C-Suite: How to ensure value beats price

The commercial lines market is a contrary one. Brokers and their clients have diverse and complex needs, yet the buying decision too often comes down to price and little else. That’s not consistent with being a valued profession. But what can insurers do to change this?

First, we need to recognise not all brokers are the same. There are those brokers who invest their time in really understanding their clients’ businesses and their specific requirements. In responding to those brokers, insurers have great insight to work with and can tailor their response to provide a proposition that really hits the mark in terms of meeting clients’ specific needs.

Brokers and insurers working together in this way is consistent with being a valued profession, which is a very different scenario from working with the broker who is simply pitching opportunistically on price. So as an insurer, before asking the broker ‘what’s your target premium?’, perhaps we should remember that if you win on price, you also lose on price.

Second, insurers need to ask why they provide quotes for the same client to competing brokers. Why work hard with the broker who has taken the time to gather that insight, and put together a targeted proposition, to then hand it on a plate to another broker who may only have a fraction of that insight? Such an approach simply devalues both broking and underwriting, and we can hardly complain if the client then makes a decision based on the easiest comparable element – price.

From my perspective, the answer here is to work exclusively with brokers, more often. If a broker has concluded an insurer’s proposition is right for their client, and has recommended that insurer to their client, they should be able to do so knowing that the insurer’s terms will not be available to any other broker, even if the outcome is that another broker is subsequently appointed.

For insurers, that inevitably means there will be occasions when they will miss out on writing some business. Clearly the pressure of hitting top-line targets may make such an approach appear to be a brave one, but in the long run, quality brokers need to have confidence in the insurers they are working with for those relationships to succeed.

If brokers and insurers worked exclusively more often, then it is also just possible that clients would see more of the value that we have to offer and rely less on price.

Simon Cooter
Commercial lines director, Covea 

This article was published in the 21 November edition of Post