Independent broker blog: Two big problems

Like many of my contemporaries, I’ve read with interest the many reports and opinions regarding Quinn Insurance over the past month and echo the sentiments of most when I say, here we go again!

At a time when consumer confidence in the financial services sector is at an all-time low I would have thought that someone, somewhere should have taken steps to ensure that this didn’t happen and that we could have avoided adding fuel to the fires of those that like nothing more than to give us all a good kicking.

While the on-off saga concerning Quinn looks like dragging on longer than one of their claim queries, another potential insurance banana skin hit in the form of volcanic ash from Iceland. Not content with trying to bring down most UK councils during the financial crisis, they now seem intent on blocking our airspace!

In all seriousness, both events do pose a number of issues for us to contend with and yet more questions to field from the growing ranks of the sceptical insurance-buying public.

We never had any direct dealings with Quinn and only ever came into contact with them as a competitor quote or in handling claims. Both experiences were not pleasant!

Having to defend our renewals against a quote from Quinn that was half the price wasn’t easy and quite naturally the client, usually within the construction industry, and not interested in the quality of service or product itself, was motivated purely by price alone.

Long discussions recounting stories of contractors not being allowed on site after producing a Quinn wording and the poor claims and after sales service just began to sound like sour grapes on our part and consequently we stopped trying to compete with this insurer in these markets.

I remember speaking to one such client who informed me that insurance was just the same as taxes; a necessary evil for which you get nothing in return and therefore only interested in paying as little as possible.

The travel disruption caused by the Icelandic volcano has also resulted in a flurry of insurance claim queries. We have advised that in most instances there is little or no cover – cue a million and one complaints citing better cover elsewhere!

One customer advised that a friend of his had been guaranteed £300 per person under their policy, careful examination of their wording revealed a travel delay section of £20 per 12-hour delay, up to a maximum of £300. My clients “mate” would therefore need to be stranded for over a week before getting their guaranteed payment.

I am quite happy to accept that our role as broker is one of educating the insurance-buying public and that the quote process is now elongated as a result of having to explain the differences in cover, excess, terms and conditions. I am sure, however, that we lose out in some instances to other processes that may well be looking to bury the detail!

What I’m less happy about is competing against those cheap providers that give little or no service. You then end up with a client base that has no expectation of the cover or service, and our role and position in the market becomes more and more difficult to justify because modern-day processes emphasise price.

The flip side is that there are a great many customers coming back to high street brokers because they’ve experienced this poor service and now see the value that we add. I suspect, however, that there are just a many that believe all policies and providers are the same, and that they may as well suffer the inconvenience and get it as cheap as possible.

If you go into a supermarket you will see quality, established brands against 'value' alternatives. These are easily distinguishable and the customer then makes their choice. The challenge for us is to distinguish our brand against the 'budget' providers when the only tangible differential will come after the client has made their purchase. If only it were as simple as changing the packaging!

Peter Smits is managing director of The Ashbourne Insurance Group.