[heading type=”h1 to h6″ margintop=”28px” marginbottom=”28px” bordered=”yes or no” align=”eg. left/right/center”]The Key 2 Retention[/heading]
Most Insurance Brokers have excellent client retention rates, a large proportion of this is due to the quality service they provide and the close relationships they have with their clients.
Additional major factors include technical practices and restrictions in the insurance market which allow the incumbent broker to gain huge advantages in sourcing the best price from the market, and even when beaten, the state of the soft market is such that the incumbent insurer, if working in a sector they are strong in, and where they wish to maintain or expand their market share, will likely match or reduce the renewal premium accordingly.
Then there is of course the ‘buying psychology’ of businesses, especially amongst the general SME market, with many seeing insurance as a ‘grudge purchase’ or ‘necessary evil.’ This encourages a certain apathy when purchasing insurance. It is simply easier to stay where you are.
With the recession squeezing budgets many businesses however are looking to save money on their insurances, and we have found that the simple practice of sending off last year’s documents to many brokers without engaging in a full and frank review of the inherent risks in the business is worryingly common. This is supported by the findings of Mactivish and PWC who claim that 65% of insurance buyers do not review the materials used to place their insurances. The intention of many of these companies appears to be just keeping their broker honest. With the technical advantages and existing relationships in place, we rarely see new business picked up this way.
To read our report on ‘Three Reasons Why Your Prospects Don’t Buy (And What to do About it)’, click here.
[heading type=”h1 to h6″ margintop=”28px” marginbottom=”28px” bordered=”yes or no” align=”eg. left/right/center”]Win on Service, Keep on Service[/heading]
Logically winning business on price increases your chances of losing that business on price in the next few years, especially if they habitually tender the market for brokers every year.
The Key to the retention of profitable new business is quite simple, win business on service and value, (at a price which enables you to provide a quality service), and not on price alone.
The PWC Mactavish report, produced in early 2011, suggests that buyers choose their broker first, and then look to secure the best price from the market, not the other way around.
With the Insurance Accelerator Product at the The Key 2 Growth we are working alongside selected partners to portray the importance and value to businesses of purchasing the correct insurance covers, encouraging mid-term appointments and over time, increasing the number of prospects appointing our partner as their broker before receiving a quotation. This is all due to the value our partners provide in helping businesses understand and more accurately assess their risks.
[heading type=”h1 to h6″ margintop=”28px” marginbottom=”28px” bordered=”yes or no” align=”eg. left/right/center”]Retention Strategy[/heading]
We understand that most Insurance Brokers do not currently have any major issues with their client retention rates, however with many significant figures in the industry hailing organic growth as the way forwards, and with the aggregators eating their way into the low premium commercial market, some are perhaps rightly concerned that Insurance Brokers are about to feel a squeeze of their own (if they are not already!)
We suggest a structured program of year round client engagement combined with building a strong pipeline of nurtured prospects, who after initially regarding you as their ‘first reserve’, will gradually come to see you as their preferred broker due to the additional service and value you provide.