Winning back the consumers trust

By Ricardo Coetzee, Head of Auto & General Insurance

I am often asked whether it is worth the cost to hire a financial adviser? Consumers want easy, simple and fast and have a do-it-yourself approach to almost everything. Insurance is not unique where this concept is concerned.

But, it’s especially during tough economic times or when the proverbial rubber hits the tar, when one can truly comprehend the value of good financial advice and especially good short-term insurance advice.

The value of good financial advice

A good financial adviser will ask you about your goals, will conduct a needs-analysis
based on not only what you need, but also based on your life-stage and what you are able to afford.

It may mean calculating how much you should save for retirement or making sure you have an adequate emergency fund. It may mean offering tax-planning suggestions or helping you refinance or pay off debt. Or, it may mean assessing your capacity to absorb risk, whether in the short term or in the long term, personally or in a business capacity. And finally, it may mean ensuring that you never find yourself under-insured.

Typically, a financial adviser will then utilise this information to develop a unique and achievable plan. A plan that will be actioned across your lifetime. They will consistently update you with regards to this plan, and they will adapt it according to your changing needs. Above all, they will ensure that you understand the details of the plan and the underlying terms and conditions of any of the policies incorporated into the plan.

Re-establishing trust

There has never been a time where the importance of good financial advice and reliability has been more prominent. The media has recently reported widely about issues that confronted business owners who thought that they were appropriately covered for business interruption, only to find out that the fine print in their policies didn’t agree. While Auto & General Insurance did honour Business Interruption claims, many insurers did not.

How many times has a homeowner discovered that they did not have adequate cover after a vehicle accident or a home fire? Or how often have you found that you can’t claim for that special piece of jewellery that was stolen?

In many of these cases, the industry has come to the rescue, but it is inevitable that with every claim not paid, there has been an erosion of trust in the industry and
the onslaught of COVID-19 has inevitably eroded this trust even further.

Let’s be clear. We are not just talking about losing trust in financial advisers. The loss of trust has gone much further, in fact it’s a loss of trust in the insurance industry as a whole and the entire value-chain it represents.

We know that insurance has always been a grudge purchase. But, in the face of
economic uncertainty and on the back of the COVID-19 pandemic and recent publicity, we are now seeing more consumers seriously considering cancelling their short-term insurance.

It is now up to the entire value chain to take responsibility and consider how we can win back the trust of the consumer. A first step has been the implementation of various forms of relief for customers by most short-term insurers. This also included product development in the form of new work-from-home products. These actions have provided the consumer with much needed relief, but how do we move forward from here?

Filtering appropriate advice down through the value chain

It remains critical that insurance product developers, underwriting teams and financial advisers remain in close collaboration when building, updating and improving products and advice models. At Auto & General, we make use of sophisticated quality control measures, overseen by our marketing and product teams, to ensure that advice is correctly filtered to our intermediaries. In addition, our compliance division plays an important role within this planning process.

From a service perspective the development of specific service standards is important. These service standards provide the customer and financial adviser with a benchmark with which to hold their insurers responsible.

In addition, the industry needs to create an understanding under consumers that good financial advice can enhance one’s lifetime standard of living and that the only way to do this is to prove the value of the advice at claims stage.

Now more than ever, advice will be the key to establishing trust and restore
relationships. This rings true across all sectors of our industry, from short-term
insurance to financial advice, investments and risk management.