What is the golden touch in insurance?
New insurance technologies and innovations – no matter how much they increase connectivity and collaboration between insurance professionals – will never quite compare to the combination of two local minds with shared experience, working together to solve a local insurance problem.
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Let me explain what I mean. If you weren’t already aware, Insurance Business publishes in six countries or regions worldwide: the United States, Canada, the United Kingdom, Asia-Pacific, Australia, and New Zealand. As part of that, our editors are interviewing insurance professionals from coast-to-coast and border-to-border.
The geographic spread is immense. Canada, for example, has a total area of 9,879,750 km², according to worldpopulationreview.com, trumping the US (9,831,510 km²) and Australia (7,741,220 km²). Meanwhile, Asia is the world’s largest and most populous continent.
The thing about risk is that no two risks are the same. While a small business risk in Eastern Canada might look the same on paper, or in automated computer algorithm, as a small business risk 6,000km away in Western Canada, there are local nuances that must be considered when underwriting that risk. The same goes for any other country or region where Insurance Business has a publication.
Brokers have benefitted hugely from greater connectivity in the insurance industry. There’s no doubt about that. If they have relationships with international insurers, they’re now able to tap into intellectual capital from insurance professionals and risk experts around the world – a boon inaccessible in the not-so-distant past.
But even the best and brightest brains cannot understand the culture or the “feel” of a place and its people if they’ve never been there or experienced it first-hand. That’s not something you can enter into a database and run through an automated risk assessment and underwriting tool. It comes from lived experience.
I can understand why insurance brokers in locales far away from big cities and financial hubs are frustrated by centralization – the trend of insurers servicing faraway communities from one central (often city-based) location.
It’s harder for brokers to work with an underwriter with true appreciation and understanding of local nuances. It’s harder for brokers to build relationships where they can say: ‘Please can you cut this client some slack. I know about all the great work they’re doing in the local community. Yes, they had a claim, but it was a one-off and they’re a very strong operation.’
Simply put, it’s harder for brokers to do what they do best – advise and support clients – when they’re having to spend precious time explaining and arguing over local distinctions with insurers who don’t even have local representation.
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I can also understand why insurers might be tempted to centralize. They can cut operational costs by reducing satellite offices and downsizing the labor force, and with the significant investments that many are making in technology, it makes sense to maximize those tools to the best of their abilities.
Despite all the recent advancements in technology – and our pandemic-learned behavior of remote working and virtual transactions – I still believe that insurers having boots on the ground in every locale where they do business remains the winning formula for the insurer-broker relationship. Only then will customers receive the bespoke and personalized service that they’ve grown to expect in their insurance transactions.
