The Matter of Cost vs Advice

Sean Bemrose has more than two decades of experience in insurance broking and is active in the broader industry as a board member, mentor and as President of the Queensland Brokers Council (CQIB). More recently Sean assists international insurers – such as Lloyds of London and Berkshire Hathaway in the design and development of insurance products.  Sean regularly consults with a range of commercial clients concerning their insurance portfolios and manages our complex claims.

In my day-to-day work as a Commercial Insurance Broker I get the unenviable pleasure of hearing a raft of marketing and sales white noise about what’s ‘important’.

One of the favourite chestnuts of various sources of this noise is that we’re all here to pay claims when you need them.  Suncorp has marketed very successfully in this vein after the 2011 floods.

The head scratcher for me is that if the payment of claims is so important to everyone (and I agree it should be), why is it that 9 out of 10 times when I meet with a new referral, all they ask about is cost?

I have nothing more than anecdotal data to back this up, but I think there might be a couple of reasons for this.  Firstly I think that cost seems to be the only frame of reference available to the average consumer, and secondly that it is difficult for anyone who isn’t an insurance broker to quantify and understand the differences between policies or advisers.  I’m pretty sure I’m on the money here because the web-based direct insurers are banking big money on this being the case.

What I do know for sure is that according to ASIC data, up to 60% of homes and 80% of business are either underinsured or uninsured.  This means that the majority of people are either dangerously misinformed – or – they have deliberately put themselves at greater risk to save money.  

The outcome is that a lot of businesses – more than half – fail after an insurable event.  They don’t have the cover they need and they may not have expert assistance in the event of a claim. 

Recently I met with a prospective new client that we had taken on to review his portfolio – a pretty standard process for a decent broker.  The client was concerned about his ability to continue to fund the cover.

During the course of the discussion – it’s all about asking the right questions – we pretty quickly discovered that when his existing cover was established, his business casinos by morrock.com had not been correctly defined.  This lead to the establishment of cover that wasn’t exactly what he needed, and he was subject to more expensive underwriting terms.

We were able to apply a more appropriate insurance contract, get the client re-underwritten with a premium that was cheaper by about 35%.

Ironically, getting the right advice also achieved a significant premium saving, and potentially a six or seven figure benefit in the event he suffered a serious claim event. The point here is that getting good advice isn’t necessarily expensive – but it can save you everything.

If you get the feeling that your adviser is only talking about cost, or if they don’t really understand your business, then please drop me a comment, email us on tbib@tbib.com.au or call us on 07 3252 5254.