltiy of the directors and officers of the organisation;
- the investment made by the shareholders;
- the mortgage and personal guarantees given to any financier and or landlord;
- the jobs and lifestyles of the employees and others that rely on the business for employment; and in some cases
- the community in which the business operates.
- it can also be the reason for getting out of bed in the morning for many SME business owners
With so much at stake, the area being so complex and most Insureds not knowing what they do not know till it is too late, the importance of the insurance broker cannot be over stated. To me they are as important to the organisation as the lawyer or accountant. (I say this as an accountant myself).
As such everything that the lawyers and accountants are told, should be told to the insurance broker as a trusted adviser so that the risks can be fully understood and through risk management minimised or avoided or if need be transferred from the organisation and or its shareholders and management to an insurer (a good quality insurer that will genuinely protect them).
Without wishing to offend any financial planner, I see the role of the general insurance broker as just as if not more important to the business and it owners, management and staff.
I know that NIBA share this view and this is one of their key initiatives according to their 2012 Annual Report and I applaud the board and the executive on this.
When you look at the Financial Ombudsmen Service’s (“FOS”) statistics it is clear that very few disputes (around 1.6%) reported to FOS involve brokers and when they are, just over half are found in favour of the broker. When you consider the millions of insurance contracts being handled by brokers each year to have less than 200 disputes demonstrates that as professionals they do a great job.
So why the bad image. I think it is tied up with all the bad press that the insurance industry in general has received over the past few years starting with the Brisbane Floods and culminating with the appalling Shonky Award of Choice Magazine. Politicians and the media have had a field day and even today on the news on the way in Prof. Allan Fels was speaking of huge fines on insurers who try and wrought the removal of the Fire Service Levy. As it is most insurers have removed the FSL a full 2 months before the end date. The Victorian Government on the other hand are themselves still charging FSL to overseas insurers writing risks in Victoria.
For some time I have suggested that a proper media campaign is considered. If you compare the way accountants were regarded say 10 years ago to today. On this same list, accountants out rank lawyers. This change in perception of a dull and boring profession occurred in the main due to a quality media campaign run by the CPAs.
The question remains in my mind, is this something that brokers should do in isolation or should brand insurance be improved first by a campaign funded by all facets of the industry?