Processes are in place, staff are trained and culture has been considered. You are aiming for best practice, but are your clients actually experiencing this? The perspective offered by consumer advocates is an invaluable resource.
Regular meetings with consumer advocates to discuss issues affecting those who deal with insurance brokers are an integral part of the work done by the independent body that monitors the Insurance Brokers Code of Practice (the Code).
The insights and practical examples provided by multiple consumer advocate groups inform monitoring activities and help shape the focus of the Insurance Brokers Code Compliance Committee (the Committee). There is no better reflection of the practical outcome of culture and behaviours than the experience of real clients with complex and unique needs.
Brokers are in the business of helping consumers to make the best decisions about their insurance – it makes sense to consider the perspective from the other side of the desk or phone.
In the most recent consultations with representatives from consumer advocates, a number of issues were addressed. The Committee urges subscribers to consider these real-life issues and the changes you could implement to address them.
Improve your communication
- When explaining situations, brokers often use legal and insurance jargon that is hard to understand. Do not simply repeat the language in policy wordings, use plain English.
- Ensure conversations are of sufficient depth that clients fully understand both what they are covered and not covered for.
- Whilst many clients may be seeking the lowest price it is important for brokers to outline the value that may be in higher cost alternatives. With this in mind, it is vital they understand the impact of underinsurance or not taking certain cover. Explain this clearly, using examples if necessary, i.e. If they insure something for $1,000 which is valued at $2,000, they might not get $1,000 for a total claim but only 50% of that claim as they are underinsured by 50%; a $1,000 claim might get settled for $500.
- Some consumers may see insurance as a grudge purchase, and no-one wants to overpay, but clients are often unaware of a risk until a loss occurs. The broker has an important role in helping clients understand what is in the insurance policy.
- Be sure to follow up with clear written confirmation especially where you believe the client is making an unwise decision.
Personal relationships can be a drawback
Insurance brokers have a close relationship with their clients, particularly in rural and regional areas. While this brings many positives, clients can mistakenly assume a broker understands their business and situation, even though it is not fully discussed. Be aware of situations that may lead to this assumption, including:
- an expectation from the beginning that the broker knows everything about them
- that initial conversations or visits might seem more informative or instructive than they are (i.e. in one case, a broker had visited a property, but the consumer was still underinsured), and
- that the full details of a claim can be misunderstood by a client in the familiar “back and forth” of short informal emails.
Brokers can and should help in many areas of claims assistance
- Review how the insurer addresses a claim, consider all the arguments. The broker has, after all, received a fee from its client to act on their behalf. There is often room for negotiation and choice including, for instance, in the use of loss assessors. Brokers can work with insurers to agree on a loss assessor.
- Acknowledge and review all feedback because there is a chance that a complaint against the insurer might develop into a complaint against you. Understand the line between behaving with decency and admitting liability.
- Insurance brokers should assist clients with disputes, including when they are taken to the Australian Financial Complaints Authority (AFCA). When they do, communication is critical. What does the client want, what is at issue, how can they help achieve this?
E.g. In one case, a broker accepted an AFCA determination of value without consulting the client. The client had wanted their written-off car back to support the disputed valuation (it might have had a full petrol tank, special tyres, modifications that would affect the pay-out) but the insurer had already repossessed the car and crushed it.
Good file notes help everyone
Keeping detailed file notes are essential if you want to assert what has happened in the past. If something is not in the file notes, you will lose the argument. It also makes sense to advise your clients to keep their own file notes about what the broker has told them to do.
Listen and learn
The financial services industry is a complex, evolving one and the people and businesses who use it bring their own expectations, requirements and situations to the mix – the scope for assumptions and misunderstandings on both sides of the relationship is high. Insurance broking firms can have the best intentions, but if you do not actively engage and respond to feedback from consumers and those who advocate for them, you are only seeing part of the picture.