PROFESSIONALISM 17
There is simply no argument for denying the objectives of the CII’s initiative on professionalism in insurance, made through its recent Aldermanbury Declaration. How to achieve the objectives is another matter and, regrettably, it will not be without cost, obstacles and diffi culties. Nevertheless the objectives are sound and highly desirable.
Why aim for professionalism? It is fair to say that most people in the insurance community want to be regarded as professional because it will give them three things:
1 Recognition for their expertise and knowledge
2 An ability to charge properly for their services
3 Status comparable to other recognised professions.
But are we ready yet to take on all that professionalism means? In a nutshell, if insurance is important to the economy as a whole and the buyer in particular then it should be taken seriously and delivered with professional skill.
We all know that insurance is an essential economic necessity. It is an integral part of the economy and it generally costs a noticeable, if not a substantial amount, of money both in proportion to a household income on the one hand and a business overhead on the other.
Good insurance does not come cheap. That statement, in itself, raises the proposition that there is bad insurance which does come cheap. But, then how does that marry with selling professionalism? If any part of the community is knowingly selling products and services without the intention of them standing up to professional scrutiny that is an obstacle to us all.
Not just a commodity On the one hand, using the commodity
argument, it can be argued that one insurance is as good as another, irrespective of the price. This is surely a view taken by the greater proportion of insurance buyers because so often price is the determining factor on the purchase. On the other hand insurance professionals know that to a certain extent you get what you pay for. That is not the insured’s view, however, when they have a claim and fi nd that they do not have the ‘comprehensive’ cover that they were expecting.
Using the professional argument, there is a case for saying that no insurance should be sold at a price that precludes the delivery of the contractual promise in accordance with the reasonable expectations of the insured. It is established that insurance is an essential economic necessity and therefore the buyer of insurance clearly intends to rely on it. However, the fact is that most people buy it and just consider it a necessary evil.
Meanwhile, an insured’s reasonable expectation should be:
1 The insurance company will be there to pay a claim
2 The claim will be paid without quibble except where it was clearly not intended to provide cover
3 Payment will be prompt so as to provide the fi nancial and business continuity protection that is the fundamental purpose of the insurance
4 The service the insurance company and their affi liates (loss adjusters, solicitors and other parties supporting the claim process) will be profi cient and at all times acting in the best interest of the insured.
The essence of insurance Insurance is about the resources, skills and expertise, together with the money, to pay claims. Despite this, the insurance community has a reputation for not wanting to pay claims and for hiding behind lawyers, in particular, and loss adjusters and others in general.
It is frequently said that if an insurer is advised by a lawyer that they do not have to pay a claim then the insurer is imperilling themselves with the shareholders if they decide otherwise. That might be a reason but it is not an excuse. Furthermore, if more value were put upon the stakeholder than the shareholder perhaps that would change.
Who controls claims? More importantly, what solicitor or loss adjuster engaged by an insurer is not going to tell the insurer, when they can, they can avoid paying the claim? At one time insurers decided for themselves when they would and when they would not pay a claim, but nowadays that dynamic has changed. Few insurance companies rely upon their own expertise and resources to make those judgements. There are lots of reasons why they cannot now fi nancially afford to do that, but that is of no consequence to the expectation of the insured.
If a potential buyer was told that insurance from a world famous ACME Insurance Co meant that the insurer would: • Take their money • Issue a policy for safekeeping • Insist it is the buyer’s responsibility to understand the technical and legal jargon in the policy and the insurer is not obliged to interpret this in advance of a claim or to answer a hypothetical question
• Require the buyer to disclose everything that may affect the insurer’s judgement in accepting the customer but the insurer is not obliged to say what may affect its judgement
• If there is a claim, the buyer will be dealing with the insurer’s sub-contractor and not ACME
• The buyer will not be permitted to know the identity of the sub-contractor in advance of notifying the claim
• The sub-contractor will correspond privately with the insurer and the buyer will not be privy to the content of that correspondence or their advice
• If the sub-contractor advises the insurer that there is no obligation to pay the claim, it may be turned down
• If the buyer is dissatisfi ed with the sub-contractor they may sue them - but the insurer takes no responsibility for their acts or omissions.
So, on these grounds, who would buy it?
Damaged reputations Regrettably it is the general perception among the insurance buying public (including business buyers) that insurance companies often start by seeking to avoid (or delay) paying a claim.
In 2005 Lloyd’s chairman Lord Levene, at a speech in the US said there was “an
July/August 2010 Insurance Brokers’ Monthly
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