Survey says insurance brokers amongst least trusted – don’t let perception becomes reality

New research has shown that just 10% of Australians regard insurance brokers as highly ethical and honest.

This places brokers as the fourth least trusted profession only ahead of car salesman, advertising workers and real estate agents.

Whether you agree with the survey or not is almost irrelevant…  US political strategist Lee Atwater is credited with coining the phrase “Perception is reality” in the 1980s, and many political and organisational reputations have been ruined or revered accordingly.

What does it mean?  Well, hall of fame American football player Steve Young, captured the meaning well when he was featured on TV show ‘America’s Game:’

“If you’re perceived to be something, you might as well be it, because that’s the truth in people’s minds.”

To those in the know

Now, to those in the know, the insurance broking industry serves a vital role. Brokers help to ensure Australian businesses stay alive and financially survive events that would otherwise see them perish.

Risk is a complex issue. The sort of advice needed to guarantee comfort and continuity is not readily available online, and people who choose to go it alone become their own advisor. For most companies small or large, this sort of complexity and burden should not be palatable, or, in fact, advisable.

Many highly professional brokers do a great job for their clients and this is supported by the fact that the vast majority of companies that use a broker and receive risk advice from them are very satisfied (Vero SME Insurance Index 2017). In addition, Arthur J. Gallagher & Co, one of the industry’s major players, is recognised as one of Ethisphere’s ‘world’s most ethical companies.’

However, it seems that the broader community’s perception here in Australia is somewhat different.

Why must perceptions change?

Whilst it is true that companies that use an insurance broker and particularly those who receive risk advice are very satisfied, the number of those that are choosing to do so in the SME space are diminishing.

Whether people surveyed by Roy Morgan currently use a broker or not, the industry must consider the authors and audience as potential customers and influencers.

Today’s world brings a significantly different buying mentality. Buyers today typically:

  • Address their needs via interaction with vendors and through self-directed information via the internet/social media
  • Continue to evaluate options, explore and lean heavily on self-directed searches plus peer interactions, but will contact providers to get help to move to a purchasing decision (Harvard Business Review, “What salespeople need to know about the new B2B Landscape” August 2015)

If there has been a significant shift for B2B sales in general, there has been a seismic shift for brokers. Brokers must recognise this is a different world and they have a fight on their hands.

According to the Vero SME report, the largest demographic not using brokers is 18 -39 year olds. The report further reinforces the buying mentality above, whereby peer advice plays a role in 52% of purchases up from 46% and of this, 19% are seeking advice from peers only!

This age demographic must be viewed as potential clients and just as importantly, as influencers and the industry must find a way to resonate with them. If this can’t be done, well, you can do the math!

What are the challenges?

The Roy Morgan survey created quite a bit of comment from the industry. Some were discontent with the findings and the basis of the research, but also admissions that there is work to do around the image.

Robert Cooper, director CPR Insurance Services, told Insurance Business that the entire industry needs to come together to help improve the image of brokers with the public as there is no silver bullet solution.

This is a salient point, image is a product of a multitude of things. Industry wide change and remaining relevant will never be one dimensional. It’s made up of every touch point you have with the community, whether these are through channels which resonate with people and If they see your offering as relevant to their needs and in many cases their lifestyle.

We’ve seen unprecedented change over the past 20 years and not surprisingly many industries have struggled to keep pace.

Well documented challenges with digital capability, delivery of a robust advice model, and an over emphasis on price as a differentiator, have all contributed to the industry being seen by some as cumbersome to engage, transactional and lacking in relevance to an increasing segment of the SME community.

With so much rapid change, it’s difficult to make the necessary shifts and depart from what has been successful in the past. It’s what keeps administrators, receivers, entrepreneurs and disrupters enthusiastically employed.

But maybe there is a silver bullet?

What governs outcomes? The way we think, governs our actions and in turn the decisions we make, as individuals, companies or industries.

Herrmann Brain Dominance Instrument – HBDI® research shows the insurance broking industry to be very left mode thinking: analytical, process orientated. A lot of the characteristics for change: innovation, new concepts, long term strategy, empathy and people orientated thinking are right mode.

“One of the things we look for in talent is: can they think like a customer and can they think like a customer will think today and in the future” – John Donahoe, CEO eBay Inc

There has been a lot of movement in the business world around diversity. Why? Because organisations have come to see that diversity and the ability to think ‘whole brain’ as an organisation is their ticket to remaining relevant and appealing to a broader market. This is the crux of the issue!

2015 Mckinsey research of over 366 public companies found that those in the top quartile for ethnic and racial diversity in management were 35% more likely to have financial returns above industry mean, and those in the top quartile for gender diversity were 15% more likely to have financial returns above industry mean.

The decisions insurance broking organisations, and the industry as a whole, make over the next five to 10 years will shape its relevance and appeal into the future.

Many of the trends referred to in this article are not a surprise or a recent emergence. This would indicate a change in direction or thinking is necessary, or at the very least an escalation of initiatives on the table (but more likely a combination of both).

If there is a silver bullet, it’s direction governed by broad diverse thinking, challenging established beliefs and showing courage and resolve to change.

To achieve this, diversity must be given a voice in the boardroom and in the leadership of businesses and industry bodies.