Even if they win, the optics of insurers battling their customers in court will harm the industry

This one is very ugly. Insurers battling their own customers in court as they argue over the meaning of words so they don’t have to pay claims. 

Claims which will keep jobs going and people’s dreams alive through the biggest crisis since the Second World War. 

Perhaps insurers might win the case, although the smart betting is now on them losing.

Whatever the outcome, there is a sense among neutrals that this goes against the spirit of an insurance contract.

Meanwhile, the broker is sandwiched between the battling customers and insurer. They are the big losers in this one. 

So why are insurers taking this to court? 


The FCA is proposing radical action to crackdown on insurer and broker’s unfair pricing  

The answer is very simple: an insurance company’s primary responsibility is, above all, not to stakeholders such as staff and customers, but to the shareholder.

If it were not for the fallout from shareholders, many of these insurers would probably just pay the claims. 

Conflicts: profit v customers 

We see this conflict between customers and profits frequently.

A good example was the so-called ‘price walking’ of customers

If you are an older customer unlikely to change policy, you get bigger premium hikes each year. If you are younger, and likely to change, the policy stays more competitive.

Such an unfair and unbalanced policy was never in the interests of customers, but insurers and brokers feared they would lose a competitive edge - namely profits - if they didn’t play the game.

The FCA intervened. 

Another good example is the mega-consolidation of the very top brokers. 

Does anyone really think that by JLT selling out to Marsh, customers will receive a better service and have greater choice? That it will be good for all the hundreds, if not thousands of jobs lost, as a merger flushes out duplication? 

James twining

Ex-JLT director James Twining penned a passionate blog on why the JLT/Marsh deal was bad

But it will probably be good for Marsh shareholders. 

The break up of Aviva, is a final good example. Yes, it will probably be good for long-suffering shareholders if Aviva is broken up. 

But it won’t be good for general insurance brokers, IFAs in the life market who enjoy Aviva’s competitive offering and the thousands of staff who will lose their jobs.

Studies have shown time and time again, that mega-consolidation between the very top companies is a negative outcome for customers. 

Maximising profits is not per se a bad thing. Growth is the lifeblood of every business. But it should be done responsibly. 

Ultimately though, the imbalance in stakeholder priorities will create tensions between shareholders/management versus customers/staff/regulators for many years to come.