The ignorance of arrogance

Not being a major firm, we don’t have the clout to dictate to insurers what commission they pay to us. Nor do we have the luxury of getting away with talking utter clap trap and having them agree.

Being small sets to automatic the thought pattern of ‘what does he know?’, or ‘if he knows so much, why isn’t he running something bigger?’

For me, the answer is simple. When I was in investment banking 10 years ago we were taken over, and being 42, my services were no longer required. Yet I have found the vagaries of a smaller size an absolute pleasure when compared to being part of a faceless and dehumanised larger entity.

Size matters - the smaller the better
The benefits of size are far too exaggerated, overrated, and mostly suit the insecurities of all too many people scared to literally say boo to a goose, but who manage to get the courage through the realisation they work for a large firm.

Unfortunately for them, size is no longer the issue, given small is in many ways a microcosm of large thanks to the internet and, yes, the FSA!

We are truly independent, not an appointed representative, member of a network, or in the process of selling out; and it is our wonderful position I wanted to question: Why in this day and age do insurance chiefs appear to so consistently say one thing then do the reverse, and by definition wittingly delay progress, handicapping their own profits in the process?

Lets face it - which ivory tower hasn’t commented on the damage lowering rates cost and the need to reverse the trend?

“Why have insurance shares for so many years underperformed as a sector compared to the FTSE 100, or is the rationale of normal business acumen not applicable to insurance company chiefs?

To brokers they say ‘we love you’ - and even ‘we need you’ - then pull the rug away through direct subsidiaries offering discounted rates with cash backs, freebies or yet further discounts.

Who can blame customers for disloyalty? It's all too good to be true.

Talk is cheap
But using these tactics, do the loss ratios reduce or commission incomes improve? Of course not. So why talk rates up when they are undercutting themselves alone?

When will they see that GWP is not the answer and, just as with banking now, where blocks of loans will rank for different credit quality, so must blocks of GWP. Crowing on the size of GWP when it is a classic loser costs the shareholders - and pays no dividends.

While labelling and supermarket style advertising has clearly affected the sensibilities of those who should know better, we are not dealing with disposable vegetables here.

The only thing we see in both personal lines and commercial business, is the public laughing all the way to their government guaranteed bank accounts, with the savings they have made at the insurance companies expense. Once again the banks appear to have shafted the insurance companies.

Don’t you just hate the duplicity of it all? Transparency is now so predominant, and we see through the spin like clear glass. Why can’t our esteemed industry chiefs?

“Crowing on the size of GWP when it is a classic loser costs the shareholders - and pays no dividends.

Why do insurers underperform on the stock exchange?
A major percentage of Insurance companies are publicly quoted and to a man or woman say they are beholden to their shareholders. Why have insurance shares for so many years underperformed as a sector compared to the FTSE 100, or is the rationale of normal business acumen not applicable to insurance company chiefs?

We just see the unnecessary waste in this industry of real income given up under the direction of ever changing CEOs and boards of major insurers who should know know better, yet prefer only to talk the talk, not walk the walk. Perhaps they now need to talk to their smaller contemporary brethren who have weathered the storm.

Have we reached the stage where those we have always perceived as smarter than us are in fact anything but, and have we unwittingly over the years all succumbed to the power of arrogance over ignorance?

Maybe with the credit crunch, the time for a change in this once great industry is on its way. where small firms will be treated with respect and the big guns realise the party is over.

Unfortunately, I think the heat from today’s sun has got to me - I wouldn’t bet on it.

Robert Marshall is Director of Trident Insurance.