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It's time to adapt to the new world of risk

It's time to adapt to the new world of risk
09-06-22 / Staff Writer

It's time to adapt to the new world of risk

Cape Town - The impact of the pandemic necessitated change in every industry. At the Sanlam Financial Confidence webinar held at the end of April, Sanlam experts and industry leaders shared their insights to help intermediaries innovate and adapt their businesses for long-term sustainability. In a post-pandemic world, ‘humanness’ matters and relationship-led advice is coming to the fore as risks accelerate and evolve. Now’s the time to have critical risk management conversations with clients.

“At an industry level, we have seen fundamental shifts over the past two years,” says Karin Muller, Executive Head: Sanlam Individual Life, Retail Affluent. “It refocused our attention on what really matters. For our clients, it was their family, health, and wellness. As insurers, it was a stark reminder of the important role we play in supporting our clients through life’s curveballs, so that they can support themselves and their loved ones.”

Just as the 2007-2008 financial crisis put a strong focus on banking and lending practices, Covid-19 forced the insurance industry to consider the changes that must be made for future sustainability. “The accelerated digital transformation was felt overnight. Client behaviour changed, including the way people want to engage with product providers and intermediaries. However, with the rise of digital came a reminder of the importance of human capital – at our core we are a people business, and the expertise of our people is more important now than ever before,” says Muller. 

Transform towards relationship-led advice 

“With R22 billion in claims in 2021 alone, we played a vital role in preventing the tragedy of Covid-19 from also turning into a financial tragedy for clients,” says Anton Gildenhuys, CEO of Sanlam Retail Affluent. “To create sustainable client relationships, we must transform towards relationship-led advice.” Andre Krause, Head of Advice and Intermediary Services (SFP) echoes this sentiment. 

The Financial Planning industry continues to evolve from being product led, towards making the client’s life the centre of the conversation, shifting from a Sales Centric Model to a Client Centric Model. 

“Changes in the financial planning industry have been accelerated by the COVID-19 pandemic and I believe the main drivers behind these shifts are the change in clients’ needs and the array of choices they have available, as well as legislative and regulatory changes. For intermediaries, one of the biggest opportunities is understanding how to frame risk conversations in a way that resonates with Covid-fatigued clients. The adviser’s role is changing to include a stronger emphasis on coaching and advice. Right now, empathy and reassurance really matter,” says Krause. 

Now is the time to have risk conversations with clients 

Customer Experience Manager at Swiss Re Europe and SA, Nick Clifton says there has never been a better time to have these conversations. Using behavioural biases, Clifton shares 5 strategies to have more constructive risk conversations with clients by showing them the value of cover   

  1. Ease of process: People are often concerned about the unknown. How long will this take? What do I need to do? By explaining the process, you provide a roadmap of what to expect. 
  2. Framing: Instead of diving straight into the product, connect on a personal level. Make the conversation accessible by using relatable language and non-insurance terms e.g., safety-net vs. claim, payment vs. premium.
  3. Rethink common objections: For example, does 'I can’t afford it’ mean ‘I don’t value it’? Does an ‘it won’t happen to me’ mindset mean the client is ignoring the possibility or disengaging with it due to fear?
  4. Loss aversion: People do not want to lose the things they already have. Increase the perceived value of the cover by highlighting what it offers clients now - peace of mind, protecting their assets, etc.
  5. Optimism bias: It is human nature to hope for the best, but sound financial planning means planning for the worst. If a client has a ‘it won’t happen to me’ mindset, focus on helping them understand the value of a Plan B in case the worst happens.

Health events are life events

Dr Marion Morkel, Chief Medical Advisor at Sanlam Individual Life says that for the last two years, health concerns have kept clients up at night worrying about the dreaded ‘what if?’ “It’s time for advisers to use the health conversation as a way of connecting with their clients, person-to-person, to help put safety nets in place,” she concludes. 

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