When you look across the Insurance industry you may wonder if everybody working in the sector actually understands the true meaning of delivering a quality service for Consumers with sustainable pricing. Perhaps some have simply been delivering lip service and crazy prices as an alternative?
Brokers in particular have experienced the difficulties and embarrassment arising from the rising cost of motor insurance and the protracted dispute over who is to blame. Well, at KennCo Underwriting we believe the clear ‘proximate cause’, as the cone heads in the industry would call it, was the aggressive use of under pricing and unprofitable premiums by a number of players.
These players carelessly did this in an effort to attract new customers and grow their market share in direct business. The upshot was that this activity created huge losses and negative press with widespread misunderstanding of the Insurance business. It also ultimately resulted in poor service standards in many areas.
Under pricing is clearly not sustainable and absolutely no good for the Industry or Consumers……….shame on All the management who opted for this modus operandi in their businesses!
Yes of course, increases in the cost of claims and the frequency of fraud will have had an influence too, but that influence was hugely amplified when the basic rates and charges were incorrect and inappropriate in the first place.
Under pricing is clearly not sustainable and absolutely no good for the Industry or Consumers……..shame on the All the actuaries and the underwriters who allowed this to happen!
In some cases the indigenous, ethical pricing of some providers was ditched and ‘price matching’ was introduced to win and retain business…………. What a crazy concept!
Under pricing is clearly not sustainable and absolutely no good for the Industry or Consumers…… …shame on the salespeople who mislead their customers!
And then, to add insult to injury (excuse the pun), to cut costs the claims approach from many became cheap, cold, unfriendly and extremely tight. Oftentimes settlement reduction or repudiation was the favoured objective over assistance and fairness.
Under pricing is clearly not sustainable and absolutely no good for the Industry or Consumers…… …shame on the claims handlers who treated customers like that!
Under pricing can only result in financial loss and the market has surely had enough examples of that over the last few years! In addition, under pricing leads to a decline in service standards because providers cannot afford quality. This in turn can damage the reputation of everyone in the business.
We should all hope that such misconceived methods of transacting business and NOT providing a quality service for Consumers are dead and gone forever. Lessons must be learned and those responsible should be dealt with appropriately and kept a long way from the steering wheel.
The Central Bank of Ireland’s Consumer Protection Code clearly states:
“The Central Bank’s consumer protection objectives are based on the need to ensure that consumers are treated fairly and with respect and dignity by firms, and that firms act in their consumers’ best interests in all that they do.”
Some have failed in meeting this basic service requirement and reoccurrence must be prevented in order to rebuild and preserve the good reputation of the Industry. After all, it does deliver much needed benefits for Consumers and Businesses and indeed a risk transfer platform without which the entire economy could not exist.
This article will no doubt resonate with discerning Brokers and many will have first hand experience of the damage that has been done.
Perhaps it’s now time for Brokers to take the lead and make the Insurance ’Industry’ a real ‘Profession’.
Perhaps it’s now time for Brokers to work more closely with those providers who do not challenge or compromise their existence but rather seek to support them in providing Quality Products and a Quality Service for Consumers.
That indeed is the KennCo Underwriting promise where Service, Stability and Security come as standard.
REMEMBER: Under pricing and poor Service are not sustainable and absolutely no good for the Industry or Consumers!
Perhaps it’s time to reintroduce ‘Uberrimae Fidei’, as the cone heads would call it, to the business!
It would surely make you wonder.
MARK P REDDY – Head of Broker Development – KennCo Underwriting