Like many others, I have had my "Dear John" letter from Iron Trades. This did not come as a surprise. Although I have held an agency with them for many years, I have to admit that it is one of my smaller agencies and therefore fell to the woodman's axe. But has Iron Trades (and others) ever bothered to ask why the agency never expanded?

It is not many months since I made an official complaint to them that I had failed to secure two new motor cases involving premiums in excess of £1,200 because other brokers nearby enjoyed motor rates from Iron Trades that were ten per cent less than mine and therefore they secured the business instead.

Against this discriminatory background, is it any wonder that brokers, such as myself, did not give them more business than suited us?

After all, they have now decided to market their private motor products on a direct basis through the internet and cut out brokers altogether. It is also interesting to note that their own long term future and mutual status is now in doubt.

The consequence is that the big brokers will get bigger and the small brokers will, to a large extent, cease to exist. The outcome will be that the big brokers will have such large accounts they will then start dictating to the insurance companies the rates that they will be allowed to charge their clients. If you think this is fanciful, I would point out that a director of a large national brokerage has told me that this is already happening.

At that stage, the companies will then realise the advantages of the smaller broker who does not have this degree of muscle.
Frank Cottle,
The Lansdown Brokerage,
Monmouth House,

Make sure the internet works fully for you
It was interesting to read your article about Norwich Union's web site package (Insurance Times, August 26, 1999).

Businesses are scrambling to get on to the internet at the moment, and this is not restricted to the insurance sector. However, it is important for any business wanting an internet presence to give themselves a competitive advantage to make sure that they are gaining a genuine competitive advantage, rather than just joining the internet bandwagon.

The Norwich Union offering is for a standard three page web site.

Although you can add your logo and colour scheme, and whilst I am sure that the templates are well designed, such a template can never differentiate between two similar businesses because the web site will be largely similar.

This is important because there are millions of insurance-related web sites on the internet. A search on Yahoo! using the keyword "insurance" returns 2,074,199 web pages.

Given this, it is vital to have a web site that offers something different to the competition or that competitive edge is lost.

There are no shortcuts here – the competitive advantage can only be achieved by using a professional web site design company to build a proper web site. So is using a professional web site designer really as expensive as was suggested in the articleNULL

The article suggested that the construction of a web site would cost in the region of £650, and to be fair that is probably the average cost of a web site. However, £650 would buy more than three simple pages. A more realistic expectation for the design and construction of a simple web site would be in the region of £250-£300.

What about ongoing costsNULL Many brokers already have an internet account for e-mail, and generally that account will offer them free web space.

However, a survey conducted by Morgan Bishop revealed that less than ten per cent of businesses with such an account actually used the free web space they were given.

What this means is that users of the Norwich Union web site package will be paying £39.95 a month (£479.40 per year) for something that they may already have! It is imperative that the insurance industry embraces this new technology, but it is also important that they make sure that they harness the power of the new technology to their benefit, rather than just joining the internet bandwagon. A mediocre web site is better than no web site at all, but like all things in life, you get what you pay for.
David Morgan,
Morgan Bishop.

NCD failings are highlighted
Recent letters asking why no claims discounts (NCD) still exists are most pertinent in the light of appreciation the NCD system is so riddled with abuse.

The problems are more apparent when related to those insured and their representatives who do not presently abuse the system, but understand that insurers are not obtaining a proper measure of premium income because other people have realised that not telling the truth and not having to substantiate what they say is financially very beneficial to them.

Therefore, the honest appear to be subsidising the dishonest.

The trouble seems to come from a too thorough knowledge on the part of the insuring public as to insurers' ways or 'sloppiness'. This is, of course, the basis of much fraudulent intent against insurers.

All the benefits to insurers of an NCD system would now appear to be obsolete. Loyalty, the second thought about claiming, the reduction of premium being earned fairly, are not modern ways of establishing a good business relationship. Protected NCD – if that is not a contradiction in terms – was clever but it has had its day. Insureds can move on to re-establish full benefit.

It was always a burden for one insurer to obtain proof of NCD from a previous insurer.

However, it did not seem too much to expect a proposer to submit proof of NCD by documentation but, of course, to many insurers that is now too costly a process. Who measures the cost of abuse against the so-called saved expenses?

We really are now ready to encounter a system – but it will not be new – where the best drivers, driving the most appropriate vehicles, are charged a base rate. All adverse features about the risk are then measured in terms of loadings.

It is to be noted that although insurers have means to find out about the proposers, there would still be dependence upon being honest with one another. Is there an alternative?

By now, readers will identify something called underwriting with a view to making a modest profit. Surely that is not obsolete and a few smaller insurers will still recognise its merits.

The major insurers can give what reasons they like, but it is a complicated task telling the claim and conviction-free insureds that they have to pay premium increases ten times the rate of inflation.
G.J. Davidson,

Rainbow's IIP achievement
We refer to an article entitled "Award for Disaster Firm" on page 20 of the edition of August 26. We would like to point out that the statement: "Fire and flood restoration specialist Disaster Restoration has become the first company of its kind to achieve the prestigious Investor in People standard" is not accurate.

Rainbow International are also specialists in disaster restoration, as you will be aware, and our company was recognised as an Investor in People in February 1997 – over two years ago.

Disaster Restoration is to be congratulated on its recent achievement.
Kirstie Wood,
National Marketing Executive,
Rainbow International.

Car-azy way to treat a client…
Our annual subscription for the Insurance Ombudsman's report yields excellent value.

Here is a recent gem. The policyholder complained that the courtesy car was too small for family needs and paid £250 for an upgrade. Only via the Ombudsman was agreement reached that the courtesy car should be equivalent to the policyholder's own vehicle and the £250 be reimbursed. This must be a complaint against a direct motor insurer. An insurance broker would have solved the policyholder's misery in a jiffy.
Malcolm P Ward,
Cumbria Insurance Brokers,

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