Comparison websites aren't keeping us satisfied - Which? News

Comparison websites aren't keeping us satisfied - Which? News

INSURERS ENTER CREDIT HIRE ARENA - HOW WILL IT IMPACT BROKERS?

"A NEW DAWN FOR CREDIT HIRE"

An article in the Insurance Times today reports that AA/Saga plans to take its credit hire arrangements in-house in an attempt to save millions of pounds. The move could trigger other insurers to follow suit as frustration grows at the level of expenses incurred in the process.


To read the full article "A NEW DAWN FOR CREDIT HIRE" click here

The insurance industry has opposed the activities of credit hire firms since the emergence of the industry in the eighties. For over twenty years insurers have adopted an adversarial stance to the existence of credit hire as a concept, with both sides entering into protracted and expensive litigation on points of law. A number of legal precedents have been set down from the High Court and Court of Appeal as a result of the arguments between the two industries.


An insurer owning its own credit hire company is an interesting business concept, something which insurers have looked at for some time, and now AA/Saga has taken the plunge.


It will be interesting to see how this affects the AA/Saga relationships with other insurers. Will negligent insurers pay the AA/Saga credit hire claims any faster than the existing credit hire operators?

In a seperate Insurance Times article on the subject, Ai Claims Solutions commercial director Chris Shaw countered that not all credit hire companies had adversarial relationships with insurers. He said: “The issue was not about referral fees but about hire durations".


To read this article click here


On the face of it, this comment seems to be somehwat naive. Of course it's about referral fees, they are part of the problem the insurers want to remove. Insurers have been applying pressure to brokers for many months now regarding their relationships with accident management and credit hire companies. Insurers have threatened brokers with reduced commission levels if blacklisted credit hire and accident management companies are being supported.


The arrival of the comparison site aggregators, a prolonged period with soft rates and the current economic climate has forced brokers to seek alternative sources of income to supplement diminsihing margins from motor insurance. The accident management sector has become fiercely competetive in its search for non fault accident victims, offering increasingly lucrative inducements to brokers for such referrals.


Insurers have cashed in on the deal too, with many millions being paid in referral commissions to insurance companies by credit hire companies for the introduction of non fault accident policyholders. Commissions are paid for credit hires and personal injury cases, with referral fees as high as £800 being paid per case.

There have been instances of large insurer organsiations writing motor insurance premiums with 0% commission to increase market share. The business model of a number of these companies includes owning their own accident management company. Let us look at why such an organisation would write premiums at 0%.

Assume 1000 motor policies are sold with average commission of £75.00 = £75,000
A 20% claim ratio = 200 claims. Assume £500 income per claim = £100,000

These organisations have learned that there is a greater income opportunity from claims income than from policy sales.

Insiders from within both industries have long since speculated that this level of referral rates were not sustainable in the long term.

The same insurers receiving generous credit hire referral fees have also been exerting pressure on brokers for supporting credit hire companies!

These factors are undoubtedly part of the rational behind the development of the AA/Saga credit hire operation. With such a business, they will control their own exposure to such claims and undoubtedly generate significant income streams from those cases where their customer is the non fault party.


BROKERS

Of greater interest perhaps, is the potential impact insurers providing credit hire will have on insurance brokers in the UK.


The success or failure of the AA/Saga credit hire venture will either encourage other insurers to follow suit, or seek alternative strategies to combat the growth of the sector.

One thing is certain. The credit hire and accident management organisations will not take the competition lying down. They will use their considerable resources to protect their business models. The non fault accident market has become a race to see who can capture "First Touch" of the customer. The accident managers have become adept at the practice, which is undoubtedly why the insurers are now considering "playing them at their own game".

Other insurers may follow the lead of the AA/Saga team and develop their own credit hire solutions. This would have the effect of restricting the size of the potential accident marketplace, reducing income opportunities for brokers working with accident management companies.

Prudent brokers will not have put all their eggs in one basket and become over reliant on accident management referral income.

The more successful brokers have quickly recognised the benefits of adding value to the customer experience.

