Stand up, unite and demand reforms
Stand up, unite and demand reforms
I have been in the insurance industry for many years and while the service offered by insurance companies seems to have deteriorated with each new grey hair I have grown, I think the industry has now reached the pits.
As registered brokers we have a duty to ensure that documentation received from insurers is correct and has been issued in accordance with both our and the client's instructions. This is a major task in itself. I also believe that we have a duty to ensure the client is charged the correct inception and renewal premium, followed by the usual adjustment at the year-end.
I have a situation with a commercial client where there are two companies on the policy operated by the same directors from the same premises with the same employees. With me so far? They provide me with separate financial information and I am required to calculate and split the premiums between the two companies for their internal accounting purposes.
The case is with Norwich Union and despite numerous telephone calls, letters and faxes they are unable to supply me with a rating structure and the latest fax states: “We are unable to provide a rating structure due to the loads/discounts built in at various levels on the systems.” While I realised that insurers no longer “underwrite”, where does that leave us with the client?
My own opinion is that as professionals we should stand up to insurers and demand that rating structures are provided for a number of reasons:
Do other brokers agree that we should make this an issue with the various regulatory bodies?
A Manning UK
These sacred cows
Further to David Union's letter from Pinnacle Insurance (Insurance Times, 19 October), I thought it best to clarify matter in view of the sensationalist reporting of a speech that I made at the Chartered Insurance Institute (CII) conference in September.
During my presentation on the business that is driving ecommerce, I stated that a number of sacred cows may need to be killed in the new e-economy.
In response to a question from the audience, I explained that even Independent Insurance was looking at all facets of its business model and that through modern connected technologies there may be ways of delivering information to underwriters, other than just the traditional visit by a surveyor.
I went on to emphasise that Independent was exploring the use of such technology for smaller risks linked to its ecommerce initiative – business-risk.com – and this would not necessarily mean not doing surveys, but may actually change the nature of a survey and would certainly cut down the time on site.
I trust this clarifies all the issues for your readers.
director and assistant general manager
marketing and ecommerce
Autocracy of the IIB
In recent months, the general insurance industry has been subjected to the views of the Insitute of Insurance Brokers (IIB) and, on the whole, the industry has chosen to ignore the institute's ill-informed and Luddite views on regulation. However, the announcement of the manner in which the institute is changing its criteria for membership (Insurance Times page 3, October 19 “New IIB criteria to oust undesirables”) cannot be allowed to pass without comment.
Once again, the IIB appears to be out of touch with the consumer-conscious world in which we live. Does the IIB genuinely believe that by self-regulating itself, the credibility
of its members will be enhanced in the eyes
of the public?
The IIB has been vociferous in its criticism of the General Insurance Standards Council (GISC) for not listening to the needs of brokers and intermediaries and yet the IIB appears to take autocratic decisions without apparent consultation with its membership. If the comments from IIB members are anything to go by, the proposed eligibility change has been taken without consultation and despite Andrew Paddick's assurance that the change is “just a formality”, the IIB membership appears to have been caught unawares.
All of us can imagine, I am sure, the furore that the IIB would have created if such a decision were made by GISC without consultation. The GISC still has a long way to go in its mammoth task of bringing all sectors of our industry together under one compliance umbrella. GISC can, however, hold its head high and say it is truly independent and with four ABI/insurance company directors and six intermediary/broker directors plus public interest representatives making up the main GISC board, it is well-placed to ensure representation from throughout the industry. GISC is committed to consultation on its future governance and will, in due course, comprise a board of elected members plus independent public-interest directors to ensure that the interests of consumers are represented.
If the IIB is intending to launch “IBRC mark II” in April next year, then perhaps the institute would be kind enough to share its proposed rulebook with its members. Or, am
I the only one thinking that “IBRC mark II” is just another way to generate money for the IIB and to impose on its members an additional layer of regulation in an, as yet, undisclosed form. GISC has emerged as the “only game in town” and is tackling the issues in
a pragmatic and professional manner. GISC deserves the support of all the industry, including the IIB – it is still not too late for the prodigal son to return to the family!
The Association of Insurance
Intermediaries & Brokers
Pots and kettles
I refer to Mr Gray's letter in Insurance Times of October 12, 2000.
I was very surprised to find that Gray was unhappy about the tenor of my reply (Insurance Times October 5). In his original letter Gray referred to “ivory tower-living Polaris people” who “never contemplated consumer friendliness”. Surely having set such a tone it is rather paradoxical that he should object to a robust reply – I think the pot is calling the kettle black.
Let me state categorically that the Polaris rating engine, like all others, can respond to as few pieces of information as an insurer is willing to use for quotation. A number of insurers have Polaris products on websites that use very small question sets.
Such products are not on broker desktops for two reasons: first, software houses use a standardised (and generally quite extensive) question set and insurers' products are designed to respond to these and second, on a website it is possible to add data from third-party sources which avoids having to ask the proposer to provide such information.
