Service standards at the major insurers have been roundly condemned by Biba, in an unprecedentedly bitter set of public remarks from the broker association's chairman.
Speaking from the platform at the Chartered Insurance Institute conference in Harrogate last week, Biba chairman Simon Bolam launched a blistering attack on the decline in broker service that has accompanied the mega-mergers of the past few years.
"Service levels are plummeting,"said Bolam. "The backload of work waiting to be processed by these insurers is enormous. They're often three months behind."
Highlighting a widening gulf between senior management and their workforce, he said: "Morale amongst insurance staff is at the lowest level I've ever known. Many of the these people despise the arrogance of their head office. They see them as out of touch with what's really going on."
Bolam was scathing of leadership at the insurers. "The people running the merged insurers are not merger specialists. And in implementing their mergers, they've lost focus on servicing the needs of brokers and intermediaries."
Bolam's comments mirror what brokers have been saying amongst themselves and to insurers for many months.
They bear out the findings of the recent Biba survey of broker and intermediary attitudes towards service levels.
But it was the public nature of the Biba chairman's attack that took observers by surprise. Until now, Biba has been unwilling to condemn openly in the way it has behind closed doors.
Bolam told Insurance Times later: "I'm a high street broker, so I am speaking from the heart. I really feel the pain of what's going on. It has cost me a lot of money." (See story below).
Certainly, the presence immediately beside him of Axa Insurance chief executive Andy Homer was no inhibition.
Commenting at the time, Homer said: "There is a lot of truth in what Simon says. No one going through a merger has overcome these problems.
"As an industry, we have struggled with the management of change - we just don't have the general management skills to cope with the change. But it's not that there are lots of bad managers in general insurance - it's because managing major change is very difficult."
Speaking a few days later, Homer added: "Yes, there are stresses and strains - and no one wants that to manifest itself in bad service, and we take these issues very seriously indeed.
"But I also think that if Simon's comments are about the whole of the market, then they're wide of the mark. I think he's talking about one particular insurer, and although I welcome his input on the subject, I think he needs to take up these points with that company's chief executive."
... And he wants commission from insurers after mergers
BIBA chairman Simon Bolam is urging insurers to pay extra commission to brokers as compensation for the extra costs that mergers impose on them.
Bolam said that he and a few other brokers have managed to persuade one or two insurers to pay compensation for the extra costs borne by brokers. "But it's only a very small minority. If all the brokers affected started calculating what the mergers have cost, it would be astronomical."
Rather than ask for compensation - which might be difficult to quantify - Bolam called on insurers to pay commission overriders.
Bolam also revealed that Biba is setting up a brokers' working party which it wants insurers to consult before any merger. The group - due to be approved at a board meeting yesterday - will invite insurers considering merger to discuss with them how to mitigate the effects on brokers.
Bolam told Insurance Times: "We have been very concerned for some time now at the costs that are falling on brokers because of the mergers. When you add up the cost of re-issuing policies, it must have cost the broking industry many millions of pounds.
"We hope that by talking to us before they merge, insurers can be persuaded to help reduce unnecessary costs for our members. It will serve as a think-tank to help them consider the implications of what they're going to do."
What the insurers say
RSA: "We don't find that morale is low, although with financial services generally going through uncertainty, there may be some sort of lowering of morale, but not at RSA."
Norwich Union: "We don't think those comments can be directed at us. We have done so much to make sure our services to intermediaries have been perfected. This has been recognised by numerous industry awards. These are voted on by intermediaries, so we must be doing something right. Nobody is perfect, but where we have identified problems we have improved systems."
CGU: "We have been through a merger process which is a complex undertaking. We have formed a new company, structure, products and service philosophy. All this has been done on time and on budget with the minimum of job losses. We have relocated 3.5m policies, installed 250km of cable, had 3,000 desks relocated. "Yes there's been some slippage on service, but it is a testament to our management that integration has been achieved on time and on budget.
"Now we must get things right and service our customers' needs and that is what we are doing now."