In a marketplace is dominated by price driven consumers, innovative thinking brokers will always succeed in securing and retaining business by providing enhanced service that the internet cannot compete with, qualified advice and quality products.

Brokers that have developed successful "Add On" strategies for such quality products are booming even in the midst of an economic downturn.

Related Broker Articles :-

"When choosing add ons it pays to go cherry picking" click here

"Top Broker Tips For Selling Add Ons" click here

Broker In Focus - April 2009 Bulletin

Click here or the image above to view full bulletin

NEW RESOURCES FOR UK INSURANCE BROKERS

New broker online resources from Nice 1 Ltd, the team behind Theft Protect are proving popular among insurance intermediaries.


This site, and the consumer awareness portal at http://theftprotect.blogspot.com/ contain articles and latest news about UK Car Crime and Car Insurance.

The bulletin details way that the Nice 1 Team support brokers in their efforts with Theft Protect, and provide links to articles on the consumer site where we keep the UK motorist appraised of the need for adequate insurance.

Click the link below or the thumbnail image of the bulletin above to view the full bulletin. We look forward to supporting your business soon.

Kind Regards

The Nice 1 Team

Top Tips For Selling Add Ons

INSPIRED THOUGHTS FROM SOME OF OUR BROKERS

On our travels around the UK Insurance Brokers, we frequently hear of how difficult the market has become. Once the insurance salesman visited you, then you visited his office. Now you pick up your phone or click your mouse. Direct writers and the internet has accelerated the direct phenomenon.

In spite of the adversity, we come across brokers every day who have found opportunities to grow their businesses.

The brokers that we witness embracing Add-Ons as a means of recapturing previously sacrificed margins are an excellent barometer for one way forward for insurance brokers.

Whilst some brokers struggle to get beyond the price issue presented by bargain hunting customers, many others recognise the changes that are still occurring in motor insurance.

Motor insurance renewals have tradionally been viewed as an annual chore, both for the customer and the broker. The more enlightened brokers now see capturing the core policy as the first point of contact, with an existing or new customer. Add-ons represent a wonderful opportunity for a business to improve the customer experience, and to offer the customer excellent value products that he really does need.

Here are a few Top Tips from some of our brokers who are achieving success with their add on strategy :-

• Develop a disciplined strategy for approaching the customer asfter securing the core policy
• Be prepared to give a little on commission for core products, regain it with add ons
• Research your customer needs, survey your customers to identify what products will suit them
• Whatever policy you are selling, acquire renewal dates and other essential data relevant to future sales
• Get out of the midset of selling everything or nothing at a fixed point in the year
• The more frequently you apporach and successfully sell products your customers want, the higher they will value your services at renewal
• It is cheaper and easier to sell more to existing customers than to pay for new ones
• Invest your money in an outbound selling strategy to existing customers first
• Insist on stand alone products that do not have to be sold concurrent with renewals, this frees you up to approach customers all year round
• Consider packaging two or three add ons together in a special deal. Many brokers achieve success offering three products for the price of two. Some add ons come cheap, even free to the broker and can be used well for these sort of promotions.
• Demonstrate value. Offer something like a "Gold" "Silver" and "Bronze" package. Customers like excellent packages representing great value.
• Lose your fear of "bothering" the customer. Brokers are professional advisors, your customer needs and wants your advice.
• Stop making excuses for making money. The old days of customer retention with no effort are dying fast.
• The transaction isn't over when you've secured the core policy, it's only just begun. Properly planned strategies for outbound calls will pay dividends.
• If you lose the core policy at renewal, don't give up! He doesn't become someone else's customer just because he has moved his main policy. You have opportunities to shine with add on policies and the service levels behind them. The new broker may upset the customer during the year and place him on the verge of returning to you. Give them every encouragement!
• Wherever possible, move away from the focus on price, concentrate on highlighting the increased levels of service and protection provided by the add on.
• Be persistent!

Brokers adopt different strategies for the way that they sell Theft Protect. It all really depends on how significant the price issue is to your business.

The three main choices brokers have illustrated to us are :-

• Compulsory sale - included with every policy
• Assumptive sale - included with quote giving customer opt out facility
• Upselling - selling the core policy first, then either upselling immediately or approaching later through outbound calling or other method.

