Corporate loyalty - The importance of good relations

Business common sense suggests that developing and maintaining productive relationships with larger corporate insurance buyers is a good thing. Working together to understand a customer's perspective and its attitude to risk management is a key objective for an insurer.

As an industry we do this very successfully with many customers, but there appears to be part of the UK customer base that shows itself to be consistently and actively disloyal to holding insurers and brokers. Somehow along the way our industry has created a customer base that has been trained to shop around at renewal.

Insurance must be one of the few industries in the world that invites its customers to leave every year. Despite efforts to the contrary some customers are still driven more by price than by loyalty to a broker or an insurer, so it is valid to examine whether or not customers move insurers and brokers based on price regardless of relationship.

We have an environment where brokers and insurers alike are prepared to have short-term acquisition strategies focused on price alone. Not only that, brokers and insurers can never have enough customer interactions and shifting a process to focus on relationship needs as opposed to a product sale or renewal is proving troublesome. For those that argue this is not affordable the question must be asked - can you afford not to? There is a new generation of business owners in the UK economy. The news, good and bad, is that they expect more, want to pay less and continually delivering value is mandatory.

Customers have become distracted by being better informed around insurance products and the deals that are offered that make them more price sensitive than ever before.

The most suitable response is to make sure that as a provider of substantial capital to a business, insurers must move away from being an anonymous entity and seek to establish relationships of influence with the customers it wishes to keep beyond the short term.

As an insurer, we recognise this as an added dimension in its competitive positioning and has actively sought to work closely with brokers to get both parties to excel in meeting customer expectations. Insurers should be looking to support those brokers that understand an insurer can be used as an extension of their business and that recognise value in the following key factors.

- Relationships as a critical factor in the choice of an insurer partner

- A differentiated proposition based on partnership to the customer

- The importance of customer relationships and retention as a principal driver for growth

- Managing risk with customers that want to demonstrate openly their quality of management approach

Managing risk between customers, insurers and brokers is a business fundamental. Helping customers understand the factors affecting their premium and what action they can take to manage proactively the risks within their control is something Zurich has championed through the brokers we work with for several years now. There is little doubt that, through working together and tapping into the expertise of the insurer and the broker combined, a company can improve significantly its ability to manage the cost of risk and influence the stability of its premiums over time.

There are some simple messages for customers, brokers and insurers. Firstly, customers prepared to consider meeting with insurers have the opportunity to demonstrate their attitudes to risk and the high quality of how they manage their business. Secondly, working collaboratively to manage risk gives each party confidence that there is understanding and the desire to put in place long-term relationships and solutions. Finally, mutual visibility is how we are able to manage consistently the cost of risk through changing market cycles.

The result is a move from being a transactional provider to value-based relationships with customers that realise the value this brings. It is not just about annual renewal, but also about an ongoing dialogue and understanding things from the customer's perspective throughout the year. A commitment in advance to review issues and relationships at pre-agreed points, plan the financial performance of risk and proactively manage it and its cost as a result can only benefit the risk management process.

Relationships matter and our evidence is that loyalty does exist but has to be earned. Those insurers and brokers that form stronger ties, more authentic rapport and brilliant customer experiences have a good chance of solving the pricing paradox. You can get it right if you work on customers' emotions, by focusing on achieving trust, delivering a variety of valued contact and making sure every aspect of that contact makes you feel different from your competitors.

If you fail to make yourself irresistible then you are likely to depend on customers' habitual behaviours to keep them on your books. There can be only a few brave people in our industry that would admit to relying on that.

- Steve Green, Head of corporate, Zurich UK General Insurance.

This article is from a Zurich supplement entitled ‘Corporate Risk’ which was distributed with the November edition of Professional Broking.