Look at insurance in the round and be CONSULTATIVE . Insurance purchase is and should be the last part of a much broader discussion that ultimately informs how much insurance should or should not be bought by a client. All too often this is not the case and the default position is to sell quicker, faster and cheaper insurance .I’ve seen clients relax and visibly get engaged more when they realise that they are not just being pushed towards insurance purchase. I have dealt with many commercial clients over the years (most recently I was Lockton’s Marketing Director) and even for some larger corporates the common denominator is that they don’t actually have a measured and scientific understanding of why they buy the insurance they do. At times the insurance industry is guilty of jumping straight to the prescription stage (would you use a doctor that behaved like this?), which invariably means setting about the task of delivering cheaper insurance. Value in this process is ultimately lost and as an industry, that at times, seems fixated on selling on price we scratch our heads and wonder why clients are often promiscuous?

Why should it be that unlike nearly any other investment a company makes (human capital, machinery, premises, cars etc) when it comes to insurance that the ‘cheapest deal gets it?’ It’s because we don’t sell and clearly articulate ourselves so that we are seen as professionals who add demonstrable ‘value’.

Think of any luxury/lifestyle brand – they would all be out of business if they sold merely on price. When you buy a BMW you know that you are paying a premium for a quality car. Why ? Because the people at BMW go to great lengths to deliver a great product and constantly remind you about the value /benefits of owning one.

I believe that clients have been taught to think that price is all important . The industry has taught them that price is king (all commercial buyers after all have see the personal lines insurers on TV behaving this way).

My rather simplistic approach is not the subject of some untried and untested theory. I’ve used it to very good effect. Here’s a brief case study:

Simple and alternative value proposition

The situation - a mid-sized City of London based asset management company invited my company and 6 other leading brokers to pitch for their business. They had a reasonable relationship with their current broker. They shared minimal information and yet wanted definitive pricing and detail. The focusing was on cost. With so many brokers competing we would normally have declined to participate. We knew we didn’t have enough information to be able to dispense good, solid, reliable advice. We werenot confident (nor should any of competitors have been) about the efficacy of any suggestions we would potentially make. Wedidn’t know enough.

What we did:

• We determined to be different , have fun and adopt a ‘we’re got nothing to lose attitude’

• We calculated that all of the other brokers would assume their usual default positions – complying to letter of the client request (even though the process was flawed), get into intimate detail about policy wordings, programme structures and most of all talk about how they could save money and make it cheaper.

• We requested that we be allowed to present first (vitally important). This allowed us to ask some straight questions and plant seeds of doubt in the prospects mind about the other 6 broker suitors they were seeing that day .

• We credentialed ourselves

• We presented them with one piece of paper (see next slide) and then proceeded to outline our thoughts. We dared to ask some obvious questions (there are many other we could have asked):

– How do you evaluate risk in your business?

– How do know how much insurance to buy?

– What credits are you getting back from insurers to recognise the risk management procedures you have in place that have undoubtedly cost your business money?

– How do you know your current arrangements will perform if your current brokers haven’t factored in all of steps that happen before the decision to buy insurance is made?

Outcome - As analytical people there was little for the prospect to disagree with. They liked the approach and appointed us the following day. We discoved we were not the cheapest .

Simple and alternative value propositionCase study

A very simple value proposition

Business Strategy

Risk Management Strategy and Compliance

Risk analysis, appetite and

Plan

Risk Management Framework

Many insurance advisers fall into the trap of starting the conversation here. This is the last place to start it as everything that happens further up the line directly impacts how much or how little insurance a client might ultimately need.

Start the conversation here and take the client through the process

Paul Handleighpaul@youtalk-insurance.com