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

Moody’s warns OFT motor referral will "hurt profitability"


Insurance (Photo credit: Christopher S. Penn)

Somehow I suspect that, if this is the first time industry leaders take notice such a "warning", any criticism about arrogance or ignorance in the sector would be immediately vindicated!

"At a minimum it [the investigation] will create uncertainty for the industry and more significantly could result in lower motor premium rates.

"A reduction in revenue from lower premium would hurt profitability, particularly for those UK general insurers with the greatest market share in private motor insurance."

via Moody’s warns oft motor referral will "hurt profitability" Insurance Age.

How much does the industry actually care about its “policyholders”? Well, a big clue for me is that they are still, too often, referred to in that manner. Even the term "customers" really doesn’t do the relationship justice.

After all, as a policyholder, I haven’t just walked out of your shop having spent £1 on a newspaper or some sweets.

I have purchased a promise of protection against a future event that may result in financial loss or injury…I am a STAKEHOLDER in your business and NOT just some "sap" who believed the promises made in an over-priced advertising campaign – that manages to irritate and insult in equal measure!

Perhaps if you thought of me and treated me like your marketing people say you do, I might find it in my heart to look beyond the one-dimensional price message that pollutes my daily existence and ignore the constant reminders that shopping around is good – but being disloyal isn’t!?

Still, it is reassuring to know that, whether I’m old, young, male, female good or bad risk you aren’t singling me out for special treatment…you’ll mistreat and cheat us all across the board.

At least, in (allegedly) cheating re pricing you’re not discriminating against me. Well, until OFT tells me otherwise!

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Banks do not focus on customers, says OFT chief – New Model Adviser®

Rather, the problem is that they view customers as a “means to an end” – a common complaint about firms across Financial Services!

The “shift”, that has taken place over many years, and accelerated courtesy of “light-touch Regulation”, saw the focus move from responsible lending to misrepresenting debt as credit and widespread mis-selling at every scale:

Earning loyalty and trust by serving customers with products that added value is a long, slow, process – stable and sustainable (win/win).

Chasing and retaining market share, based upon indebtedness and inertia is cheap and fast – fragile, volatile and unsustainable (lose/win).

Fingleton said that the financial crisis has worsened the situation and that concentration had increased across most banking markets.

‘At the heart of the concerns about these markets is a lack of ‘customer focus’ on the part of providers,’ he said. ‘We still have a banking sector where competition is manifestly not working well for consumers.’

He warned that ‘if we do not see real change from banks, then a more radical approach needs to be considered.’

via Banks do not focus on customers, says OFT chief – New Model Adviser®.

UK Insurance: Nobody expects the Spanish inquisition…Part "tres" – Spanish lessons anyone?

I’m not normally an “I told you so” kinda guy BUT you may find it hard to believe if you track back to previous blog items (approx. 2 years worth) carrying the same WARNINGS and the offer of help.

Help to map a transitional path through sustainability, to transparency, then TRUST and competitive advantage. It MAY not be too late for some!

Now, we all know that FSA don’t have a great track record but the negative role of intermediaries has been the “elephant in the room” that simply could not be ignored any longer.  Insurers and anyone who cares for the industry need this kind of intervention because the lobby for the status quo extends from broking into investment banking!

Related industries that should be reliant upon reputation and trust but have, instead, reduced the reputation and role of Financial Services to that of, virtual, door-to-door salesmen.

Integrity, value and service have been replaced by a façade woven by pricing, marketing and advertising.

The level of customer dissatisfaction, both at point of sale and, increasingly in claim resolution  – I understand even OFT have been inundated by complaints – is as unsustainable as the commission rates…that have been “negotiated” or maintained using the worst kind of leverage.

The Financial Services Authority (FSA) has published a discussion paper to open a public debate about how it, and in future the proposed Consumer Protection and Markets Authority (CPMA), should best protect the consumer with a specific focus on product intervention.

Under the new regulatory structure, insurance intermediaries will come under the CPMA’s remit.
As part of its new consumer protection strategy introduced last year, the FSA said it has already introduced a more interventionist approach with the aim of anticipating consumer detriment where possible and stopping it before it occurs…

Read more here

UK Insurance: Nobody expects the Spanish inquisition…again! Just in case anyone who read this thought “that doesn’t really apply to the broader [general] insurance market” and that I may be totally wrong to suggest that further questions may follow, you may want to take a look at this. Also from OFT and relating to the motor insurance market BUT with implications for activities involving household, motorcycle and commercial vehicle insurance The OFT today published, for consultation, commitments offered b … Read More

via Get “fit for randomness” [with Ontonix UK]

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UK Insurance: Nobody expects the Spanish inquisition…

I really never really thought of FSA or OFT as anything like the Spanish Inquisition, except insofar as the element of surprise is concerned…because, I reckon that most people would be very surprised if they brought about any kind of change to UK Financial Services, that benefitted the customer/policyholder – despite any good intentions!

Needless to say that, if my understanding of this investigation is correct, this is much more about protecting the interests of shareholders in relation to underwriting bank rights issues. BUT the point is that there is a lack of transparency (opacity) and that the rates have not reduced despite improved conditions.

My prediction…”hold on to your hats” because I have a feeling that this is the tip of the iceberg and the insurance industry can;t stand too much “heat”!!!

This is not and will not be the only such initiative. Opacity is the rotten core of all that is wrong with the UK (and global) Financial sector. Bailouts, fines and reprimands may have been tolerated but will not appease people beginning to feel the full effect of increasing economic uncertainty, rising cost of living, the likelihood of rising mortgage costs and falling services as a result of Public service cuts.

“NOBODY expects the Spanish Inquisition!
Our chief weapon is surprise…surprise and fear…fear and surprise…. Our two weapons are fear and surprise…and ruthless efficiency…. Our *three* weapons are fear, surprise, and ruthless efficiency…and an almost fanatical devotion to the Pope…. Our *four*…no… *Amongst* our weapons…. Amongst our weaponry…are such elements as fear, surprise…. I’ll come in again”