Media - Selling Underinsurance
This title, one hopes, is recognised as an oxymoron. The reason for using it is that a typical renewal process can actually fuel the risk of underinsurance.
Every broker is aware how often price is “king” in the renewal process. Despite the entirely correct blandishments of the luminaries in our industry that “price is what you pay and value is what you get” every broker knows that it may also be expected to get the cheapest renewal insurance, come what may.
During that renewal process the typical Insured’s mind is bent upon price, price and price. No matter what intelligent observations about cover and value and sufficiency of sums insured or limits of indemnity that a prudent and expert broker may make at the time, the fact is that very often it is just the price that the customer is looking out for.
Accordingly, any suggestion that sums insured should be reviewed brings with it the implication that the price may go up as a result. That is not what the insured wants to hear and so it is only too easy to go into denial or even to cross the threshold into unconscious mis-representation, in order to keep the conversation on price, alone. That puts the broker at risk of unintentionally “selling under insurance”.
So what can the broker do?
The answer is not any easy one to accommodate but it might turn out to be the beginning of the “renaissance” of the professional insurance broker.
Make an appointment within one month of renewal to revisit the Insured and thoroughly review their insurance demands and needs. Having achieved the “cheapest” renewal and retained the business any enhancements and increases that are now required will be based upon the best price available only a month before.
It is a separation of transaction from advice and is not the normal business model for insurance broking but it may be the smartest move you have ever made.
This is the time to talk about business continuity, disaster recovery and all the things that we typically try to cram into a renewal meeting when the key issue is price. If the broker is bold enough to negotiate an additional fee for an annual demands and needs review, which is utterly justifiable because it is your core expertise, then the value of your service can be enhanced manifold. Think on it.
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