So we have a “dysfunctional” motor market…or is that just the tip of the iceberg?

MY point is that, whilst steps are now being taken to tackle this problem the fact remains that, as usual, it is the “customer” who foots the bill.

Sadly, it is a similar story when it comes to dealing with household claims, except that the lawyers have been replaced by insurer-sponsored Repairer Networks and nationwide franchise operations. Their interest is in recovering the margin (and more) – squeezed out of them by insurers in return for “approved repairer” status – by cutting corners or inflating reinstatement or repair costs on multiple claims.

Both of these scenarios are “extensions” of the practice – that has exploded in the commercial insurance market in recent years – of paying brokers excessive and unsustainable commissions to sell and service their products.

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Insurers are so desperate to maintain GWP that they will forego underwriting profit in its pursuit!

Every time the premium bar rises it benefits them but hurts individuals, households and businesses…in short the whole economy! This is how skewed the “logic” of the prevailing culture in financial services has become. And, believe me, they are comforted by the fact that Politicians, FSA and the general public concern themselves with “effect” rather than dealing with “cause”:

A morally corrupt corporate culture.   

The secondary industries that have sprung up around insurance claims – in particular motor accidents – bear testimony to this culture. Massive costs come back around to policyholders in the form of increased premiums. No surprise there then but did you know that much the costs come about as a result of insurers’ desire to secure income from lawyers who are happy to pay for details of claimants. Still not…

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