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

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.

Read more of this post

Merlin Claims:: making value disappear


I have never endorsed fraud so am not about to start now BUT I have always winced when I read about the cost to the industry of fraudulent (or inflated) claims. Thankfully, the industry has, belatedly, made great strides in this respect and a great deal of credit should go to IFB who had another major success this week. However unbelievable it may sound, my concern has not been so much the, reportedly, £2.1bn of undetected general insurance fraud!

What I and others (who are not so free to speak out) find particularly disturbing, is the unquantified scale of, what amounts to,  “licensed fraud” that is perpetrated by the industry, against the industry, inflicting yet more reputational damage on ourselves and for which, as customers, we all pay a financial premium. This may go some way to explaining why Roger Williams MP will, again, be raising the issue of Regulation for Loss Adjusters in Parliament after the summer recess!?

I really wanted to go to town on this news story but, you know what, after the news of Merlin entering administration broke, a couple of brief conversations and a few texts, I reckoned I couldn’t have put it any better than these words from a former, Senior (Fraud) Loss Adjuster:

Another Network has gone into administration. Merlin’s short-lived involvement with the insurance market may have cost millions of pounds to building contractors. For how long are CILA members (link to code of conduct – for reference) going to be “authorised to conduct business” with no real business model?

Merlin’s model was to take money from contractors and pretend to insurers that they were getting “value for money Loss Adjusting“.

Read more of this post

M.A.D.: The $600 Trillion Time Bomb – Money Morning


My learned colleagues, at Ontonix, recently undertook the task of analysing over 600 macro-economic  parameters from the World Bank for the period from 1970 to 2010 and posed the question: “how much globalisation can the World afford”?

This may seem to be a curious course for a firm whose Founder and CTO is quick to quote Zadeh’s Principle of Incompatibility but should be viewed in the context of a genuine desire to “educate and inform”…and, of course, to showcase Ontonix capabilities!

Read on because “high precision” may not be required. A rough idea of the numbers and the implications should suffice! Read more of this post

Risk Management: adding to uncertainty!


By the time that “conventional” risk management is considered relevant by many business owners, risk managers, insurers and banks the damage is already done!

That is bad news for the business owner and everyone, directly or indirectly, working with the business. It isn’t great news either for local and national economies that are reliant upon successful enterprises for their survival.

The paradox is that, this scenario is not necessarily bad for those involved in underwriting or managing the risks associated with financial or insurance “risk transfer”…and not just because they still get paid and can blame failures upon events that ‘could not’ be predicted (even when that is not the full story)…because, as long as  there remains a need [to transfer risk], there MAY be sufficient risk spread or separation, that, in the event of a loss event (that cascades or spreads, vertically and horizontally to/from the client), a major company SHOULD be able to absorb the impact. But this does not appear to be enough to ensure Compliance with further Regulation, whether Basel, GIAS or similar.

un(fore)seen is not the same as unforeseeable

Risk-v-Resilience1.pngI hope this infographic helps clarify the point.

…but we can certainly make them worse by attempting to do so! The complexity and inter-connectedness of business [fractal complex systems and networks] has transformed the nature of risk in the “Digital Age”.

Unmanaged complexity is a source of systemic “risk” and adds to ‘reducible’ uncertainty.

Before we are able to apply the tools of risk management – without adding to system complexity – we, first, need to extend the current “risk horizon” into uncertainty.

 

Reactive – Protection: Risk ManagementMRI-scan-415x587.jpg

Reflexively assessing risk [to enable compliance with legislation or regulations] is like prescribing treatment based upon observed symptoms and patient data of those with a similar profile, without identifying the root cause: or undertaking intricate surgery based upon an artists impression of the human anatomy!

Proactive – Prevention: Complexity Management

Tailoring treatment based upon a thorough examination of the patient – the equivalent of an MRI or PET scan [objective & quantitative] – observed at micro scale to treat at source: conduct micro surgery and monitor the health [resilience] of the patient, in real-time, whilst in theatre, ICU or for as long as is necessary.