Insurance advisers helping to navigate challenging times – now more than ever

Johannesburg -  Both the role and value proposition of insurance advisers is changing as the insurance industry becomes more complex.

Karen Rimmer, Head of Distribution at PSG Insure explains that understanding the client's risks and offering the most appropriate solution requires that insurance advisers are experts in their field.

"Specialisation – and access to expert resources – is more important than ever. The unprecedented losses that insurance companies have incurred in the last few years as a result of the pandemic, the 2022 KZN flash floods and July riots of 2021 as well as loadshedding and the war in Ukraine, has put huge cost pressure on insurance companies."

As a result, she says, insurance companies are mitigating their risk, relooking their products and changing policy wording to include more responsibility from clients as well as managing their costs carefully.

"Insurers are becoming much more cautious when taking on new risks," says Rimmer. "They either decline the cover upfront or expect the client to carry more of the risks through imposing terms and conditions. This can be as basic as installing anti-theft devices to very complex and expensive equipment to protect a business."

The challenge for advisers, she adds, is to remain abreast of these changes and act as a facilitator between the client and the insurer to agree on the best possible risk mitigation at a price that the client can afford.

"Advisers need to navigate their clients through the process of amended policy wording and ensure that the risk mitigation measures are being adhered to and are maintained. During the annual renewal of the policy, for example, a total re-evaluation should be done by the adviser to ensure that the current policy is still relevant or if amendments are required."

The need for an involved adviser, one who has access to specialist knowledge, is higher than ever before, she says. Adviser practices also have to make provision for managing policy amendments, keeping clients informed of their responsibility on "prevention of loss and duty of care" and overseeing payments of claims.  With more expected of them, adviser practices are having to relook their capacity and support structures

Working with commercial clients is often even more complex given that the risks and premiums are significantly higher and given the reality that not being insured correctly can cause the business extensive losses.

To effectively service their clients, Rimmer says advisers need to segment their client base, ensure optimal office structures and solid planning to mitigate these challenges. They also need to ensure a culture of learning and uphold solid relationships with product providers in order to stay updated with constant changes from insurers. Their support structures need to be competent and they need to ensure that standardised processes are aligned with regulations.

She doesn't see robo advisers as a threat to the traditional insurance adviser. "A robot can never replace the human interaction that is required to really understand the context of the insurance need of an individual or a business and match that with an appropriate solution."

At a time when rising inflation, increasing interest rates and higher insurance premiums are impacting consumers' available spending, it's more important than ever to ensure that money is being spent effectively.

"Simply cancelling insurance cover is irresponsible," points out Rimmer. "Instead, clients need the expertise of an adviser who can recommend where savings can be made with the least additional risks."

Given just how important advisers have become, they also have a responsibility to make provision for longevity, says Rimmer. "Clients need to be assured that their needs can still be met by a competent successor in the event that the adviser cannot continue operating."