Comparing all face-to-face intermediaries with all telephone-based firms is unhelpful
As Alexandre Dumas said: "all generalisations are dangerous, even this one". I cite this mainly to avoid opening with a variation on the pervading theme of "in these difficult times", but also because I've seen many opinion pieces and social media comments which ignore this fact.
Coronavirus has seen a wide variation of approaches from our partner insurers. Some have taken a degree of pressure to offer acceptable service, while others have taken the crisis in their stride and have been consistently on the front foot in terms of service, product innovation and customer support.
Similarly, not all of our competitors have behaved in the best interests of the industry. Now more than ever, with potentially the biggest economic crisis of a lifetime on our horizon, insurers must take a firmer stance in distinguishing between intermediaries, rooting out rogue distributors and cleaning up our industry.
In doing so, an end to blunt generalisations is key; comparing all face to face intermediaries with all telephone based firms is unlikely to provide useful insight and, just as Justin Bieber and Prince William are both Millennials, not all telesales brokerages are created equal. The blanket distinction between advised and non-advised entities is similarly unhelpful.
Insurers try to predict which distributors will give them a headache in future, having been burned by intermediaries who mis-sold products, facilitated non-disclosure resulting in declined claims, and - most commonly - took up-front commission and were then unable to repay it when customers cancelled their poorly sold plans.
In the flawed world of indemnified commission, clawback is an inevitability. Smart brokers provision adequately for this cost and smart insurers monitor broker performance and work with them to improve the statistics or, ultimately, pull the plug on new business.
Frustratingly, by the time insurers recognise a problem broker, stopping them earning new commission only serves to exacerbate the likelihood of them going bust. This nuclear outcome creates two spin-off problems: 1) insurers are unlikely to get back commission they're already owed and 2) members of these broker firms rise, like grubby phoenixes from the ashes of a toxic factory fire, to found new firms, which mysteriously increases the rate of policy cancellations from the original business.
Stopping this vicious circle is essential. Just like fighting a virus, these people should be tagged, traced and isolated from the wider society.
Insurers mustn't be shy about rigorously assessing new and existing intermediaries. Try taking out a personal loan without disclosing your income or sharing your bank balance for the past few months and you'll not get far, yet those selling protection products in return for up-front commission don't uniformly have to share details of their financial viability.
Given Reassured's obsessive focus on customer outcomes, we track and understand every facet of our business. We openly share this data with insurers, along with our financial strength, planning and cash balance. It gives them the security to work with us on bespoke projects and should mean they are more compliant to our needs when times get tough.
Without wishing to sound Orwellian, those with nothing to hide shouldn't have a problem doing the same, and insurers should not feel they're overstepping their bounds by asking. Focus on individual firms and stop applying out-dated and irrelevant generalisations.
Phil Jeynes is director of corporate sales for Reassured
Effective 6 December
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