The non-life insurance industry has a special relationship with service providers as they play an integral role in fulfilling an insurer’s customer value proposition to the insured/policyholder. Some of these service providers are often Small, Medium and Micro Enterprises (SMMEs), who are expected to have a high level of expertise in client services in order to ensure that client experience is maintained through the delivery of high-quality service and in the most professional manner. Failure to deliver the services to the client’s satisfaction may negatively impact both the insurer’s promise to its client and/or the relationship between the service provider and insurer, thereby impacting the sustainability of both entities through the termination of the insurance policy by the policyholder and/or the contract between the insurer and the service provider.
Engagements with service provider representatives at various SAIA Forums have indicated that there may be a relationship breakdown between some insurers and service providers, as a result of the absence of the formalized engagement mechanisms/channels; especially in relation to stakeholder conduct (client, insurer and service providers) during claim management stage. Service providers have described most of these relationships as one-way and usually at the expense of the service provider. Examples provided include:
- Supplier mistreatment by clients/policyholder; with no platform for the service provider log a complaint.
- Unequal negotiation terms with engaging with insurers to secure business.
- Utilization of the incident managers as gate keepers for contract negotiations
There has been no evidence of clear mechanisms for the voice of the supplier, especially small black owned suppliers, to be heard by the insurer. The result of this is that if a service provider feels mistreated by either an insurer, an insurer’s agent (incident manager, for instance) or the client; this service provider has no channel for recourse. Some of the service providers utilise their industry associations as platforms to facilitate engagements with the insurer, however this method is not always successful and it can be a lengthy process and may not provide the immediate relief to the aggrieved service provider.
Creating communication channels with service providers, especially black owned SMEs, is necessary to facilitate engagement on pertinent issues and establishing necessary solutions for challenges identified. Insights obtained from a formalized process can be useful in improving the industry’s understanding of the service providers needs and particularly for SMMEs and review its supplier engagement strategies to ensure an inclusive approach that accommodates small businesses?
This Treating Suppliers Fairly article is one of a series that SAIA will be writing to cover different topics on SME challenges.
For more information contact Zanele Gigaba, SAIA Transformation Manager: Zanele@saia.co.za