Each has its pro's and cons.

Compulsory sales generate the highest volume, however they necessitate a lower premium. Brokers adopting this tactic tend to generate more income and profit due to the volume. Brokers however report that there are only so many add ons that can be succesfully built in before the overall price to the customer appears less attractive. Keeping the commissions low is key to the success in this category.

Assumptive sales work well. Brokers achieve as much as 75% take up in this category, again by reducing commissions, though not to the extent of the compulsory sale. The downside is the opt out rate can vary from region to region.

Upselling works particularly well once a broker has defined the strategic plan to outbound call the customer, or ensure the product is mentioned once the core policy is secured. The downside is more broker driven, by the attitude towards price as the most important factor.

We have examples of brokers that are selling Theft Protect stand alone, regardless of whether they hold the core motor policy. Some sell Theft Protect to their home or commercial customers, capturing motor details in the process. Brokers are successfully using this strategy in different parts of the UK. If you have yet to get started, what is stopping you?

There are plenty of innovative brokers out there with strategies that work. Become one of them.


These pages will continue to put forward broker ideas and inspired techniques that work. Share your successes here and hopefully you will find tips that will help you too!

Theft Protect - Features & Benefits

Customer Benefits

• Immediate like-for like replacement vehicle for up to 28 days
• Theft , Attempt Theft, Unauthorised Take, Vandalism (new!) & “Fault Write Off” cover
• 10 passenger car (2 prestige), 3 cv, 3 motorcycle & 7 Private hire vehicle groups
• Avoid exposure to car hire costs, typically £300 for 14 days hire of a Group A vehicle
• Can be purchased in 1,2,3,4 or 5 year multiples
• Stand alone, not tied to buying other products (Now generating significant interest for aggregator brokers)

Broker Benefits

• Private & Commercial Vehicle Cover
• 10 passenger car (2 prestige), 3 cv, 3 motorcycle & 7 Private hire vehicle groups
• 14, 21 & 28 day options available
• 1, 2, 3, 4, 5 year options available
• Provision For “Write Off” Customers
• Broker sets own selling rate/commission
• Simple on-line processing & certificates, cover arranged in minutes
• Full Marketing Support
• Increase your product portfolio
• Generate additional revenue streams
• Sell standalone to capture renewal dates for core policy marketing
• Fully functional in CDL as part of quote process & stand alone in Schemes Engine 110
• Can be sold in conjunction with other broker software (New … csv data download facility)
• Up-to-date crime statistics available to assist broker marketing efforts
• Customer awareness flash presentation available for broker websites
• Can be built in to brokers’ Quote n Buy facilities (Brokers can have links and/or implant product onto their site).
• Adaptable to multi site & mixed profile brokerages.
• Fulfillment facility available for volume capacity.

A Few Endorsements

"It's a very easy sell, once you actually talk to the client about it. Don't be afraid to talk about it at the same time as you're selling a motor insurance policy because you'll find clients are extremely receptive to it. It's now our second highest performing add-on product - brokers just need to embrace it "

Mark Lee, Operational Development Manager, Wesleyan General Insurance.

“Theft Protect has proved to be a resounding success within the sales teams at our various companies. Like most brokers we sell a variety of add-ons, some more successfully than others and Theft Protect definitely comes into the more successful category. Without doubt a very worthwhile product.”

Mervyn Vaughan, Operations Director, Markerstudy Retail Group.

“We offer Theft Protect to all of our customers. The prices are pitched sensibly so do not affect our motor retention. The claims service is excellent and we don’t have the worry of a customer without a vehicle for these incidents. We reached the 100 policy units in no time!”.

Brian McCullough, Sam McCullough Insurance, Newry, N.I.

“Theft Protect is our easiest add on product. It’s so simple to explain and sell in our call centre and the majority of our customers want the cover. The fact that it’s now available in CDL and its flexibility as a stand alone product makes it a natural product for our outbound teams to sell mid term. The potential to capture more core business with it is excellent.

Stephen Jones & Eddie Weekes, Directors, Tick Direct