Refuting the notion of the joys of internet trade
Refuting the notion of the joys of internet trade
Having operated online for more than two years we now have a site offering a wide range of products ranging from accident/sickness to yachts. From my experience I can now give you the first three rules of internet trading:
1) If you invest £x and return £y then x>y. A subsidiary rule is that y increases linearly as x increases exponentially
2) The only people making money from the internet are those people advising/ helping businesses get on the internet
3) Unless you have a unique product or have the most outstanding product of its type on the market then it is pointless having an internet site promoting it.
The internet should be seen purely as an advertising platform and not a source of obtaining business at a low cost.
I am quite aware how this flies in tradition of the organisations who are trying to pull everyone onto the internet but consider the following:
People surfing the net are looking for the best deals available. At the moment very few are wanting access to a local broker's site.
People wanting the best deals have to find them. At the moment the main ways of finding a product are:
a) Type in the URL (location) of a company that you think has the product (and would that be www.instimes.co.uk, www.insurance-times.co.uk, www.insurancetimes.co.uk, www.insurancetimes.com, www.instimes.com, etc – if you get one letter wrong you will end up at the wrong place)
b) Go to a major search engine and look for the product.
The problem for insurance intermediaries is that there are several thousand insurance-related sites and, unless the search engine returns their specific site near the top, their site will not be found. This applies whether the customer has made their request from Thurso or Truro, as the result will be the same.
Look at your high street – in mine there are approximately 100 shops and four of them sell insurance. Someone wanting insurance locally can call into all four shops, get a quotation and take out a policy there and then – ignoring other insurance providers we have a one in four chance of selling a policy.
Now go onto the internet and look for “caravan insurance” at Lycos.co.uk. It pulls up almost 5,000 relevant pages
Unless you are Caravanguard, not many people are going to find your website – your enquiries are going to be minimal and you will competing direct with all the schemes on the internet. (There are 23,000 returns for motor insurance.)
The obvious trend therefore is that:
1) Providing clients with screen rates, from CSC or Misys, is a complete waste of time – you will always be undercut by companies specialising in specific products
2) In order to compete you must have a decent product NOT generally available.
This is where insurance companies and
brokers can get together
3) In the future I would expect insurance companies to produce a range of products that are fully transactional online and offer them to intermediaries to host on their websites. The reduction in costs means that very low commissions would be needed – after all the broker would be doing no work
4) The advantage of a broker would be to use their ability to provide advice to clients and provide bespoke quotations for schemes when the original enquiry would have come from the website, i.e. dealing face-to-face (or via telephone) with the customer.
I am sorry to have to disabuse many people but brokers should not be stampeded under this juggernaut by misleading information from software companies, broker organisations or internet directory companies. It can cost a lot of money for a very small return.
B Portwood & Co
Stick to what you know
I feel forced to write (yet again!) after reading this weeks issue of the mighty IT (January 25). The comment by the spokesperson of holiday giant Going Places states: “If cover was unsuitable customers could take advantage of its seven day cooling off period and claim a refund”, is horrendous, I feel.
Does “Joe public” actually read the policy that is given to him? Surely Going Places should point out the various cover limits under Association of British Insurers (ABI) rules. In most cases the travel insurance sold through travel agents is bundled into a special deal on a particular holiday.
Perhaps travel agents should stick to what they now best – selling holidays – and leave the travel insurance to the professionals.
Warman & Co, Yeovil
Regulation is a must
In all the various articles, letters and other forms of words being written about insurance regulation and who is to undertake the role, I am somewhat astonished that non-insurance industry personnel are still being allowed to sell guarantees or similar insurance products without training or the adequate safeguarding of the consumer.
In your new IT2 supplement there is a great deal about travel insurance and how the travel trade sells the majority of cover and now retailers of food and other products are muscling in as well.
Recently I was asked by a client to sort out a problem with Peugeot Finance because a car salesman had sold her a policy that would pay her hire purchase if she was unemployed or sick. The problem was that the lady in question was a self-employed nurse/carer and as such was not in full-time employment. The policy excludes such persons, so she was paying about £33 per month for something she could never claim on. When challenged about this situation it took four telephone calls and a number of faxes before Peugeot Finance acknowledged that she had been wrongly sold the policy, but did they repay her or even pay interest on the money they received? No. Worse still, they blamed the car salesman for selling this cover to my client. The matter was resolved when the car was sold and the client repaid the hire purchase less the premiums that had been deducted.
This is not a problem related solely to
Peugeot as I can myself attest, because I borrowed money from my own bank to purchase a car. The bank offered me insurance against unemployment. When I pointed out the circumstances of my position and that I did not have a contract of employment in the usual way they said that I could still be covered. When the loan agreement arrived for signature it excluded payment for unemployment unless gainfully employed in full-time employment. I asked the bank about this and again I was advised on the telephone that despite what was written I would be covered.
There can only be one way forward for insurance, and that is for all who sell or provide insurance products to be regulated by one authority. All organisations that wish to sell insurance products of any kind, including white goods guarantees, must be required to be fully accountable within the regulatory regime, without exception.
All in the insurance business must join together to rid ourselves of unqualified and untrained sales and administration staff. If retailers, travel agents, banks and finance houses want to sell such products then those at the point of sale must be trained in all aspects of the cover they sell and they must be held to account by the regulatory authorities. No one should be allowed to sell any insurance product outside of regulation.
R P Hodson
Not just the big boys
I must take issue with Bryan Whicher (IT January 25) when he claims Biba is only interested in the big boys. Brokerages don't come much smaller than mine, but having resisted joining Biba for much the same reasons outlined in his letter, I have, since joining, derived immense benefit from doing so. Biba has given me immediate help and advice on many occasions and at not cost to myself. The annual conferences I have attended have been excellent and the local regional meetings a fountain of useful knowledge and insight.
Above all they have retained a level of professionalism and status that I feel has raised my own status and standing as an insurance broker.
Bryan James & Co
Frustration is the rule
Re: your anonymous correspondent's letter (IT January 25). Thinking of my own frustrations in dealing with helplines and large organisations generally – and especially those who claim to be customer-orientated – I'm reminded of he whose birthday we celebrated last week,
“Oh, wad some power the giftie gie us,
To see ourselves as others see us,
It would frae mony a blunder free us,
And foolish notion,
What airs in dress and gait would leave us
And even devotion”
PS Paul Hudson is giving his age away when he makes jokes about my name!
Roy Rodger FCII
Consultancy and Training
Just a coincidence?
I note with interest that one of the more vociferous correspondents in your paper regarding Insurance Brokers' Registration Council (IBRC) mark II is the secretary of the south east region of Insititute of Insurance Brokers (IIB). Yet at no time do I recall seeing this position mentioned in his letters or as part of his title. A mere oversight?
Ian K Mantel
Manor Insurance Services
Headline in herer
I refer to Anderson & Sons letter, ( IT 25th January) which given the examples provided appears to be referring to the Driving Over Christmas extension rather than Driving Other Cars !!
Area Develpoment Manager