Insurance Marketing Through History

Posted by Active under Active Insurance News, Latest News

Insurance has always represented a challenge to the advertising industry. It’s not sexy, there is no tangible product to see, it’s not a pleasurable purchase to consumers and historically insurers have always been greeted with scepticism. What has changed in recent years is the way insurance has been sold. Going back to the sixties and seventies, Yellow Pages and Thomson Local was the place people looked – full stop – as the phenomenon that is the Internet was not even a concept. Insurers and brokers ploughed their budgets into these directories and even utilised alphabetically relative names to get to the front of each heading such as a.aaardvark and a multitude of dots after their name. This is not dissimilar to modern techniques used for SEO work to gain position on natural rankings in search engines. In fact at its peak, these directories dedicated even a coloured edge specifically for their insurance sections, it was that lucrative.

Marketing for name recognition is no different now as it was thirty years ago. Amongst the most memorable was the campaign in the early eighties for Commercial Union where their tag line was “we won’t make a drama out of a crisis”. Bizarrely, after years of huge investment and branding, following the purchase of Commercial Union by Norwich Union (now Aviva) they dropped the name completely. Other household names who also also invested heavily in their name also saw this disappear when purchased or merged. Notable casualties include Guardian Royal Exchange ‘GRE’, Eagle Star (now owned by Zurich – though they have retained the name for direct business) and General Accident.

The Direct Line group revolutionised advertising and shook up the industry when they vowed to champion the consumer and offer their products direct to consumers and have maintained this stance to this day as they also refuse to subscribe to comparison sites. The challenge they have currently is to advertise this fact continually in the face of overpowering campaigns and, it must be said, ease of use when the time comes for a customer to purchase a policy. These comparison sites have now saturated television screens to such an extent that it is not uncommon for insurance adverts to appear one after another. Will these campaigns be remembered in history? We have meerkats, rotund opera singers, singing girls and cartoons, all of which are insurance irrelevant. It obviously works as the author remembers them! Or is it just relentless brainwashing? So where next for marketing strategies for these players? It will be interesting to see how insurance is portrayed over the next ten years. will insurance companies rather than aggregators advertising particular markets such as empty property insurance, short term car insurance or cheap tradesman liability insurance with a view to attracting them online?

Backlash for Whiplash?

Posted by Active under Latest News, Motor News

Finally, there looks to be good news for motorists insurance premiums as the Transport Select Committee have announced that claimants should have to prove that they have suffered whiplash injuries following an accident. This is a major cause of increased insurance premium costs as Accident Management companies hijack claims and encourage spurious claims for whiplash, extortionate hire car costs and legal fees for claims that would historically have been a fraction of their cost today. MPs also want insurers to be banned from selling any form of customer information and intends to ban them from receiving referral fees for this information, but only for personal injury claims.

According to the BBC News website, Louise Ellman, chair of the Transport Committee, said: “Insurers, solicitors and claims management companies have themselves driven up the cost of motor premiums by encouraging people caught up in road accidents they did not cause to claim for personal injury, car hire, and other legal costs.” “The insurance industry must abandon sharp practices that push up premiums such as passing drivers’ personal data to other parties or taking secretive referral fees from solicitors, garages and car hire firms,” she added.

There has been a 70% rise in motor insurance claims in the past six years, the Transport Select Committee pointed out, despite a 23% drop in the number of casualties actual caused by road accidents and that whiplash claims accounted for nearly 70% of all Personal Injury claims (PI as it is commonly referred). However insurers in the cheap motor insurance and cheap 1 day insurance market find it very difficult to defend against these claims as the injuries are currently very much “subjective”.

Louise Ellman also added “The threshold for receiving compensation in whiplash cases should be raised and, if the number of such claims does not fall significantly, the government should bring forward primary legislation to require objective evidence – both of a whiplash injury and of it having a significant effect on the claimant’s life – before compensation is paid”. This basically means prove it or no claim will be paid – which is good news for honest claimants who have a legitimate claim and have nothing to fear but claims farmers will be fighting a lost cause.

