Newcomers to insurance who have been reading Insurance Times recently must be excused if they think that 'dual pricing' is both new and shocking. Such has been the reaction from the industry following Sandy McArthur's (see March 23) rallying call to fellow brokers to withdraw their account if they discover an insurer has offered policyholders cheaper deals directly.
Indeed, this week we have published two more letters from brokers who applaud McArthur's comments and share his deep-rooted concerns.
Meanwhile, our post bag continues to grow. Letters of the same sentiment are left on the shelf for another week.
McArthur rounded on Norwich Union, and the insurer has subsequently borne the brunt of the attack. But this is an industry-wide problem – there is no question that many other insurers are equally guilty of dual pricing which has, after all, existed for years.
It suggests the timing and the outrage evident in these letters reflects a far deeper malaise, much of which was highlighted in an independent survey of brokers recently.
In the last two years, the pace of insurance evolution has quickened.
Mergers have created a handful of mega-insurers who dominate the market; retail giants have started to sell cover; and a new direct threat in the form of the internet has emerged.
Small brokers are isolated. They can accept the business realpolitik of the internet and the threat from retailers, but it has been hard for them to accept the deterioration in insurer service standards as well, especially, when they are desperately trying to keep hold of their policyholders at the same time.
This week Patrick Snowball, new general insurance chief executive of CGNU, which will have 20% market share, has promised to improve service standards. Perhaps the rest of the industry can follow his lead, or even go further.
Brokers need insurers to guarantee minimum service standards. And not just for the brokers that they have close relationships with, but any broker that makes them money and sells their policies.