Holding insurer gets to match. It’s a well engrained habit. But there is evidence that as a process it is looking as dated as my Dressdown Friday chinos. You all know the routine. The holding insurer always gets last go, sometimes with full details of their competitor’s offer. Irrespective of whether they have done a good job for the adviser and the client and indeed whether they have been giving the client a fair price in the preceding period of cover.
Now we are properly in the market it is interesting to reflect on patterns of trading and behaviour. We may be seeing the start of a change in this most persistent of habits. When the market breaks its habit of asking holder insurer to match, will we then see the incumbent insurers having to sharpen up their service and actually invest in their processes ? If you get to match even when your service has been poor, why will you feel the urge to change ?
My old guvnor Des Le Grys always taught us that before we strode into any business talks to have a turn round the block in the other man’s shoes. I do understand the holding insurer’s position and can see that he or she is not having a great time. When you defend on a price derived from another insurer’s basis you will probably feel that “ there is no money in it “ and it follows that the prevailing feeling is that there is no margin from which to invest.
Advisers, and I include the major employee benefit consultants in this, are increasingly no longer routinely disclosing the best rate to allow the incumbent insurer to match as the last stage.
Indeed they are saying to the incumbent “You will not go through to the second round automatically as the holding insurer and we expect you to quote on time according to our agreed plan with the client”. They say that by doing this they are getting all insurers – and particularly the incumbent - to quote aggressively, by reference to their own basis and earlier. They tell us that as a result of this change in approach
ü they have a faster review process,
ü more control in their own processes,
ü lower costs,
ü are able to meet their deadlines with clients and
ü are able to prepare their reports more reliably and professionally.
Interestingly they feel they are getting better prices from insurers overall too. Some of the big incumbent insurers are providing strong feedback – sorry to use that exhausted corporate euphemism – on this change. Perhaps that is understandable but if you price relative to your own basis you might find that your control of your book and analysis of your business gets quite a bit better.
