I would like to take Tony Cornell to task in his article "Brokers will lose if they fight duel".
Brokers are not looking to fight a duel with the insurers. We are looking to do business with insurers in a fair way. Indeed, it appears that insurers are looking for a duel with brokers.
If, as Mr Cornell states, insurers would come clean, brokers would stop "whingeing" as he puts it. It is the denial by insurers of what they are doing that has raised the current furore. Mr Cornell raised various issues:
He stated that ignoring marketing costs, direct business has a considerable cost advantage. True. However, including marketing costs the price differential is marginal to say the least. Commission payments are not the main pricing difference. For motor, the average open market commission rate is 1O-12%. That does not account for the 3O% and higher price differences. The premium differential is due to insurers buying in market share to transfer high volume business to the direct market.
Brokers do not select against insurers. They select the most competitive cover appropriate for the individual policyholder. With EDI, insurers should be in control of the type of policyholder they seek. If they are unhappy then change the underwriting criteria.
The same criteria can be applied via EDI through the broker channel. Lifestyle questions could easily be included on EDI proposals at little or no extra cost. Indeed, using EDI, the broker does all the work.
Brokers do promote themselves to their clients. Any broker worth his/her salt will also promote the insurer brand if they put their client with that company. But it is hard to retain a client if the best available premium is vastly in excess of what is available direct.
If the insurers are slow and expensive who wouldn't change insurer?
Direct insurers do not understand customer behaviour better than brokers. Compare over 20 years insurance experience with someone with two years experience working in a direct call centre under pressure to reach a target for new business acquisition.
He is right. direct insurers can change rates daily; we can't, largely due to the software distribution channels. Perhaps brokers should apply pressure on their software suppliers.
If insurers provide competitive products and efficient service, brokers will be happy to recommend their other products
Many broker insurers have direct claims control. There should be no difference in expenses, excepting that a broker will pick up an insurer if they feel the policyholder is being short changed.
Regardless of how the costs are classified, they are still costs. Mr Cornell begs a very important question when he states that "Marketing costs for direct acquisition in many cases exceed commission".
Most brokers are clear in their minds where the market is going. They have been open as to what they are seeking. It is a pity that many insurers have not.
Goss & Co (Insurance Brokers), Reading
Be clinical with reports
Initiatives such as that by Transafe UK to undertake forensic accident investigations to reduce the growing problem of fraudulent personal injury claims, must be applauded. However, the mainstay of such investigations must be high quality forensic medico-legal reporting.
Medico-Legal Consultancy has uncovered a large number of large-scale multi-claim frauds simply by providing medical reports of the highest quality, including forensic dissection of medical records.
Almost all personal injury fraudsters have a long track record of personal injury claims, but these are frequently going undetected because personal injury claims are still – quite unbelievably – being settled without medical records being fully dissected. Such a situation would not exist if there was insistence by insurers that the records were properly checked.
The situation is made worse by the fact that many of the agencies who provide medic-legal reports, some of whom do so at the direct request of insurance companies, use unknown doctors who are inexperienced and untrained in the provision of medico-legal reports.
Insistence that a report is, for example, prepared by a Consultant Orthopaedic Surgeon, does not necessarily mean the report will be carefully researched or accurate. It merely ensures that it has been written by a Consultant Orthopaedic Surgeon.
In almost all cases, getting to grips with personal injury fraud is entirely in the hands of insurance companies, who must insist that the medical records, both pre-dating and post-dating the accident, are available and completely and thoroughly analysed by whoever is preparing the medical report.
To do anything less is to accept the fact that such fraud will continue unchecked, to the detriment of both insurers and policyholders alike.
Dr Roger Norwich,
The Old Docks Office,
We are brand new
I read with interest the article last week from Jeremy Wilson at Goss & co regarding the branding of insurers' direct arms.
At Broker Brands, we are trying to make this exact point and trying to stop agents selling insurance products of companies that sell products direct.
Insurers spend millions of pounds advertising their names because they understand the concept of marketing. A client is more likely to buy a brand they have heard of.
Some brokers and intermediaries have spent years building up a decent reputation, yet give out literature from the competition. We only sell insurance through intermediaries and brokers with their own brand on it. There is no need to be selling products from insurers that rather you weren't here.
What price loyalty?
As old established brokers, we reluctantly sold our personal lines due to the hassle of both insurance companies and software house (Penta).
We chose Hill House Hammond, who have provided an excellent service to our loyal clients. However, one such loyal customer who is over 80 years of age found that the previous insurance company, Highway, whose past premiums were approximately £300, no longer handled motor. The lowest premium Hill House Hammond could obtain was £1,030 (in-house under Norwich Union Insurance.)
Despite the client obtaining a quote from Saga of £690, which he could accept, he still preferred to deal with us (via Hill House Hammond). We could in no way match this premium and with sympathy, advised him, loyalty apart, to accept Saga's figure. To our surprise, while he was relieved we were not offended at him going elsewhere, he had obtained a further lower quote, from Norwich Union Direct of £424. What chance have we got when even the larger brokers are shot in the foot by their own associated company?
W F G Walker,
Harold W Walker & Sons,