Price or quality?
The cost of living is rising, but that's no reason to scrimp on insurance. As Kate Hughes finds, good service is pricelessWith the credit crunch in full flow, consumers are bombarded with money-saving tips and warnings about overspending. Price comparison sites like Moneysupermarket.com and uSwitch.com offer a one-stop shop for bargain hunters, where the emphasis is on price above all else. But many consumers fail to realise that cheapest isn’t necessarily the best or most appropriate consideration when it comes to their individual insurance needs.
The details of the cover represented on these sites is often far from comprehensive and customers may only see the basics of the policy before buying online, believing themselves to have bagged a great policy at a great price.
But nowhere is the phrase 'you get what you pay for' more true than when it comes to insurance policies. Brokers have long offered added value, and that message is even more important now.
It can be quite a challenge to show your clients that having the right cover at the right price is ultimately far more valuable than the wrong cover at a lower price, however. "The industry has drawn customers to look to price before benefits," says Justin Gott, Art and Private Clients Underwriting Manager. “We need to reverse those priorities, because I believe clients would often make different choices as a result."
The virtues of added value over cheap cover are apparent at both point of sale and point of claim. The Hiscox 606 policy, for example, targets high net worth clients. The policy offers a range of extras that are not found in bargain policies, such as that personal possessions are covered anywhere in the world – not just in the home.
In the know
Cover is tailored to the client’s needs by increasing the limit on fine art or jewellery following a high-quality value assessment or valuation. Justin says that high-street lenders often struggle to adequately cover valuable individual items, so making a client aware of the wealth of specialist knowledge on offer is crucial.
"Increasing a client’s cover because of specialist knowledge and a proper valuation can give real peace of mind in the event of a loss," he says. Access to that knowledge is generous – the 606 policy provides clients with free helplines covering everything from legal questions to travel advice.
But Justin emphasises that it is far better to prevent a loss than to fix it afterwards. “The sentimental value of an item is often far more important to clients than the monetary value," he says. "This is where risk management and disaster planning really come into their own.
"If we can prevent water damage ruining, say, a family heirloom in the first place, we can demonstrate added value to clients that is far more important than shaving a few pounds off a premium."
And clients can also be reassured that, if disaster does strike, their claim will be settled quickly and thoroughly. In fact, Hiscox settles a quarter of all claims on day one, and there are no deductions for everyday wear and tear – even on clothing. Hiscox also guarantees to pay interest on any UK-based claim not paid within four working days of receiving a signed agreement form.
If, at the end of the day, the bottom line still eclipses the qualities of the service and policy, it may also be worth reminding clients that increasing their excess may be one way of maintaining a consistent price for their cover. It will keep a hold on insurance costs when the price of goods and services are going up all around them. And that kind of advice is invaluable.
Compare and contrast
Your clients are busy people, and they like to have all their options laid out for them clearly and simply. But mainstream price comparison sites often don’t tell the whole story and clients may end up with cover that doesn’t meet their needs.
That’s why Hiscox, in partnership with independent research company Defaqto, has created Defaqto Compare!, an online research tool. It allows you to compare the product details of almost all home insurance policies with Hiscox’s, enhancing the personal service you provide to your clients.
At a glance, you can see what is and isn’t covered in each policy, as well as highlighting extras that your client might have to pay for to get the level of cover they need. With Defaqo Compare!, it’s all there in black and white.
