Tom Baigrie: We've come a long way, baby

Those of you not as ancient as your columnist can have no idea just how well the insurers and reinsurers have handled their responses to COVID-19 compared to how they would have done 20 years ago - or even five years ago, come to that!

While several have botched their initial reactions or been held back by legacy tech, or now seem to be introducing tighter underwriting by stealth; overall the level of communications, the focus on claims, the emphasis on the value of additional benefits, and the overall speed of change, is a huge testament to just how far our insurers and reinsurers have come.

Historically, any effort by advisers to urge a focus on comms and customers or suggest courses of action would have been dismissed or countered with waffle about competition law. Now, for the most part, insurers engage, correct less well thought-out positions and make their stances clear with decent comms.

The result is we are surviving and can count ourselves very lucky not to be in the travel or leisure business, or any number of others shut down just like that. Of course, a slow mortgage market will not help us, but our time of maximum pain may well be when recession strangles household income for a prolonged period.

Then rising lapses and falling new business could challenge all but the best run larger scale specialist protection advisers. Although, on the other hand, I suspect the holistic financial adviser and wealth manager firms will prove as enduring as ever and perhaps they will learn to write protection again too, now that it's clear good times never last forever.

Retention

We can also expect more customers seeking to re-broke their cover in search of savings. While that is a natural and proper part of any insurance market, our retention team routinely come across the work of salespeople whose core business model is to churn recently bought policies. It's time insurers took responsibility and stopped the intermediaries they bankroll from using often illegally generated propensity marketing leads and then telling a stream of confusing lies to make a sale. The replacing of properly thought-through protection plans with cheap, inadequate covers can cause potentially disastrous customer outcomes, for which, in our half-formed regulatory structure, these rogue traders then bear no responsibility, because they claim to not give advice.

Given tough economic times ahead, those who do cheat customers in that way represent a reputational threat to our whole market and a likely commercial threat to the insurers who still deal with them. So it is high time all insurers looked beyond the apparent financial viability of their distributors and focussed on the consumer outcomes their commissions are driving and the misrepresentations being made in their name. We can only become truly proud of our industry if insurers echo their progress in customer care initiatives with reform of their distribution that stops the worst of it doing active harm to their customers.

Tom Baigrie is CEO of LifeSearch