Where do general insurers go from here?

Stating, what should be, the bleedin’ obvious…IF the industry cares as much as its marketing says it does!

Moving away from the old ‘acquire and exploit model’ that general insurers have been using for years requires a huge change in mindset. Especially when it involves bucking the trend within the industry and communicating a proposition based on value and service while others are fixating on price.

However, I’m afraid the old strategy just isn’t going to work in a world where consumers can compare prices and share experiences at the click of a mouse. Giving existing customers a compelling reason to stay and do more business with you is surely the way forward as customer sentiment can spread like wildfire online. It will therefore be those that have engendered positive perceptions from their most loyal customers, who retain and attract the most policyholders and who are subsequently most profitable in future years.

via Where do general insurers go from here? « UK Insurance.

One Response to Where do general insurers go from here?

  1. Tom Ricketts says:

    I agree absolutely with the sentiment but see several issues with implementation. Firstly, I have met almost nobody in a 25 year career who can express to a client (customer) the value of insurance – in fact I have learned not to raise this issue because just asking the question can provoke a “burn the heretic” response. Secondly, Insurers are now using “big data” and models to actively select against the insured – it is becoming increasingly difficult to insure the risks that you are most exposed to and most concerned about. Thirdly, insurance is not innovative or creative – insurance companies are tied to anachronistic practices and hedged in by anachronistic legislation (at least here in the US) that compounds their unwillingness to think creatively and expand the value proposition of the industry. My evidence? Gross Written Premium as a % of US GDP shows that the insurance industry is now smaller than it was in 1955 – this is NOT the sign of a healthy, thriving industry – the industry is now in terminal decline and doesn’t even recognise it. Also, many large companies are electing not to buy insurance at all, despite the fact that as a source of contingent capital it is MUCH cheaper than their own internal cost of capital – why is this? because the frictional costs of insurance are so high – an example: one of my clients took over 5 years to settle a major Business Interruption claim (& this is hardly a unique circumstance), which is hardly the hallmark of an efficient, value added product.

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