UK insurance ‘dissected’


I felt compelled to respond to some comments that were prompted by a previous article:

IBM Insurance:: does the industry really care what customers want? I wonder…

The following comments come from a, highly experienced and senior, former insurance executive, who now works for one of the major Global Consulting firms. Obviously I wouldn’t name names without first gaining the approval of the individual in question but I really wanted to share my thoughts. After all that’s why I blog.

For many years I have eagerly anticipated some meaningful debate with thought leaders, passionate or concerned people from within the insurance industry. But I have been, consistently disappointed. I wish I was more confident that these views might spark some meaningful discussion…but I won’t hold my breath!

The comments:

I think David Wilson is making the point that despite the results of the IBM survey, he’s seeing little action from the UK insurance industry. I think at the moment UK and Western European insurers have their hands full with Regulation – Solvency II, RDR – and this is diverting their attention.

Even so, in terms of innovation, UK insurers (or at least Northern European insurers) are seen as leading the global pack in terms of capital effectiveness and optimisation, with the North American market looking to UK as an example of best practice especially in the area of risk management.

My response:

What are the key issues identified:

  1. Compliance with additional Regulation – brought about by cultural, operational and regulatory failures
  2. UK & Europe seen as innovation leaders – based upon the above, should this be the case? And,
  3. capital effectiveness and optimisation – are these correct metrics for innovation and compliance?
  4. risk management – where is the evidence of “best practice”? – I see plenty of evidence of “bad practice” that has become ‘accepted practice’ across the industry. What are current practices in relation to complexity, business resilience and systemic risk?
    Insurance and banking have convinced themselves that they have been/are innovative but, if this is true, why are they the least trusted and most complained about industries according to their customers? Does that not explain the perceived need for more regulation?

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Floods:: will the insurance industry redeem or condemn itself?


When it comes to preparing for, coping with or recovering from, flooding it is highly recommended that property owners AND insurers listen to experts, such as our very own, Jeff Charlton …rather than to organisations peopled by …

individuals whose self-interest consistently supersedes the interests of their colleagues – clients – congregations – students – customers – members – citizens and IS the biggest threat to their own interests as well as our shared future!

Do so and, whether insurer or insured, you may be well on your way to coping with or avoiding nasty issues that impact both wealth and health.

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Driver sued for refusing to sue


I’m sure that most people will be shocked by this story but, for me, it is the back-story of the claim culture, the role of the insurance and secondary industries that it “feeds”. Sooner or later we realise who the victims are!

No-win, no-fee lawyers such as this can pay claims companies up to £500 for passing on the personal details of people injured in car accidents, although there is no evidence that this particular firm has done so. In January, Mr Hopper says he was contacted by a GP surgery asking him to attend a medical in respect of the claim. At this point, any lingering stiffness in his neck was long gone. Mr Hopper’s conscience kicked in. He would not lie to a doctor, so he pulled out of the claim before his appointment. He told the law firm he no longer wished to pursue the claim. They sent him a letter saying that as he had discontinued the court action, he was liable for their costs, which amounted to £1,140. h

You may already know that the Government have already sought to shake up civil justice related to the “no win no fee legions”.

This is a topic I have written about in much more detail before and these may aid your understanding of the true nature of the problems and who actually benefits from

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.

Get "fit for randomness" [with Ontonix UK]

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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Insurance innovation: an oxymoron stuck in 3rd!


The transition from 1 to 3 was relatively straightforward because greater operational efficiencies and product commoditisation enabled insurers – and brokers whose aspirations matched theirs – to sell more by reducing pricing and increasing commissions.

But a “high growth” strategy is an all-or-nothing commitment that, eventually, has to take its toll upon the products and services provided. When GWP and ROI become the focus they do so, inevitably, at the expense of customer:

peace of mind; service; satisfaction; trust and (with them) reputational damage for the industry

So, as retention rates declined, an industry that, since its earliest days, thrived upon trust, loyalty and stability chose to spend increasing amounts on marketing and sales that promote – even reward – disloyalty and volatility!

Insurance system graphic(1)

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