Peter Blanc explains why challenging times are an opportunity for advisers and the insurance profession to add real value
Advice around insurance topics has never been needed more than right now. Following hot on the heels of the Covid-19 pandemic, we now have war being waged at the edge of Europe and the disruption being caused to global supply chains is huge.
The ramifications of these global challenges will be felt for many months if not years to come, particularly when considering the price inflation being caused.
Inflation was already becoming a problem but the latest inflation figures are truly sobering, with prices increasing by 10% or so in a year. In some sectors, even 10% feels like understating the problem.
Insurance brokers and financial advisers have to navigate this new landscape and make sure that clients continue to achieve excellent outcomes. Enabling families to realise their long-term financial goals while interest rates remain at historic lows but inflation creeps towards 10% is no mean feat – return requirements demand the taking of some risk, as cash effectively devalues by nearly 10% a year.
On the general insurance side, brokers have to not only ensure that sums insured are updated to reflect last year’s inflation, but also have to consider that inflation could yet get even higher. These increased cover requirements can increase premiums at a time when clients are suffering from a real cost-of-living crisis – making renewal conversations tough!
Insurance brokers and financial advisers have to navigate this new landscape and make sure that clients continue to achieve excellent outcomes
Our claims colleagues are also feeling the effects of the supply chain challenges in most areas of life. Replacing lost, damaged or stolen property is no longer a simple process and the timescales for rebuilding damaged or destroyed premises are often multiples of pre-pandemic expectations.
So, what to do? Ensuring that customers are properly protected and given the best advice takes a truly customer-centric business model, which is at the very heart of the Financial Conduct Authority’s (FCA) proposed Consumer Duty. I describe it as the requirement to ensure that every customer is treated how each of us would like to be treated – as a valued, cared-for customer, where the insurance professional truly understands his or her needs and provides products and services that will stand up to anything life can throw at them.
The CII, the Personal Finance Society and the FCA share the same goal – and every practitioner now has the opportunity to really add value to customers. These challenging times represent a period when professional advice will be welcomed – and remembered.
Peter Blanc is president of the CII