The good and bad of insurance

The good and bad of insurance

I traveled interstate over the past couple of days and had very productive meetings with senior insurance people and brokers passionate about general insurance and the protection of their customers.

When I got home I flicked on the news and heard the story of the client of insurer owned by the Commonwealth Bank that had been with them for 20 years as a premium paying customer and then became a cost centre to be crushed when she dared to contract breast cancer. I simply could not believe what I was hearing.

I am of a vintage that remembers that when I started in loss adjusting the first claims I did was for the Commonwealth Bank. MBS Loss Adjusters had been handling their claims Australia wide long before I joined MBS at the start of 1982.

At that time the Commonwealth Bank had a claims team in Brisbane that looked after Queensland clients. They were among the most ethical group of insurance people that I ever had the privilege of working with. I only had the highest regard for that claims team and Comm Bank Insurance brand. It was not just in Queensland. MBS did the claims nationally and we helped out in other states at times of catastrophe and obviously we spoke about this major client at our national conferences. The philosophy of this insurer and for the majority of the market was if in doubt pay it. The longer the client had been with you, the less doubt it took to look after the client and give them any benefit of the doubt.

The whole culture within the bank has changed from those days. Not only in insurance but the entire bank. I cannot understand how anyone who read that client’s file would not shown some compassion and honoured the policy. It was not a tyre kicking client who changed insurer year after year. I understand they had been there for 20 years.

From what I have seen and read, I cannot see that even now they get it. Like many Australians I have been a customer of this bank for most of my life. I do not want to be associated with any brand that treats their customers this way and have actioned an exit strategy for both LMI and me personally. Luckily I have no insurance with them and would neither insure or recommend anyone insure with them until there is clear evidence that things have changed for the better.

Sadly, this insurer is not the only one that seems to have lost their way.  I have been giving this a lot of thought as to why?

Is it because we do not train staff as well as in the past particularly in ethics and the principle of utmost good faith that is the foundation stone of insurance and enshrined in the Insurance Contract Act?

It is, the introduction of procurement offices that only seek to engage specialists like loss adjusters, lawyers, investigators on who is the cheapest?

The list goes on.

I now believe it must come from the top and comes down to culture. The whole purpose of insurance was as a social good to protect our neighbours, our communities, our economy. This has all been forgotten.

The customer is no longer a person for some, thankfully not all. They have become a line item on a budget.

I do not really think the customer has been pushed aside in preference to the shareholder. They have been pushed aside for the individual’s bonus.

If the culture was correct and the customer was the focus, the institution would not tolerate any employee treating their customer this way let alone trashing their once fantastic brand. The leadership would invest in training, ensuring that the top professional experts were engaged and that everyone touching their claims understood ethical behavour, not only understood it but lived and breathed it.

The question is who can we now really trust. Many of us around the world have lost faith in our governments, our churches, our banks, our large corporations, and our sporting icons.

There is hope as I am convinced there are some good people within the insurance industry, in broking, and certainly within our own company who day after day put the customer first ensuring that they get a fair deal.

I have to keep telling myself this as the number of claims that are like the one that appeared in the Royal Commission that are on my desk at the moment. Most I know would not been here if they were with the same insurer even 10 years ago.



One response to “The good and bad of insurance”

  1. Matthew Frost says:

    Allan, great blog and a sobering story about how insurers can behave badly if the culture is wrong. This is all to do with tone from the top and then lowering the bar of ethics to an unacceptable point that becomes the new norm for claims handlers. Insurers would have a much better reputation by adopting a simple philosophy of giving the client the benefit of the doubt.

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