By Gerald Ewing, Unimutual Chief Executive Officer
Warren Buffett, American stock guru, entrepreneur and owner of the world’s largest insurer, Berkshire Hathaway, lives by two simple rules:
Rule 1. Never lose money
Rule 2. Never forget rule No.1
Any broker, insurer, large or small business owner will know that client retention is equally important and could form Rule 3, with rule 4 being “Never forget rule No.3.” It is far harder and more costly to acquire a new client than maintain an existing one and in any marketing strategy client retention ought to represent the low hanging fruit.
This simple statement essentially relies on one of two assumptions. Either the client is loyal or the client is complacent. Neither can any longer be taken for granted. Reliance on a client’s complacency is clearly not a sound strategy – ask any motor insurer as they come to grips with comparator websites and the power of social media.
Loyalty is therefore the key but it is hard won – it takes time, and has to be maintained. In a competitive market this is ever more challenging.
According to latest APRA statistics for intermediated general insurance, as at 31 December 2016, there were 1,645 intermediaries (read broker) licensed to conduct general insurance business. Of these, 814 brokers (49 percent) were active during the preceding 6 months. Of the 814 brokers that placed business with underwriters in the six month period, 773 (95 percent) placed business with APRA-authorised general insurers. There are 92 general insurers in Australia. Collectively that adds up to a lot of competition.
Of course not all will compete in all sectors of the market and realistically, for the University and higher education and research sector which often comprises large and complex risks, the competition pool might be quite limited. Nonetheless, no broker, insurer or indeed mutual can afford to let their attention slip.
Unimutual has a very loyal member base. As at 1 November 2016, greater than 50% have been members for more than 10 years with 85% of universities having been members for more than 5 years.
These impressive retention statistics have been earned through a combination of product, price, sector knowledge/experience and service. They are also the result of a strong tri-partite relationship between Unimutual, brokers and Universities. In an extended soft market where it is becoming increasingly difficult to differentiate on product and price Unimutual has relied strongly on its unrivalled sector knowledge coupled with a very strong service philosophy that embraces the broker.
In practice what this means is that we don’t get hung up on client ownership. We recognise that they are your clients and our members; and work with you to ensure that client/member satisfaction, which drives loyalty, is always front and centre. We work on the basis that what makes us look good, should also make you look good. It’s not working if the result is that we look good and you don’t, or vice-versa.
There are a number of reasons why Unimutual is uniquely placed to cooperate with you in this way.
As a mutual, operating on a not for profit basis, we are free of the constraints that the shareholder model imposes on business and on insurer/broker relationships. We are therefore able to offer a level playing field with a high degree of transparency and trust.
The discretionary nature of the cover means that claims disputes very rarely arise, but if needed can be referred to the member claims committee and Board for consideration. This ability to avoid disputes and resolve claims quickly removes a large potential source of client/member friction. In addition a very pro-active response to claims with on-site attendance for large and complex claims, a willingness to work with the member on reconstruction, a strong defence by Unimutual of unmeritorious liability claims against the member, together with the backing of our knowledge and experience of the sector; all reinforce member satisfaction.
Risk management is a key part of the Unimutual service offering. Our risk managers work closely with both members and you to identify emerging risks, and recommend practical risk mitigation guidance leaving you to advise on risk transfer / limits and retention strategies.
Building and maintaining relationships are an important part of creating satisfaction and loyalty. We have a large number of touch points within each Unimutual member institution. Keeping track of the constant changes is a role we perform and we are happy to share with the member’s broker. We regularly arrange mini- seminars, working groups and our annual conference, where we actively involve you in networking and engagement opportunities. At our most recent conference we included a broker panel and a broker presentation so that the broker’s importance and role could be better appreciated.
The Unimutual web based data collection system is a platform that we developed for members to reduce the workload involved in collating and presenting renewal data. The system is accessible by members’ brokers and has similarly reduced the workload in brokers’ offices. We expect the web based member claims system to provide similar benefits when it is rolled out in May this year.
At the end of the day, we understand that Unimutual and you the brokers are ultimately both service providers to the Unimutual members, University or other, and that we therefore have a common interest in ensuring that that we work well together and jointly put our best foot forward.