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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Towergate:: the price of being "more corporate"!?


It is a rare occasion when I praise Aviva for their strategic decision-making but this is one such occasion! However, I was immediately reminded of the spat of a few years ago that saw Towergate and Zurich “agree to disagree” over respective strategies.

tripWhilst BIBA attempt to appease the most blinkered of their membership by “wasting” money on a Deloitte review and a declaration that they intend to fight an EU move toward hard [commission] disclosure, the reality of a badly broken model is glaringly obvious…

A source claimed that the network decided to disengage after it had become frustrated at Aviva’s lack of understanding of the model and the value it offered the provider: somehow I doubt it is a failure to understand the model and more to do with a lack of faith in the ability of the model &/or Towergate to adapt to survive a turbulent economy and in the future FS landscape.

Unsurprisingly there is no mention of the “value” that is LOST to customers through the network’s “central charge” and unsustainable commission rates! Both of which impact their (Aviva’s) ability to achieve underwriting profit or to offer, reduced, sustainable rating at a time when the customers’ needs far outstrip this, or any other network’s demands: driven by their need to keep on selling in an attempt to outrun the tail of their own making…it didn’t work for the banks and it may not work for them for exactly the same reasons.

A spokesperson for Aviva responded: “Our decision is based on our commitment to build strong, local relationships with our brokers to ensure that they get the best deals with Aviva.

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Broker Profitability: Tony Cornell’s take on the industry :: Insurance Age


So, Tony Cornell’s macro perspective mirrors my own conclusions and contradicts the sentiments expressed in the recent PwC survey…no surprise there then! I have already declared my own opinion that a “mood of optimism” was, at best, dangerously naive.

The coming year will be a difficult one for growth. Inflation is likely to return to low levels, economic growth will be non-existent and competition will remain fierce. Margins will be under attack and cutting expenses to match a potential fall in income will be a survival strategy for most. This means, yet again, lower standards of service from insurers, hardening claims attitudes, re-organisations and staff reductions. Consolidators will need to concentrate on integration and achieving economies of scale other than through commission leverage. It will be a difficult year…

via A year to remember Insurance Age.

Tony knows the UK insurance industry better than most and has been sharing his thoughts for more years than he would (probably) admit. What Tony does not know is that unmanaged and excessive complexity is at the root of many of these issues. YET, AN INDUSTRY THAT PROFESSES TO KNOW ABOUT RISK EXPOSURE, IS “CONTENT” TO CARRY ON AS THEY HAVE DONE, DESPITE; A RADICALLY CHANGED ECONOMIC ENVIRONMENT AND; WITHOUT REALLY CONSIDERING THE EXTENT OF THE CONTRIBUTION TO THEIR OWN PLIGHT; ATTEMPTING TO TACKLE TODAY’S PROBLEMS WITH YESTERDAY’S TOOLS, OR; RECOGNISING THAT TREATING UNCERTAINTY AS IF IT WERE RISK, IN THE “DIGITAL AGE”, IS AN UNFORGIVEABLE ERROR.

“Insurance isn’t the problem”: correct…the problem is endemic in FS


I like Eric Galbraith and don’t envy him the task “at hand”. Well done for not ducking a real issue for the industry in your Guest Blog BUT please, please, please – for the sake of the hard working, customer-focused, brokers out there – don’t shirk from the message that, unless they start “dieting and exercising” they will not be fit enough to survive in a more testing climate!

It would be as wrong to believe that the problems are exogenous as it would be to suggest they are the fault of Aggregators, any “deal” with BIBA or the input of individuals within the BIBA Executive!

One of the earliest recorded “team builders” put forward this helpful piece of advise a long time ago: “Physician heal thyself” (Luke 4:23). But to do so does require a more holistic perspective because the success or satisfaction of the various parties are inextricably connected: interdependent.

‘Insurance tops the list of complaints’ blares the headline of an article in the Money section of this weekend’s Financial Times featuring the latest annual review of personal finance disputes from the Financial Ombudsman Service (FOS). 

via Insurance isn’t the problem – Insurance Age.

UK insurers: Arrogant, ignorant or deaf?


This isn’t the first time that PwC have warned the insurance industry. It is just after the 1st Anniversary of a warning that was “supported” by Citi…hence my question.

March 2010: Transparency – Trust – Trends – TRANSFORMATION

“According to our research, non-life firms could see significant capital increases under the directive as it currently stands, so it is vital insurers explore what options they have available to maximise capital now. This will include identifying where they believe current measures are inappropriate.”

Post Magazine Group News | LinkedIn.

Here is a “surprising” blog from Martin Friel at Insurance Age. I say surprising, merely because it was deemed worthy of comment! In the grand scheme of things that have gone so badly off the rails, in UK insurance, this strikes me as pretty mundane. Truth is, the really juicy stories just don’t tend to openly talked about or published. These are more about the people…whether directly (policyholders) or indirectly (investors)…who, ultimately, pay the price of yet more FS shenanigans. Because someone will pay the ferryman and, in reality, it looks like insurer results are going to have to be REALLY bad before they even attempt to justify rate-hikes in the current economic climate – and make highly leveraged, high growth, strategies pay off before financial collapse follows the, evident, failure of risk management and moral corruption – but NOT BEFORE all kinds of awkward questions about rating bases, broking remuneration and claims handling/management are asked:

Why on earth would an underwriter go anywhere near a book of business that had a 90% loss ratio? Unless the company in question is putting some astronomical rates into the market, then I just don’t see how this can work. I’m not an expert by any stretch of the imagination but surely this is essentially encouraging every broker with a poorly performing motor fleet book to, I believe the term is, fill their boots.