Industry voice: The ever-evolving role of brokers in IPMI
William Cooper, Marketing Director for William Russell, talks to ITIJ about how the role of brokers has changed, and how relationships with clients are paramount
International private medical insurance (IPMI) distribution is changing, but not all brokers would characterise the change positively. So perhaps ‘evolution’, with its connotations of progress, isn’t the right word. What follows is an incomplete snapshot of the changing role of brokers in IPMI distribution – from the perspective of an insurance provider.
First and foremost, brokers need clients. And signing up new clients is tougher than ever. In the IPMI market for individuals and families, conditions are particularly challenging. The niche for brokers is incredibly small. They’re looking for expatriate individuals who don’t qualify for state-provided healthcare in the country where they live, who don’t already receive medical insurance cover by virtue of their employment, and who have the capital to afford expensive premiums.
Several brokerages have built impressive lead generation programmes to find new clients in this niche. With these programmes, brokerages are not only competing with other brokerages; they’re also competing with insurers. It’s not just the usual ‘quick win, high cost’ paid search or lead purchasing campaigns. Brokerages now compete for clients with insurers on the organic results pages of Google. Success in the organic space requires long-term planning, patient investment, and skilful execution.
JF Daams, Director of Medlife Services in Malawi, also notes this emerging link between brokerages and insurers. He sees the services that his brokerage provides as an alternative to the digital onboarding processes that insurers typically employ for their direct-to-consumer sales. His team plays an “important advisory role to help clients understand how [IPMI policies] work”, holding face-to-face meetings where insurers cannot, and advising on product options, underwriting and applications, which, again, insurers cannot do.
Medical insurance schemes
In the market for small to medium-sized enterprises (SMEs) and corporates, companies seeking group medical insurance schemes have plenty of choice. There are hundreds of brokerages to choose from, all working with similar insurer panels. Brokers need to work on their service differentiation, on their brand, and develop a niche where they can successfully sign up corporate clients.
Once a broker signs up a new client, the next step is steering that client through the confusing waters of medical insurance. These days, there are so many options for clients: IPMI policies, regional policies, national policies, medical aid schemes, and state-funded schemes. With more options for clients, the scope for bad choices widens.
Medical insurance is a complex business, and committing a client to a proper IPMI policy does involve hard work
Clients upgrading from a local or regional option, for example, might have preconceived notions on price and underwriting when they consider IPMI. Similarly, clients moving from a mature insurance market to an immature market might have preconceived notions on insurer options and service. Brokers have a job on their hands guiding their clients past these preconceptions towards the right insurer for their needs.
Medical insurance is a complex business, and committing a client to a proper IPMI policy does involve hard work. Applicants for an IPMI policy must provide detailed medical histories and perhaps undergo medical examinations – all without the certainty that the insurer will accept their application. Our industry is hardly the most digitally enabled, so most of these processes involve PDF forms, manual interventions, and experiences that are a million miles from the digital experiences we now expect in personal banking and private investing.
These frustrations can push clients who are cash-rich but time-poor away from comprehensive, quality insurance options towards low-cost and low-cover options with easier onboarding. Brokers, again, must steer their clients towards the best options for their budget.
This responsibility can put pressure on the broker-client relationship, as Chris Emmott of EBG International in Chile told me. In fact, numerous brokers I’ve consulted in recent months have been wary of losing their clients, either to another brokerage or direct to an insurer. So, brokers must strike an incredibly difficult balance between retaining the client, delivering a solution quickly, and making sure the client has adequate cover.
Once on risk, brokers are becoming increasingly involved in the client’s policy throughout its life cycle. Of course, brokers have always been concerned with the onboarding stage and at policy renewal. But we’re experiencing increasing broker involvement in client queries around policy management and claims processing.
That’s not to say William Russell is having service issues! Rather, clients are being more demanding of their brokers than ever before. Clients expect their brokers to represent their interests in the typical issues and questions that come up during the policy, with which brokers of a previous generation may not have been quite so involved.
Even for clients who are happy with an insurer’s service, the regulatory landscape and market conditions can change in an instant. In the United Arab Emirates (UAE), for example, the Dubai Health Authority (DHA) calls the shots and will not shy from implementing fundamental changes at short notice. Brexit transformed the way that brokerages in the UK did business in the European Economic Area (EEA), and vice versa. As markets become more regulated, it becomes harder for smaller brokers to survive. Smaller brokers in the UK that could not set up an entity in the EEA after Brexit, for example, are simply no longer able to place EEA risks with Europe-based insurers.
Compliance issues
Compliance controls for brokers are becoming increasingly onerous. Regulatory requirements for anti-money laundering, Know Your Customer (KYC), record-keeping, data monitoring, and – in the UK – the Financial Conduct Authority’s (FCA) Consumer Duty are increasing the costs of doing business. In theory, one must say that such controls are a good thing for consumers and crime prevention. But they do increase the burden on small and medium-sized brokerages, or brokerages looking to move into new product lines.
One broker I spoke to, with a main business in financial planning, said that his firm doesn’t consider standalone IPMI enquiries. The time and cost of onboarding such clients simply exceed the returns. The broker’s firm now only advises existing clients on IPMI.
Brokerages withdrawing from advising clients on certain product lines is an unhealthy, if unintended, consequence of increased compliance and regulatory controls, reducing the options available to clients and concentrating business with the large brokerages that can handle the requirements.
On the market side, insurers enter markets and exit quickly. In key regions for William Russell (e.g., East Africa, South East Asia, the UAE), we’ve seen insurers perform land grabs, with insurers offering very attractive premiums for clients in
the first couple of policy years. But with such enterprises, unsustainable premium increases are never far away.
Compliance controls for brokers are becoming increasingly onerous
Brokers having been doing far more work to steer their clients towards sustainable, long-term solutions, and that starts with warding clients away from the obvious temptations of cheaper premiums early in the policy. Because, if a 15% or 20% increase comes in the third year, the client will paint the broker who made the recommendation as the bad guy.
And William Russell’s position on the role of brokers? We remain committed as ever to our brokers, intermediaries, advisers, and independent financial advisers (IFAs). Though we have a healthy direct marketing programme, most of our new clients come via brokers and we don’t want that to change or see it changing any time soon.