Interestingly, the ABI agreed that the payment of referral fees should be banned altogether, but to all organizations and not just to insurers and stated that customers are fed up of paying high short term car insurance premiums to line the pockets of “ambulance chasing lawyers and claims management companies”. Nick Starling of the ABI was quoted as saying “It is absolutely critical that Britain’s whiplash epidemic is tackled once and for all and the select committee’s acknowledgment that the bar to receiving compensation for whiplash is too low is a step in the right direction,”

This is not a new concept – In the past year the insurance industry and its compare short term motor premiums have come under increasing scrutiny:

• March 2011 – the TSC accused the insurance industry of encouraging claims through the payment and acceptance of referral fees.
• June 2011 – Jack Straw described this system in the insurance press as a “dirty secret” and a “racket”, in which insurers sell information about customers who have been involved in accidents to solicitors who then encouraged them to make claims.
• September 2011, the Office of Fair Trading (OFT) began looking at why motor premiums have been rising fast The government also agreed to change the law to ban referral fees in personal injury claims
• October 2011 – the Parliamentary Justice Committee of MPs said the payment of such fees only encouraged organisations to sell data without permission, and said that any impending ban should apply to all referral fees paid by lawyers to third parties
• December 2011, the OFT launched a full investigation into car insurance costs, including the cost of hire cars and accident repairs.

The Lords are scrutinizing the Legal Aid, Sentencing and Punishment of Offenders Bill, which has been amended to put in place the ban on referral fees relating to personal injury cases.

The Transport Committee’s report concluded: “We recommend that the government send a clear message to the insurance industry that it expects the data protection legislation to be fully respected and we echo the recommendation of the Justice Committee that the stricter penalties for breaching the [Data Protection] Act, passed by Parliament in 2008, should be brought into force,” the MPs added

Plumbers Liability Insurance – What To Look For

Posted by Active under Latest News, Public Liability

Now that insurance comparison websites have commoditised products, particularly motor insurance, there is a common perception that all public and employers liability products offered by insurance companies are also very much identical. Yes, the core covers are the same, but the terms, conditions and endorsements can vary significantly. Take plumbers liability insurance for example. For small firms with up to 15 employees, these are normally rated by insurers on what is known as a “per capita basis”. These policies are very cost effective, provide cheap liability insurance but are inflexible as the policyholder has to declare from the outset how many employees will be working for the firm and has to continually monitor large fluctuations throughout the policy period. Look for a product that includes some form of temporary employee cover, usually between 50 – 100 MAN days (i.e. 1 employee for 100 days, 2 employees for 50 days etc.), as this is a real benefit. Other pitfalls to look out for are :

• If there are restrictions on the use of heat – this includes heat guns, blow torches, oxyacetylene and any other naked flame. It is not uncommon for policies to place strict procedures around the site, for the policy to be effective in the event of a claim

• Height restrictions – most, but not all per capita policies restrict the height to 10 or 15 metres or a maximum of 4 storeys including the basement.

• Premises restrictions – again, these types of policies tend to restrict the premises to private dwellings, shops, offices, hotels and schools only

• The usage of PPE equipment, “toolbox talks” and health and safety obligations are always fulfilled under UK law.

For firms who want flexibility, wage-roll and turnover based products are available. Insurers rate each risk on its own merits, judging by the estimated splits on wage-roll/turnover at inception of the policy for the forthcoming year. Then, at the end of the policy period, the policyholder is required to complete a declaration giving the actual figures and the premium is then adjusted and, if the actual figures are higher, an additional premium is payable. This method has two distinct benefits for the policyholder. Firstly, it should be viewed as a form of credit! Secondly, in this competitive arena it is not unusual for insurers to “waive” the additional premium on the declared figures, if the policy is renewed for a further year.

The terms conditions and endorsements will fundamentally be the same as per capita products, but usually there is no height limit and there is only usually a hazardous locations restriction, such as railways, nuclear, airports etc…

Also remember that labour only subcontractors are also deemed employees for the purposes of insurance as there is still a legal obligation to cover these workers for employers liability.