Biba blog: Are we skating on thin ice?

Trudging to the office this week through the snow and ice reminded me of my first job in “insurance” many decades ago. Why? Well, it was because no-one had attempted to clear the pavements outside their places of business. In those days, my elevated position as “junior in the mailing department” meant that it often fell to me to clear the steps and pavement of ice and snow from the front of our office.

Obviously no-one cares about this now. Perhaps it is because the buildings are rented or the task is not written into anyone’s job description. At the time, my job description was just to do as I was told or else. How times have changed.

Thankfully, I did not encounter any snow on my recent visit to Hungary for the latest BIPAR meeting where I presented on BIBA’s current position on the market solution around transparency, conflicts and status disclosure. The meeting highlighted a number of issues including review of the IMD and BIBA will be working with BIPAR on these over the coming months.

On getting back to the office I was met with members’ wrath about a couple of frustrating marketing issues.

“Thankfully, I did not encounter any snow on my recent visit to Hungary for the latest BIPAR meeting

From my discussions with senior insurance company people on the subject of hardening rates, it is clear that there is a strong desire to put underwriting back on track and, where appropriate, increase rates. Recent feedback from brokers, however, seems to confirm that, at best, commercial rates are stabilising with a few specialist classes increasing. On personal lines, however, there seems to be a disconnect between what the marketing teams of some insurers desire and their chief executive wishes with a proliferation of cut throat offers for free insurance, 25% off, 10 months for 12 months or cash back etc, etc. All this suggests a slashing of rates.

Are the insurers’ CEOs content to see the industry tarnished by these cheap (but not always so cheerful when the claims materialise) ‘buy one get one free’ offers of insurance where there is little, if any, focus on what cover is provided? Do they believe that this is the only way to sell insurance? Perhaps instead the marketing teams can be given the challenge to change and improve both their firm’s image/service and the overall sector’s image, with particular emphasis on cover at the right price, or perhaps even focus on existing customers.

It will not work, I hear many personal lines experts saying. I am all too aware of how consumers have been programmed to respond to price offers, but I believe this is a vicious circle which needs to be broken.

As many of you know, BIBA has already taken issue with and succeeded in changing the way comparison websites operate. Perhaps I am just being pedantic but I do not believe you can compare an insurance price without mentioning cover. That seems fair and not misleading. Banks are also part of this ‘marketing’ bonanza on insurance products and perhaps they, more than any other sector of financial services, need to think about change.

“As many of you know, BIBA has already taken issue with and succeeded in changing the way comparison websites operate

Talking about banks, some members have also raised the issue of banks “offering” to take over the handling of the commercial insurance arrangements for companies to avoid or reduce increases in bank charges, the inference being that bank charges would increase unless the bank was appointed to handle the insurance arrangements. If what I am hearing is correct, particularly in this hard pressed financial environment, perhaps conduct of business is being pushed to, and possibly over, its limits.

We need to care more about standards if they are not to go slip, sliding further away from us.

Eric Galbraith is chief executive of the British Insurance Brokers Association (BIBA).