Insurers shun online scrutiny...........
So claimed the headline in the Sunday Star Times on 30 March. Now, it’s usually the Life Insurance industry, lenders, or finance companies that gets this type of treatment from the media – apart from the Property insurers getting the regular – and poorly informed beat-up over the Christchurch re-build complexities.
But in this instance the article, inspired by an initiative being proposed by Roger Bell and Richard Conway, is right on the money.
The general insurance industry and in particular the person lines product providers – motor insurance, contents insurance, etc. - are closing ranks and operating like some sort of cartel to prevent technology being deployed to the advantage of the consumer.
Actually, if they would only take the time to found out, these insurers would come to realise that they’re rejecting a major commercial opportunity to develop a highly profitable initiative, already well established in other jurisdictions.
The issue under review is the provision of pricing data to a consumer ‘aggregation’ website, and the response from the insurance providers – and ICNZ – is nothing short of disgraceful puffery representing the worst spin-doctoring, obfuscation, and protectionism imaginable.
Over a long career in the industry in the UK, Australia, and here, I’ve never read such drivel churned out as ‘reasons’ for not supporting this initiative.
I ran my own composite insurance brokerage in the UK for a decade and we had a large motor insurance portfolio along with a sizeable domestic property insurance delegated authority scheme. So I have some experience in these areas, and even in those days we – and the broker-supporting companies – subscribed to Moquote, the computer-based system for providing car insurance quotes to consumers.
Not only did the insurance companies (and my small organisation) thrive, the increased coverage gave rise to extended client relationships – which also benefited some of the supporting insurers.
So forgive me if I reject one of the cornerstones of resistance from Vero that they’re an “intermediated insurer selling products through brokers and other business partners”.
Specialist motor insurance brokers would set up their own website for consumers and clients to get an indication of what they pay for - and what they get for the money.
Of course, the clever brokers will want to explain that some companies do indeed have stronger claims paying and financial strength ratings than others from Standard & Poor’s.
But hold on there, all licensed insurers are now regulated by the Reserve Bank of New Zealand and required to meet minimum solvency standards relating to their particular areas of operation.
So is ICANZ, or any other insurer prepared to release details of licensed motor or household insurers who may fail to meet their obligations to policyholders?
I met Richard Conway not long after his arrival in NZ while I was CEO at Ginger Group, and I’m pleased to see he has an ally in Roger Bell.
While I couldn’t do anything at GG – just didn’t fit with the strategy – I understood what he was seeking to establish, and was, and remain, wholly supportive. The initial reluctance to co-operate was evident then (2011) and it seems the industry is still reluctant to embrace the new technology.
The suggestion that consumers are unable to discern between quantitative factors and qualitative factors is as much an indictment on the industry, as it is on the opacity created and maintained by-product providers in this area.
And here I claim some high ground based on recent career focus, because the Life Insurance guys have been providing qualitative and quantitative information through excellent online subscription services such as Strategy Financial, Quote Monster, X-Plan etc., for many years now.
So the excuse that providing access to such information is harmful to the consumer is, with all due respect, bovine scatology!
Increasing the quality of product access for consumers should not be beyond the wit and wisdom of insurers by providing tools to fashion the type of insurance cover they wish to buy.
Of course, my background and instinct is to direct the consumers toward an appropriately qualified and experienced intermediary to get suitable advice and guidance, and if an imaginative insurer was to break ranks and support Bell and Conway, competitive elements would be released for the benefit of all stakeholders.
These feeble arguments are similar to the excuses posted by the industry for not supporting compulsory Third Party Motor vehicle insurance, which are similarly self-serving, misguided, and entirely out of step with global insurance practices.
Motor insurance pricing is claims and experience driven. The higher the claims, the more the insurer has to charge. Of course, competition will force insurers to be more sensitive to expenses, commission, and other cost factors which comprise the retail price.
The skill and quality of underwriting will also influence price and the good guys will gain commercial advantage.
Wow – radical, eh?
All the nonsense about selecting against young people and other specious arguments are redolent of an industry intent on retaining a stranglehold on a product line which is failing to meet the needs of the community.
As I mentioned earlier, pricing and benefit information has been available on the Life Insurance side for years – it’s high time the general insurance industry caught up with the 21 century, and met the needs of consumers rather than defending their outmoded practices.