Sometimes a broker has to go against their instincts to get the right deal for their client
We often speak to brokers whose bread and butter is commercial business insurance, but they have been asked to do an important client favour.
It is a common request that commercial insurance brokers get from CEOs and CFOs: “Can you sort my home and motor out too?”
To the CEO, it seems like a good synergy, to ask the broker that they’ve just paid a six-figure brokerage for their business insurance. It is a good working relationship, and over the years, they have come to trust them.
What the broker does next can affect the health of that relationship for years to come.
In a time where everyone is looking to tighten their belt a little, beware of false economies. Cheap paint, cheap shoes, not having car breakdown cover, or dabbling in DIY and making an unholy mess of it – these are all classic false economies that can easily end up costing more in the long run.
Standard market polices for high net worth clients fits neatly into this category, too.
I recently spoke to a broker who had picked up a new client due to this very situation.
The client had been with his previous broker for several years, choosing them for their expertise in commercial insurance. The broker was asked to arrange home and contents coverage as a favour, and they did so happily. They arranged the most competitive insurance they could find on the day and no-one thought any more of it, until it was time to claim.
The first time that the policy was pored over in any detail was in the aftermath of the client’s home being burgled.
The claim was rejected, for a standard reason – a failure to comply properly with an alarm clause. The insured had noted on their submission that they had an alarm, and so the insurer included a requirement that the alarm always be set when the property is unoccupied. Unfortunately, the insured didn’t set their alarm, so the claim wasn’t paid.
And from there, it went downhill for the commercial broker and their six-figure client. First chance the client got, he walked away to one of the broker’s big rivals.
The lesson here? Don’t assume all home and contents policies are equal – some policies on the standard market can be peppered with onerous clauses. Which is fine, if you have studied the clauses and consistently comply with them.
DUAL’s model is quite different. We wouldn’t refuse a claim just because the client forgot to turn the burglar alarm on, and we would not include such warranties in our policies.
DUAL policies are designed to be broad by nature – and our underwriting model looks to cover the whole of the risk. This allows us to be flexible, which is valuable to high net worth clients, as they may have more to lose. Where larger sums are involved, you need to build in a bit of wiggle room for human fallibility. At DUAL, we like to keep the wiggle room on the clients’ side, rather than on the insurers’ side. High net worth clients are happy to pay a little more for this, but often they don’t have to with DUAL; we are usually competitive with standard market premiums even though our terms are much broader.
To protect your working relationships with c-suite individuals, if you are asked to do them a personal lines favour, the trick is to arrange home and motor insurance that they don’t have to think about too much.
Less restrictive inner limits, much higher single article limits and significantly more generous limits on third party liability claims can be a great comfort to you personally, in the event that your client needs to make a claim. Standard market policies can often be more restrictive in these areas, which may not be a good fit for your important clients and their needs. In such cases, you will be in a much better position by recommending a quality policy with generous limits and no onerous warranties.
To arrange home and motor insurance as a favour, ‘off the side of your desk’, is a risk for you personally. If something goes wrong, you will be associated with that failure and that could be a factor when the “bread and butter” business comes to renewal.
If you step outside of your specialism, you should have a relevant specialist to call upon to ensure the cover is fit for the client’s needs. If you want to talk home and motor for your important clients, please do get in touch.