Premium: is it really the best differentiator?

In recent years, the UK insurance market, has become accustomed to employing premium reductions as the first step in customer retention. But, are there other ways to differentiate than purely on price?

Basic business principals tell us, that when price is continuously driven down customers no longer value the product. Relationships become merely transactional, brand apathy kicks in and it becomes more difficult to demonstrate added value. If customers can’t identify with a product, they will start to question their purchase and inevitably start to look elsewhere.

Pressure on customer retention and shrinking margins are both warning signs for any business and are, of course, unsustainable in the long-run. With this in mind, it’s important to incorporate solutions that aren’t simply based on financial metrics.

Research shows that customer experience is intrinsically valuable when it comes to retention. According to an annual CEI (Customer Experience Impact) report, 86% of buyers will pay more for a better customer experience.

An end to end service will certainly add tangible value to the customer. To shape this experience, it’s crucial that the broker and underwriter are working together to provide propositions focused on the customer’s experience.

Mark Pearce, UK Property Senior Underwriter at Probitas, tells us “Customers see value in products that really meet their needs, something that has been specifically tailored to them. True personalisation might not always be viable, but bespoke facilities will certainly offer a unique proposition for the needs of a sector, trade or individual customer.”

It is those who are differentiating themselves by taking an ‘outside-in’ view, that stand out for great customer experience.

Many brokers are demanding a fresh approach to the design of portfolios, which are focused on a niche, rather than something that is labelled as such but, in reality, is just a one size fits all policy when you scratch the surface.

“Customers are certainly more informed, and are no longer willing to pay for cover that they deem unnecessary. Quite rightly, they are questioning covers and limits – so it’s vital that both the underwriter and broker are really listening to them and responding accordingly.”

Stephen Covey, the world-renowned author, sums it up perfectly, when he says ‘most people do not listen with the intent to understand; they listen with the intent to reply.’

Mark goes on to explain, “As underwriters, this sentiment needs to be employed. Understanding both the broker and customer enables more flexibility to the underwriting approach. And, ultimately, designing portfolios that retain individuality and personality.”

It’s conversely important, to educate the customer on areas of cover they may deem to be ambiguous and unnecessary. “We have a duty to work with our broker partners to help customers understand the cover they are buying, and to do so in a language they understand. We should not be trying to blind them with complexities and jargon.”

The results of an open dialogue, can be seen on an economical scale by both broker and underwriter. If the customer can identify the value, then they are not focused on driving the price down and will want to build a lasting relationship.

But, listening is just the first step.

To build a truly valuable portfolio it must be built on robust research and analytics. A policy is only as good as the cover it provides. An underwriter’s experience and knowledge can be elevated with industry-leading modelling software and reliable data.

“At Probitas, working closely with analysts allows us to have a flexible approach and make informed decisions. Crucially, this information gives us confidence in the decisions we make. It feeds our appetite for building portfolios at a grass roots level. It’s what gets us excited!”

“An ‘outside-in’ view has been part of our ethos from the start.” Mark continues, “Listening at all stages drives emotional, rather than transactional, engagement. It’s clear, therefore, that premium reductions shouldn’t be the first line of defence. A purely transactional relationship will result in a lost client – because you’re no longer providing a relevant service.”

“The entrepreneurial desire that Probitas was founded on, is the same desire that drives our ambition and hunger to provide portfolios that truly deliver. Portfolios that respond to the needs of customers and demonstrate value.”