Is this the way we do business now?

Bullying has to be up there among my top-ten list of all time pet hates, along with the chewing of gum and littering. That’s why I was so annoyed this week to be informed of one large, foreign insurer (which shall remain nameless) exercising its market clout against one of our members in an unnecessarily aggressive and unfair manner. They really ought to know better.

The insurer in question had ended its relationship with the intermediary saying that the small size of its agency meant that it was no longer economically viable to do business with; that’s not where I have an issue. It is after all a commercial decision and one that the insurer is fully entitled to make. It was what happened next that was really disgraceful and made my blood boil.

The insurer then proceeded to write to all of the broker’s customers telling them that it had severed its relationship with the broker. The insurer then chose to incentivise policyholders with the offer of a ten per cent discount for dealing directly with them. It was through this marketing letter that the broker first learned that policyholders were being approached in this manner (the broker also happened to have a policy with the insurer).

It was that unilateral decision to remove the broker from the equation and the manner in which it was carried out that so angered me. The insurer had taken it upon itself to try to cut the broker out. Forget advice, forget independence, forget service. Is that really in the best interests of the customer? Is that really in the spirit of treating customers fairly?

The customer of course has the final say in all of this, but they were given no indication or background as to why the insurer’s relationship with the broker had ended. OK, so it’s not necessary to make that public knowledge. However, had policyholders been privy to the information that the broker had refused to sell their business to the insurer then they might have viewed the letter in a very different light!

The insurer also appeared oblivious to the detrimental effect that such a letter would have on the broker’s remaining customer relationships. The broker involved received numerous enquiries from long standing, satisfied customers about whether their business was closing down. It may not be illegal, but it certainly is unethical.

We’ve written to the insurer in question raising our concerns about its activities. If nothing else this incident highlights the importance of the terms of business agreement between the insurer and the broker and in particular the non-solicitation clause.