Insurance Industry:: Innovation, transformation or failure


If you have visited my blog before you will already know that I have spent some considerable time researching and commenting upon a wide of topics that, although many within insurance fail to see the connection, are related directly related to the insurance industry.

In truth, my work was initially prompted by concerns (a deep dissatisfaction may be more appropriate!) about how the insurance (particularly broking) operated: structure; culture; regulation; remuneration levels; use of IT; cover; pricing of RISK. It was only as I delved deeper into the subject matter, a form of ‘root cause analysis’ [RCA] – causality being particularly pertinent to insurance! – that I came to fully appreciate HOW DANGEROUSLY LIMITED the understanding and application of a probability-based assessment of risk truly was. Especially when the business environment has, fundamentally and irrevocably, changed.

If a future event will take place, it will do so irrespective of the probability that we may have attached to it. If an extremely  unlikely event will happen, it’s probability of occurrence is already 100%

Having been introduced to Complexity (by Dr Jacek Marczyk, Founder of Ontonix srl) and it’s relationship to risk and uncertainty my RCA led me to investigate from a (more rigorous) scientific and mathematical perspective. Eventually into the realm of the behaviour of Complex Systems and, inevitably, to Systems Thinking. Gradually, the understanding, that comes from viewing life and work through the Systems lens, revealed that much of what is wrong with Financial Services stems from unnatural interventions.

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C4 Dispatches:: insurance industry – profit before people


The insurance industry, consistently, dispels the myth of “honour amongst thieves”. In this programme we see it through the lens of motor insurance BUT bad practice doesn’t stop there.

If you didn’t watch the programme…you should! Follow the link embedded in this picture (may only work in UK – sorry!).

motor ins ripoff

For the sake of clarity, you may, also, wish to consider the definition of the word that the Office of Fair Trading used to describe the motor insurance industry: DYSFUNCTIONAL Read more of this post

When Hiscox talk about credibility others should listen


This is a topic that I have been going on about for AGES and I could have (but didn’t) write the article I have included below. I have oft quoted the Annual Edelman Trust Barometer. But, as Annabel reiterates, the industry’s understanding of their own marketplace is so poor that they would rather SPEND on telling you that they care rather than INVESTING to demonstrate it: RHETORIC WILL NOT RESTORE TRUST, for it does not facilitate transparency!!!

If ever you wanted evidence that an industry doesn’t listen to those that fund it, this is it. Insurers and brokers clearly understand competition and their prevailing model but struggle with the concept of how to move to a new (better) model that is fit for the Digital Age and future financial landscape. One that offers demonstrable customer value: NOT ambiguous strategies, unsustainable pricing and unjustified commission levels.

“It is easier to understand that you face competition than obsolescence”

CHANGE WILL HAPPEN. Business systems that, for whatever reason, fail to adapt to a rapidly changing environment are extremely vulnerable. Those that aren’t embracing and benefiting from meaningful two-way interaction across their business ecosystem, will make it easier for new models to gain the foothold they need to, initially, survive and to thrive in the coming years.

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Why your insurers and brokers may be obliged to testify against you


If any Company Directors or brokers were still in any doubt about the burden of responsibility on their shoulders this case may serve as a timely reminder that we need to ‘get beyond’ having an annual chat about general business issues, football and family before determining that their priority is to secure the cheapest terms available:

To prove that the company and its directors were on notice, the prosecution relied almost exclusively on evidence produced by the company’s brokers and insurers. Representatives from the brokers’ risk management team were called to give evidence and discuss information contained in numerous documents spanning the six-year period before the accident.

These documents included:

A pre-cover survey;

The minutes of a meeting to review the company’s health & safety policy as well as the monthly and quarterly risk management meetings;

The ongoing audits of both sites and recommendations;

The documents prepared for the insurance market to obtain cover, including one monitoring the progress of risk management.

via Why your insurers and brokers may be obliged to testify against you | Airmic.

Blanc warns on commission disclosure:: Insurance Age


I would like to be a bit more specific than Mr Blanc. THE ‘danger gap’ is the difference between what brokers are PAID and what their clients’ perceive they are worth!

That is, what value does a client place upon the quality of advice and service they receive from their broker?

It should tell the commercial/corporate insurance-buying public all that they need to know, that the industry has been trying to resist the “threat” of commission disclosure for a long time…

…surely TRANSPARENCY is only a threat if you have something to hide!?

For Mr Blanc the “danger gap” was the space between what brokers earned and what clients perceive that they earned.

via Blanc warns on commission disclosure Insurance Age.

Biba did disappoint (rather than surprise) when Eric Galbraith, at their conference in May this year, vowed to resist EU regulatory calls for “hard disclosure”. I was not impressed and voiced my opinion at the time!

For an industry involved in risk, we have become remarkably proficient at lecturing others on the subject whilst failing to take our own advice! Ignoring or avoiding inconvenient truths about our own shortcomings is standard practice.

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