A proactive regulator
Regulation is an issue of serious concern to every professional, and Bob Scott's Opinion piece (Insurance Times 7 February 2002) argues "let's set appropriate regulation and encourage raising of standards, rather than a prescriptive system that could add unnecessary cost".
Surprisingly perhaps, for a customer group, we entirely agree. The problem with prudential regulation is that despite the addition of belts, braces, several sets of bells and whistles and an inspection programme, anyone who wants to evade or ignore the protections will find a way to do so. Simple logic says that if there are gaps anywhere (and there are always gaps) some customers will fall through.
We would favour a somewhat different regime than has been considered so far - one which includes some proactive protection for customers such as that provided by the rail or telecoms regulators.
At the moment, and under the FSA system proposed for the future, a customer believing that something untoward has occurred has either (a) to point to the regulations that have been breached, or (b) to take the case through an internal, then industry, complaints process for a decision. Depending on the outcome and the severity of the issue, (b) may lead at some future time to a change in regulations.
We'd far prefer to see the creation of an insurance regulator that not only deals with complaints about any existing code, but is also able to intervene, if it sees fit, in any issue which seems likely to affect customers at large, or which unfairly takes advantage of individual customers.
There must still be a basic regulatory code - but one which need only require in reasonably concise terms that customers must be treated fairly, and advised by properly trained individuals. Companies that decided, for instance, not to provide customers with a current policy wording, would find that specific issue added to the current code, which should be a web document subject to more or less daily adjustment.
There would need to be a realistic system of checks and balances from both sides. The industry should not be held to requirements that are impossible or wildly impracticable; customers should not be required to be their own actuary to evaluate products.
The important emphasis, however, is on excluding the unacceptable, not defining at enormous length and cost what constitutes acceptable behaviour patterns, and providing supervision to ensure that such patterns are followed - at least while the inspectors are present.
To do so inevitably incurs expensive overheads, spawns sprawling and inefficient administration, and stifles real competition - hitting the customer with increased costs twice over.
National Association of Bank & Insurance Customers
Recently, I had occasion to try to locate a particular claims department of a very large UK insurer. After a few unsuccessful tries, a very helpful lady at Leeds offered to locate the right place for me and return with the details. She duly did so a little later, informing me that she had been put through to Croydon five times, Southend once, Norwich five times, what appeared to be two branches of Barclays claims at Norwich and Colchester, an answering machine that advised that the offices were closed between the hours of nine to five and one personal injury department, before finally arriving at the correct destination. It had taken her about an hour, bearing in mind that this was internal and she knew where she was trying to get to.
This, I would suggest, on a national scale, is perhaps an area in which the issue of costs can be addressed. This kind of ineffeciency is strangling the industry.
Countering motor theft
Recent reports of vehicle thefts involving violence, indicate that the insurance industry is at a crossroads in its approach to vehicle security.
Thatcham-tested alarms and immobilisers have been at the core of most insurers' vehicle security strategy for some years, but it is clear that a new phase has now begun requiring a pro-active response from the industry.
For some time burglary and violence to obtain vehicle keys is increasing. The case of a man who died at the hands of would-be vehicle thieves is the culmination of that process. A murder that has been waiting to happen, according to police.
Sophisticated modern vehicle security is difficult (but not impossible) to overcome. By taking the keys, the thief spends a minimum amount of time at the point of theft, easily overcomes the alarm and immobiliser and has an undamaged vehicle to sell on, complete with a set of keys for authenticity.
The use, or even the threat of violence against the owner, offers the thief a low-risk option for visibly high returns, and the growth of this practice has created a problem that is clearly not going to diminish.
The best means of countering vehicle key theft is the installation of a proven vehicle tracking system. Even with the keys in his possession the thief cannot stop the tracking signal in the same way as he can disarm an alarm or immobiliser.
The industry needs to increase penetration of tracking security into targeted vehicles, either by premium support or underwriting requirement. In this new climate, it would be short-sighted to continue with the current level of reliance on alarms and immobilisers as the panacea for all theft problems.
The insurance industry was instrumental in introducing the concept of alarms and immobilisers into public acceptance and now has the motivation to lead the way again.
Insurance liaison manager
Tracker Network (UK)
In your article "Sisters are doing it for... less pay" (Insurance Times, 31 January) you mention five "women who have broken through the glass ceiling".
For the record, Sian Fisher is managing director of the Hiscox Insurance Company, which makes her the only female managing director of a UK property/casualty insurer.
Alex Gordon Shute
Hiscox Insurance Company
The young ones
I have recently re-read with interest an article ("Brokers under threat" Insurance Times July 2001) and found the section headed "No young blood" to be of particular poignancy.
A colleague and I have recently started our own brokerage, providing commercial general insurance and financial services advice. I am 27 and my colleague is 32. We have a combined industry experience of 23 years. Therefore, I think it is fair to say that we know our respective industries extremely well and have numerous good connections.
Some of the issues we have had to face are: GISC membership; gaining insurer agencies; FSA authorisation; restrictive covenants on employment contracts; setting up a modern office; business development; ceasing to receive an income for several months and writing and working with a business plan
It is commonly said that there is a lack of `young blood' in our industry. However, in our experience this is not so. There are in fact an increasing number of young entrants into our industry; it quite simply that they have to join the larger broker for training purposes, where they become trapped by salary and other employment benefits, which are hard to let go of.
I strongly believe that if this young blood could break free of its current entrapment it has the ability to bring about a change in the public's perception of our industry, turning this into a profession, and so attract more young and dynamic individuals.
Gaining insurer agencies was possibly by far the most frustrating exercise. Most insurers we approached are currently considering culling agencies and declined our application without giving it due consideration. But we challenged their decision and now have agencies with leading insurers.
I agree wholeheartedly with the recent comment in the insurance press and the growing realisation that outsourced providers must now come under regulation.
It is the case that some service provides to the Lloyd's Market have long been regulated by Lloyd's. The supervision of our own managing agency will pass to the FSA regime.
However, service providers to the non-Lloyd's market have not been subject to compulsory regulation.
Companies such as ours welcomed the opportunity provided by membership of the GISC to demonstrate their professional standards and commitment of service to the client, be that client a start-up, operating company or company in run-off.
FSA has now indicated to the GISC in writing that due credit will be given to
GISC members of good standing when the transfer from GISC to FSA becomes effective, probably in 2004.
We will pursue our membership of the GISC and we will encourage all service providers to the general insurance market to do the same. By so doing we will give a clear indication to the FSA and to our clients that the high standards demanded are demonstrably already in place.
J A Goodwin
Omni Whittington Group BV
Letter of the week
Is it me?
Is it me - or is service from insurance companies at an all time low ?
Is it me - or do other brokers feel that, with the modern technology, it should be possible for insurers to issue a claims cheque instantly - and not up to two weeks after they have told us it has been issued ?
Is it me - or do insurance companies honestly feel that they are saving expense by cutting both the number and quality of staff ?
Is it me - or have the insurance company officials at the top completely lost touch with what is happening ?
Is it me -or do the insurance companies no longer care at all about service?
Is it me - or do the insurance companies really feel commission rate cuts will help their relationship with their broker customers ?
Is it me - or do insurance companies really think that their broker customers enjoy the experience of telephoning them and pressing one for this and two for that, and then listening to music, or not getting through at all ?
Is it me - or has the basis of "utmost good faith" been lost ?
Is it me - or are there other brokers out there suffering like us ?
It must be me...
This can't be true...
I must be having a nightmare.
I am sure I will wake up in a minute.