Direct insurers may offer stiff competition in the personal lines space but there are still plenty of profits for brokers to make, according to an expert panel at NIBA Convention in Melbourne.
MGA Insurance Brokers’ Andrew Faber kicked things off by outlining some of the impending trends in personal lines, with Home and Contents and Motor premiums expected to continue to rise for the foreseeable future.
Home and Contents premiums are rising, with the number of dwellings growing 10% per year since 2008, contributing to the premium pool almost doubling in that time from $4.2 billion to $7.8 billion, Faber says.
According to Faber, with the domestic Motor and Home and Contents insurance market in Australia representing a $17.16 billion industry, even a 10% take of direct insurers’ heavily guarded market share could result in a $1.7 billion opportunity for brokers.
“The pot of gold is already there within our existing client base,” he says, recommending that brokers do what they can to look after the personal lines of all their business clients. “It is generally accepted that we can’t compete on price – but we can.”
Kate Fairley, founder and director of Get Informed website, says personal lines are an opportunity they can’t afford to let go.
“What we need to realise is that to everyone else, all insurance is just the same,” she says. “As a broker you’re in the position to explain that all insurance isn’t the same, because the coverage is different.”
According to Fairley, brokers should be in the business of providing advice, not competing on price. Instead of giving a discount on insurance, they can instead make themselves invaluable at claim time.
“If we give our clients the option of reducing their cover, we run the risk of them taking these options and, in turn, they run the risk of not getting paid, and every claim that isn’t paid is damaging our reputation,” she says.
Mike Donnelly, a former NIBA national board director and the managing director of Adelaide-based Donnelly Insurance Brokers, also offered several pearls of wisdom based on his many years in the industry.
“From a risk management point of view, it makes sense to add personal lines to your business,” he says.
According to Donnelly, personal lines can’t afford to have the same structure as commercial accounts, and a separate profit centre should be established with a benchmark $150,000-180,000 per person working on personal lines business.
He also recommends operating a call centre-type operation, where personal lines brokers take calls by rotation and follow these enquiries or claims through to completion, meaning that clients get immediate attention.
Donnelly made particular mention of the importance of hiring the right people. “In my experience you need people with the right attitude,” he says. “My philosophy is you can’t teach people how to have the right attitude, but you can teach them insurance.”