Service standards is a battle that no one in the industry should be fighting each other over, says Grant Ellis
The long awaited Biba service standards are, we are told "almost ready for publication" - the only hurdle now seems to be a final sign-off meeting between Biba and the ABI.
This comes at a time when the Office of Fair Trading (OFT) has been critical of the insurance industry's standards and is particularly concerned about the early issue of renewal notices. So I guess that any agreement between parties to improve standards is a good thing.
However, getting agreement on standards is one thing, but actually enforcing them is quite another. What will be the consequences of non-compliance? Will rogue insurers and brokers be hauled over the proverbial coals if they flout the rules? I think not - and here's why.
GISC, the industry wide voluntary regulator is, and has been, enthusiastically supported by all major insurers since its creation just a couple of short years ago.
One of the obligations it places on insurers and brokers alike is to provide adequate notice to policyholders of changes in terms and conditions, including renewals. To quote from the GISC commercial customer code: "Members will notify commercial customers of the renewal or expiry of their policy in time to allow them to consider and arrange any continuing cover they may need."
While GISC does not define what is "in time" it responded to my written question by saying that it depended on the complexity of the product, but that it was at least ten working days for a simple policy, such as for a commercial vehicle, and longer for more complex policies.
This is a service standard. Need I say more? How many insurers have managed to adhere to this in the past 12 months? And what have the consequences of non-compliance been? That's right - nothing at all.
For service standards to have any teeth, their breach has to have a detrimental effect on the party that is in breach, and in my experience this is going to come in only one of two ways.
The first is financial - "if you are in breach you pay me this much" and the second is for the regulator to impose it, with the expectation that if it is breached it will come down on the transgressor like a ton of bricks.
The FSA has already indicated its willingness to get involved in imposing standards in, for example, the claims arena, and I'm sure it will extend this as time goes on.
Its role is to ensure that the end customer is not disadvantaged by inadequate performance from the industry, and it will pursue this with vigour, rest assured.
But in all other areas it is the commercial relationship between the broker and the insurer which will ultimately determine the level of service that is provided. Insurers have already demonstrated their willingness to differentiate the service they provide to segments of their broker base, and this is a commercial reality.
Why are we surprised by this? It happens in all other walks of commercial life. If you are not a sufficiently important customer in the eyes of the supplier, then your service from it will not be as attentive. Yet there are still brokers out there who believe that first class service is a right that they should be able to demand, and spend much of their time bleating about the fact that insurers won't give it to them.
Get real guys - if you want better service, demonstrate to your suppliers that you are worthy of the extra investment. Either put up or shut up, as the saying goes. This is not a battle that trade associations will or should be winning for any of us.
