One cannot fail to be moved by the plight of rural businesses and farmers during the current foot-and-mouth epidemic. The scenes of livestock being culled are horrific and the financial problems facing all businesses involved are heartbreaking. Yet, while many interested parties are commenting on the situation, there seems to be a deafening silence from the leaders of the insurance industry.

Knowing the industry well, I suspect that much time is being spent pouring over policy wordings to see if any cover has been given inadvertently, considerable mental energy is being expended on working out how these can be interpreted in insurers' favour and time is being spent calculating how quickly any covers given can be withdrawn.

This, of course, would only add to the industry's image as one that profits from misery.

Indeed, insurers are likely to make windfall profits from the disaster. This is because:-

  • farmers' usage of their vehicles is down, reducing claims incidence
  • lighter business activity is reducing liability claims
  • stock is being run down or destroyed, reducing exposures
  • crime in rural areas is probably declining
  • profits meltdown impacts on business interruption exposures
  • claims payments are delayed because of investigation problems.

    However, like the banks, the industry needs to respond positively to improve its image and show it cares.

    Perhaps it could form a task force at the highest level to see what collective action could be taken, or even suggest a support fund, in which the industry could make a donation to be matched by the government.

    If insurers fast-tracked all existing and new claims in affected areas, interpreted policy wordings liberally and continued cover during the outbreak, their reputation might improve within the farming community.

    Perhaps they could also waive claims investigations during the emergency, make generous interim payments or give immediate premium refunds for reductions in risk.

    Relaxation of credit control for clients and brokers involved and, in extreme cases, premium holidays would also be positive steps.

    This dire situation should not be exploited; our industry should be seen as sympathetic towards a community in crisis, especially since our sector has derived substantial profits from that community over the years.

    For once, let's put shareholder value and merger benefits to one side and show we care.
    Tony Cornell
    Cornell Consulting
    Calcot, Reading

    Groupama is right
    Groupama has come in for a lot of criticism in your last two issues, but I believe that its stance on the General Insurance Standards Council (GISC) is just what is needed to restore confidence, professionalism and

    standards in our industry.

    Why am I, a registered broker and a member of the GISC, singing the praises of one particular insurer? Because it seems that so much of the conflict in our business is unnecessary. Where does “company bashing” by intermediaries and “intermediary bashing” by companies and “trade body bashing” by rival trade bodies actually get us?

    One of the things that impresses me about Groupama is that it invests valuable time and money in making the GISC happen.

    It will, I am sure, have thought about its strategy of saying to brokers and intermediaries that they should join the GISC or have their agency cancelled. Of course, that approach is not without risk, because there are probably brokers who will cancel their relationship with Groupama themselves.

    But the GISC needs the support of the entire industry if it is to succeed.

    If brokers and intermediaries are happy with their standards they have no need to worry about the effect a controlling body would have on their business.

    If, on the other hand, their standards are not up to scratch…
    Richard Sheik
    Managing director
    Camberford Law

    No way to do business
    I held an Axa bed & breakfast policy that was due for renewal in March. Ten days before it ran out, I had still not received renewal terms, so I decided to find out what was happening. Three days, ten people, 15 phone calls and numerous branches later, I managed to speak to someone who said they might know what was going on. (I didn't quite have to go to France, but I have been everywhere else.)

    When I explained the situation, I was told that the bed & breakfast contract was no longer being supported. I was then told that the policy would be reissued as a commercial contract at double the premium – rising from about £600 to more than a £1,000. I thought this was ridiculous.

    I asked the underwriters how suitable a commercial contract was for what was essentially a personal lines risk, but they couldn't tell me with any certainty what cover was quoted, let alone if it was suitable.

    I requested written confirmation of the quote to put to my client. All I received was a prospectus and copy policy, without confirmation of cover levels, endorsements or a premium.

    What are these people doing? Do they understand insurance? I got the impression that the person I finally dealt with did not really want to be doing the job, and this seems to be a widespread problem.

    If insurance companies are going to restructure, I would like to suggest that they invest in some good staff who are willing to help rather than hinder.
    Paul Berry
    by email

    Hey Jude, don't let it ring
    I overheard a pensioner complaining about trying to obtain a motor quotation from a direct insurer and having to endure the call queuing system. The accompanying music selection included Hey Jude.

    After a lengthy wait, the pensioner eventually gave up and rang a local broker instead.

    He wondered if the firm in question realised that Jude is the patron saint of lost causes?
    Patrick Parnell
    by email

    IRBC is not to blame
    Mike Slack states (Insurance Times, March 22) that the Insurance Brokers' Registration Council (IBRC) would not accept membership from mere intermediaries such as himself.

    The real issue, however, is that the IBRC simply could not do so unless the intermediary sought registration and was prepared to meet its requirements. If an intermediary chooses not to do so then it has barred itself from registration and membership of the Institute of Insurance Brokers (IIB), which is a broker-only body.

    The Insurance Brokers Registration Act was introduced for the benefit of the customer. That it was flawed by only regulating the insurance broker and not all intermediaries is not the fault of the IRBC or the IIB. What I have long been unable to understand is why the act was never amended to include intermediaries.

    To suggest that some brokers are frightened of being regulated and monitored is total nonsense; all brokers have agreed voluntarily to being regulated by the IBRC.
    Peter Richards
    Insurance broker
    Kempston, Bedford

    Stealing trade
    As a senior partner in a firm of brokers, I have just been approached by an employment agency giving me details of a commercial account executive, currently handling £190,000 worth of business, who wishes to change jobs. One of the assets that the employment agency attributes to this person is that, after 12 months, he could be expected to bring business worth £85,000 to his new employer.

    In my opinion, his present employer has paid him a salary and provided certain benefits for him to obtain business for that brokerage. He has had the protection of that brokerage in the event of his making any errors.

    Yet, on leaving the brokerage, he feels that he has a right to attack its business, for the benefit of his new employers.

    When we are endeavouring to improve standards in the insurance industry, I believe that there should be some sort of code of conduct relating to what I see as nothing more than theft.
    David Miller
    Senior partner
    David J Miller Independent Brokers

    Use chartered insurers
    Few, if any, would disagree with Hubert Green's letter “Learn from elders” (Insurance Times, March 1). If our ultimate objective is for the chief executives of insurance companies to be underwriters, we could, in the meantime, require them to involve chartered insurers in their decision-making process. As members of the Chartered Insurance Institute's Society of Fellows (SOF), these insurers will have served an apprenticeship, be properly qualified and possess a working knowledge of the theory of insurance.

    More importantly, members of the SOF could help both in internally regulating insurance companies and guiding external industry regulators.

    You need look no further than predatory pricing, the mis-selling of endowment polices, the Equitable affair or the decision to wind up the IBRC to see the problems caused by the Insurance Directorate/Office of Fair Trading's failure to understand what they are doing.
    John Lynch
    Insurance Advisory Service
    Hillingdon, Middlesex

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