All the talk these days of declining service standards rather suggests that there was once a golden age when brokers were satisfied with their lot. For a reality check, though, ask Tony Lancaster, Groupama's colourfully-spoken chairman and chief executive, if insurers ever got their service right. His answer is an emphatic "No".
"Insurers have never got it right, though there've been some good attempts. But where we've all fallen down is that we don't have an adequate relationship with consumers which helps us work with them and understand them." It is something Lancaster and his newly merged £500 million group are determined to put right.
"World-class service" is the aim – a right-first-time approach which eliminates what he terms the industry's "tremendous wastage".
The 57-year-old former Gan chief may have been around the insurance block a few times, but when it comes to improving service performance, he has all the enthusiasm of a young 'dot-com'er. Lancaster views improved broker-delivery as an opportunity to make Groupama stand out from the herd of mega-insurers still struggling to get their post-merger act together. With the creation of CGNU, his task may become that little bit easier.
Back to basics
Speaking about the Biba chairman, he says: "The Simon Bolams of this world are clearly correct. Documentation and service levels have been disappointing on certain fronts. We've got to get back to basics and improve the business of service. We are, after all, a service industry."
That said, he firmly rejects the notion of faults residing purely with the insurers. He does this tactfully. "We often get proposal forms from brokers with the important questions just not answered. And, of course, insurers often have all the questions correctly answered and then type them up wrongly. I wouldn't say one was worse than the other. But we do both need to cut out the triplication of effort."
Lancaster knows it takes two to tango. "It's got to be a partnership. We both need to go back and look at the questions we ask and decide if they're all necessary. And we need to improve checking and staff training."
Before it starts delivering world-class service, Groupama has been asking brokers how they would define such a term. "We're looking to decide what the acceptable service standards really are. We're asking our intermediaries and brokers how many days they feel a policy should be prepared in. And similarly, how long it should take to handle claims and settle accounts. Once we've established what the acceptable standards are, we can measure how we're doing and see where we may need to improve."
Even before those answers arrive, Lancaster knows that service is quite distinct from price. "World-class service is not price-driven. Sure, price is part of it. But if you're entirely price-driven, you probably can't afford to give the right service. If we're going to work on a price-driven basis, then we're in a completely different race – and that can't be a long-term race."
Unfortunately for Lancaster, brokers often stick with insurers whose service is poor as long as their prices are sharp. That said, the industry's economics may at last be changing a little in his favour. Prices are rising at last.
"The industry hasn't made a profit for years. And the question you have to ask is how much longer it can go on not making money. I'd have thought not much longer. We are below the Plimsoll Line."
In his view, sheer necessity to turn a penny means the turning point has probably arrived. "I really think we are at that point. There is a correction starting to occur in the market. Reinsurers are starting to say no."
He acknowledges it's not going to help this year's profits – much of the 2000 premium has already been written, on inadequate rates.
"The client is still getting a fantastic deal. We've been very poor as an industry at explaining ourselves. Just think: it must actually be very difficult for clients when they see insurers competing like mad despite their results. And then all of a sudden, we over-react and over-correct."
Competitive, not price-destructive
Not that Gan or Lombard were exactly giving it away – in Lancaster's view, that is the wrong way to build relationships with anyone. "We have to be competitive, but we don't have to be price-destructive. I think the broking community respects the educated commercial underwriter. And they don't respect the underwriter who'll do anything the broker tells him to do."
"The underwriter who says I'm prepared to do this but not that has the respect in the long run of working brokers. And that fellow is the one who's going to be around when the market hardens.
"The trick the underwriter has to pull off is to keep a relationship with the broker, so that he'll always know that when it comes back to what we believe is the right price, he knows where to come."
When he does come back, he will find a distinctly different company. In Lancaster's words, "a lot of water has gone under the bridge" since Gan and Lombard merged last year. With the office closures and job losses, brokers are now talking to new teams in new offices.
But Lancaster is quietly pleased with the progress to date. "We have been generally happy with the reception we've received from brokers. A couple have said we'll make our judgement when you've proved yourself. But we've found the majority are just so relieved to have a genuine alternative."