"Short-term brokers who add sufficient value should share in the underwriting profits of the insurer. Furthermore, brokers can cut their operational costs by as much as 40% by utilising available insurance intelligence and management methodology," says Managing Director of Dex Group Financial Services, Nick de Villiers.
According to De Villiers, short-term insurance in SA is at a watershed. De Villiers has been involved in the insurance industry for the past 25 years and says the most important changes in this period were the emergence of direct insurers and the FAIS regulation. It brought positive pressure to bear upon insurers and brokers to reposition themselves and rise above the rest in a creative way.
"To do business successfully in the current competitive market requires a more cost-effective approach in particular," says De Villiers. Brokers must gain control over their own business.
If a broker wants to run his business in a cost-effective way, it is imperative to offer the best possible service at the lowest possible cost. This implies that the policy has to be issued correctly the first time. In order to be cost-effective and render better service as well, Dex`s technology and management methodology offer brokers a comprehensive online process. All products of the various insurers and computer systems are integrated with the Dex technology and management methodology.
This online process allows brokers to quote, accept/reject, issue and send the policy to the insured, handle the policy for amendments, and manage and monitor the policy when a claim is filed. Even the progress of the assessor can be monitored online by the relevant broker. This comprehensive process brings along a saving of up to 40% in operational cost.
The broker communicates with only one body - from the moment the policy is issued, right through, to and including claims and report-back.
Acknowledge, reward brokers who rise above the rest
"Short-term insurance brokers can now increase their turnover by as much as 25% by sharing the underwriting profit with insurers. On a premium book of R12 million, the broker`s share amounts to at least R300 000, while he needn`t even sell one extra policy."
Dex is strongly in favour of short-term brokers - who run their business better than others and who do more than is required of them - sharing in the underwriting profit of insurers. Dex has already arranged with various insurers to share their profit with Dex-linked brokers.
"This unique relationship acknowledges the fact that the broker is an entrepreneur who has built and grown his business," says De Villiers. "It is in effect the first time that the broker is in full control of the total scope of his service, and therefore it makes sense that the smart broker shares in the underwriting profit."
De Villiers says in terms of the law, brokers are now qualified financial advisors (FAIS) who render a high level of professional service. They are required to tout clients, service and retain them. If, in addition, a broker manages the entire process exceptionally well and effectively, he ought be rewarded accordingly.
It appears that Dex`s comprehensive online approach has caused quite a stir in the insurance industry. "Many of the established insurers can`t allow brokers to share in the profit as it would bring them in conflict with their share-holders," says De Villiers.
Because Dex has refined its management methodology - integrated with its information technology systems - over the years, it is in a position to make this exceptional offer to brokers. It simply boils down to the well-known Dex VBM^2 principle, which is based on perfecting volume business management methodology. In short, it means that Dex supplies the insurance intelligence i.r.o. the management of portfolios to maximise the broker`s profit.
According to De Villiers this new, different business relationship with the insurer will automatically lead to greater loyalty and a more stable portfolio. The broker now accepts co-responsibility and shares in the successes and failures of the insurer.
Over the years, Dex has supported brokers with information technology and management skills. The logical consequence of this was the establishment of the Claims Company, the latest addition to the Dex family, which completed the circle of all insurance components with claims settlement. It comprises a comprehensive administrative, financial and claims component which limits reversal times to a minimum and elevates service to a new, dynamic level. Paperwork is limited and staff can focus much more on service and sales.
"Don`t compare apples to pumpkins"
Retaining clients and good business depends on a good, personal relationship with the client. "That`s why it`s impossible for the direct seller of insurance to build the same kind of personal relationship with a client," says De Villiers.
The fight between the direct seller and the broker is like comparing apples to pumpkins. A broker also offers his clients the opportunity to choose from a variety of insurance products, while the direct insurer has to sell his own product only. Surely that could never be considered to be objective and "the best product for the individual concerned"?
The direct insurer replaces the so-called middle mechanism with an advertising mechanism. "Whereas the broker adds value through his service, the advertisement of the direct insurer doesn`t add a single drop of value," says De Villiers.
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