At its most fundamental level, relationships are the building blocks of the insurance industry. One of these key relationships is the partnership that exists between brokers and their clients – the longevity of which depends wholly on the principle of trust. For this reason, transparency is one of the most important pillars of the industry. The sector is ever-evolving, constantly changing in response to market trends and developments on the landscape of risk. But transparency will always be one of the cornerstones of how insurance products are negotiated and sold.
Navigating regulatory compliance
Transparency is not only an ethical obligation, but a central part of financial services providers’ mandate, as per the Treating Customers Fairly (TFC) principles set out by the Financial Sector Conduct Authority (FSCA). Regulated entities are expected to demonstrate their compliance with six key outcomes that govern customer service through the entire product life cycle. From product design and promotion, into the advisory and client service processes, and finally through to complaints and claims handling, financial services providers have a fiduciary duty to provide clients with clearly communicated information.
Abiding by the TFC outcomes protects the interests of end users, but it also protects the integrity of brokers and provides a foundation on which to build successful client relationships. An important part of this commitment involves disclosing commission structures and outsourcing fees upfront and within policy documentation. Providing this information from the onset goes a long way towards providing clients with the assurance that their brokers have a vested interest in ensuring that their own roles and responsibilities are adequately fulfilled.
Demystifying insurance products
Insurance policies are often complex and contain technical jargon that can be challenging for the average consumer to decipher. Information asymmetry occurs when one party possesses more information or expertise than the other, creating an imbalance in decision-making power.
Transparent practices bridge this gap by simplifying policy language, providing clear explanations, and offering easy access to relevant information. By making insurance products and processes more understandable and accessible, brokers can empower consumers to make well-informed choices and reduce the risk of misunderstandings or disputes.
Transparent policies and practices foster trust, as customers can understand the terms and conditions of their policies and are also less likely to encounter unpleasant surprises in the event of a claim. In the long-term, maintaining this level of trust is a vital contributing factor to customer loyalty, repeat business, and positive word-of-mouth referrals.
Building trust and confidence
The challenge, for those involved with the sales process, is to find ways to strike the delicate balance between time spent selling insurance products and providing the most efficient level of service. Being able to strike this balance requires much discernment in terms of the needs of individual clients, how to engage with them on the available options and how to provide them with all the information they need.
Understanding how to steer these conversations takes practice and is perfected with experience. But, when transparency at all levels is prioritised and upheld, clients are ultimately empowered to view their insurance products as crucial safeguards against risk, rather than grudge purchases.
Service after the sale
Furthermore, it can be argued that the insurance industry often faces skepticism due to a perceived lack of transparency. Brokers who actively promote transparency therefore contribute to the industry’s overall reputation and credibility. By embodying ethical practices and open communication, brokers become advocates for positive change. A collective commitment to transparency can reshape public perceptions of the insurance industry, fostering a more positive and trusting environment.
On this front, broker support can provide the much-needed after-sales service that clients need to feel heard and valued. While much has been done over the last decade to simplify complex jargon and make insurance policies more understandable to new entrants to the industry, brokers still need to intervene when clients need technical explanations and advice. Taking clients through their policy documents as a first port of call, can provide the grounds for building a relationship that could potentially last a lifetime and even extend to the next generation.
Pillars of industry
Insurance brokers act as trusted advisors who simplify the insurance selection process, provide expert guidance, and work in the best interests of their clients. They bring industry expertise, market insights, and a commitment to transparency to ensure that clients have the coverage they need to protect their assets and interests.
As an insurance broker, therefore, embracing transparency is both a business strategy and a moral obligation to serve the client’s best interests. By fostering an environment of openness and trust, insurance brokers can lead the charge towards a more transparent and reputable insurance industry.