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Financial Advisers
Monday, March 1, 2010
Back to classics

Hard-pressed consumers can look for help from at least one champion in 2010 – the insurance broker committed to the classic, service-led intermediary model.
The forecast comes from
A return to the classic broker model is overdue, at least according to First National Bank Insurance Brokers (FNBIB).
Chief executive officer, Johan Nagel, sees a comeback of brokers “who use personal service and customised risk profiling as key differentiators in an increasingly challenging market.”
He adds, “Personal service through a single point of contact will replace impersonal processes. Credible and personal relationships will underpin growth at broker businesses with the confidence, talent and systems needed to drive a return to broker basics.”
Nagel believes the year will be characterised by smart, price-efficient solutions, though price will not be the sole determinant of success as “personal service will be the key differentiator.”
Brokers able to unlock synergies and economies of scale are particularly well positioned.
Nagel explains, “Consumers understand issues like economies of scale and the benefits that accrue through synergies across a broader portfolio of financial products. Brokers able to offer affinity-based solutions across a bigger basket of financial products and services will secure competitive advantage. The proviso is that bigger has to mean better service as well as better pricing.
“Service-led brokers able to play in the affinity-solution space are also positioned for growth.”
He predicts that the underwriting of blocks of business will increasingly be replaced by individual rating and pricing; a welcome trend for cash-strapped consumers. Those with good claims records can also expect to benefit as brokers and insurance once again ‘get personal’.
Nagel adds, “Only well-resourced brokers with superior systems will be able to meet these demands. This helps to explain our urgent implementation of state-of-the-art systems in the first quarter of the year.”
The emphasis on service will encourage brokers to “stop playing the direct insurers at their own game.”
He explains, “Direct insurers play a single-minded pricing game. Brokers have to up their own game by using risk management and customised risk profiling to deliver price efficiency plus personalised service. Price-sensitive consumers with a superior claims record will expect to be rewarded.
“Fundamental affordability challenges can only be met by business models that deliver a compelling combination of competitive pricing and superior, highly personal service – a pro-consumer scenario if ever there was one.”

Copyright © Insurance Times and Investments® Vol:23.3 1st March, 2010
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