This latter function is difficult to provide on traditional broker systems since they do not have the required permanent connection to external data sources.
Some web-based products – whether written using Polaris software or not – also give indicative quotes on the basis of a few pieces of information, but will provide better rates if the proposer supplies more data.
I trust this concludes a dialogue based on a misunderstanding.
Fulfill your obligation
The October 12 issue included an article by Tony Cornell saying that as the year-end is fast approaching, brokers should be looking to maximise profit share, and he went on to discuss the best ways to do this and how to plan for the year ahead. This was a repeat of an almost identifcal article by him this time last year.
I am astonished that anyone can encourage brokers to have profit-sharing agreements with insurers when agency law requires brokers, at all times, to put the interests of their principal before their own. For a broker to place his clients' business with insurers that will give him a profit share, rather than those that do not, is quite clearly in conflict with his obligations under agency law.
And some people still firmly believe that the regulation of insurance borkers and intermediaries is quite unnecessary!
Repairing the damage
I sympathise with your correspondent who has found that his client is prejudiced following the repair of his new VW (October 12).
He will find that in addition to the loss of warranty the repair will have substantially accelerated the depreciation of the vehicle.
This head of claim can and should be put
to TP insurers, supported by appropriate evidence, on valuation and likely disposal of the vehicle as part of the uninsured loss claim.
Diminution claims, while generally resisted, are often allowed. He will need an engineer or valuer's report and evidence of when the claimant intends to dispose of the vehicle. I think he is probably best off asking the valuer to take the loss of warranty into account in his valuation of the vehicle.
I have in slightly different circumstances successfully pursued a claim based on the cost of buying such a warranty, however I am unclear if there is a market in bodywork warranties and the argument seems to flirt with pure economic loss.
Not worth the paper...
Thank you to Sergeant Timothy Draper for drawing to our attention the police force's problems involving EDI produced certificates.
We have been saying for some time that insurers that operate full cycle EDI policies should provide the brokers with watermarked or embossed paper on which to print the
certificates of insurance. The documents
we issue, frankly, look like photocopies.
It doesn't cease to amaze us that the Post Office accept these certificates as proof of insurance when presented with them for tax purposes.
EP Ward (Insurance Brokers)
We are doing our bit
I was very interested to read Sergeant Draper's letter regarding what the motor insurance industry is doing about fraudulent insurance documents.
Sgt Draper makes the point, already all too well known to the motor insurance industry, that modern scanners can replicate even the most sophisticated of documents. He goes on to ask if the industry could not consider watermarked paper or embossing tools. (He could have added holograms to his list.)
Clearly, through no fault of his own, Sgt Draper is not aware of how the industry has tried to tackle this problem in the past and the difficulties that it has faced in doing so.
It would be a relatively easy matter to produce certificates on watermarked paper if there was just one style of certificate per company and if the certificates were produced from a small number of outlets. However, with modern distribution methods and scheme arrangements, many documents are produced at point of sale and, in a lot of these cases, they are customised to the intermediary. On some certificates you have to look very hard to see which insurer it is.
If insurers were to decide to use special paper in these cases, it would mean every outlet would have a supply, and where would that leave security? Insurers and their partners have tried to get round this by background masking, making alterations more difficult. Some have also used various types
of security paper, but, because of what I have said before, it is not possible to print 100%
of an insurer's certificates on the same paper and this reduces the credibility of the security. Nor does it help where we have more than 50 autonomous police forces, all with different priorities as far as insurance documentation is concerned.
The Association of British Insurers (ABI) set up an initiative four years ago to bring in some standardisation of insurance certificates and I was the chairman of the working party. We had hoped to introduce additional material to certificates to make misuse more difficult, but we were frustrated by the Third Party Risks Regulations which govern the style and content of certificates. Had we been able to get some movement on the regulations, we would have introduced features such as make and model, drivers' dates of birth and full names into the certificate. I'm sure Sgt Draper is fully aware of how difficult it is to get the law changed, even when everyone agrees that the change is for the benefit of everyone except the criminals.
Maybe we need to look at the problem
from another angle and ask: “Is the certificate or cover note still the best way of enforcing the law on compulsory motor insurance?”
In a world where paper is becoming obsolete, should we be looking for a paper-based solution? The last one I heard mentioned was Windscreen Insurance Discs, and thankfully that seems to have died a death.
Sergeant Draper and his police colleagues can rest assured that the motor insurance industry is aware of the shortcomings of the system and the constraints of legislation.
However, I can give him something to look forward to: just over the horizon, there is the Motor Insurance Database (MID). This is due to come into play next year.
Initially, it will hold records of all individually insured vehicles. Authorised parties will be able to find out who insures a vehicle, by inputting its registration number to the MID.
If Sgt Draper is involved, as I suspect he is, with H.O.R.T.1's then I am sure he will realise how much time and effort MID will save the police, and I hope it will go some of the way to easing the problem.
Motor Insurance Consultancy and Training