Tim Ablett says our customers are getting some great deals but still they complain. Why?
There was a time when competition in the general insurance market was simple to understand. If you were a broker then your major competitors were other brokers. If you were an insurer the main competition came from other insurers.
Supermarkets were where you bought your groceries, banks where you kept your money and building societies where you took out a mortgage to buy a house.
Now we have aggregators, internet providers, affinity groups, charities and clubs all trying to persuade us to buy insurance from them.
We also have insurers owning brokers; brokers owning insurers; supermarkets in joint ventures with insurers; affinity groups offering club benefits and building societies bundling insurance with mortgage products, house purchases and the like.
The poor old customer has little understanding of the complex market they are entering when he attempts to buy motor, household, protection or health insurance.
Indeed consumers are encouraged to “search the web”, “call the red phone”, “call the aggregator”, “get a protected bonus”, “get a guaranteed maximum no claims discount”, “call this freephone number”, “get 13 months cover for the price of 12”, “gain access to all A-group hospitals”, “get an income if you fall ill or are injured”, “buy a moratorium policy”, “full cover provided after two years”. To say it’s confusing is putting it lightly.
And yet the customer probably has never had it so good. The terms may be confusing, but the propositions are widely varied, the products very broad, accessibility extensive and prices low.
But does the average consumer value his purchase? Not a bit. He moans that we do our best to wriggle out of claims, have confusing wording, charge too much, never provide the help when it is required, feel we should provide flood cover even when no flood defences are in place – and so on.
It is my view that while competition has led to cheap cover and products, we seem to have driven our industry down a commoditised, price-driven route. And, in doing that, we have lost sight of the hugely valuable role we play, not only in the financial markets but in the provision of real value-added indemnity insurance products for individuals, major corporates, and small and medium sized businesses.
Without the expertise and skills of the insurers, brokers and all the other associated businesses delivering a range of associated services, the country would literally grind to a halt.
“We should all want to retain customers for life, cross-sell other products and make claims handling easy. Yet we put every obstacle in their way
And yet, how often do we shout from the hilltops about the fantastic job that we do, the protection we provide and value for money products we offer?
The influence we bring to bear also goes unnoticed – for example, getting the government to provide adequate funding for flood defences, health and safety, as well as the augmentation of the health service provided by the NHS through private health cover and dental cover.
We can never unwind the past, “bring back the good old days” and make buying insurance a sexy and exciting experience. However, we have it within our influence to raise the bar and improve the reputation of the profession.
This can be achieved by establishing significantly better brands and customer journeys for the thousands of customers to whom we promise daily that we will be there in that moment of drama and that hour of need.
Blaming regulation for a complex customer journey is simply an excuse. Who, after all, would set up, and invest in, a business selling promises, without wanting to treat the customer fairly? We should all want to retain these customers for life, cross-sell other products and make claims handling easy. Yet we put every obstacle in their way.
We have annual renewals, we don’t make it easy when a customer exercises his right to make a claim, interrogating him before making payment. And worst of all, we then inflate his premium at renewal and lose him as a customer – just when he has experienced our promise.
Competition alone has not been the only culprit in this commoditisation process. But the upshot is that those of us within insurance are now categorised alongside second-hand car dealers and estate agents in the popularity stakes.
We need a radical rethink of the entire customer journey, the needs of our customers, the way they are served and charged for our services.
We need to build a brand that delivers a consistent, sustainable range of propositions that are simple to understand, customer driven, economical and sufficiently capable of flexibility, so that every customer feels that the product was made for him.
Tim Ablett is general insurance consultant at Project Consulting Partners