Medical Insurance, Health Insurance, Private Medical Insurance - Treating Customers Fairly

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Treating Customers Fairly - a broker's view

(1 vote)

After almost 8 years in the insurance business, launching Medibroker Online in 1998, we have good partnerships and agencies with more than 35 health and medical insurance plan providers/insurance companies. Medibroker , as a small independent intermediary (15 staff) needs to ensure transparency, choices, good service, so as to ensure that genuine best advice is offered to potential customers, to achieve their trust. This "trust relationship" allows us to work at a physical distance from our clients, when advising them and then placing their medical insurance business. We never touch client money, nor do we control/own any plan we recommend to them.

Since FSA Regulation on the 14th January 2005, a few Plan Providers and Health Insurance Companies have decided to use the "Mantra of FSA Regulation" in order to justify their placing, often draconian unilateral new terms of business upon us and other Brokers, within the Health Insurance Sector. These new TOB's radically dilute the ability of the true Intermediary to both offer best advice and to ensure that our "Customers are Treated Fairly."

Brokers are always concerned as to possible termination of agency agreements, which stop renewal commissions being paid to them. Cash Flow stops and the Broker goes out of business very quickly. If these new TOB's effectively promote "Tied Agencies" once more, how can we act truly independent of Plan Providers and treat our customers fairly and honestly with our best advice? It seems that the Insurance Industry just wants salesmen.

Consequently, the only way I feel that UK customers are to be treated fairly, is if the FSA Regulator and the Insurance Industry ensures and demonstrates by their own actions, that FSA Regulated medical insurance brokers like ourselves are also treated fairly too. Weak brokerages and timid Medical Insurance Advisors mean that the Industry will quickly revert to us acting as the "Salesmen of the Insurer" and not the Consultants to our clients, being driven of course by the highest commission paid, not by the ethics of genuine best advice. Unless the FSA engage with Brokers who write/contact them or "whistle blow" via BIBA , then give us some encouragement and real feedback, unfortunately cynicism will prevail and the Industry simply revert to the old practices of Old Boy Networks and high commission dealing, for new insurance business with low renewal commissions.

If the Health and Medical Insurance Industry wants sales people for their products they should directly hire such staff, not use genuine independent intermediaries and health insurance specialist advisers to "push" their plans for high commission, irrespective of the consequences on client service and later claims. The Public are already cynical and distrusting of the insurance industry and unless the few truly independent specialist intermediaries, certainly in our Sector of Health Insurance, are seen to be treated fairly, then what hope is there for consumer confidence that our clients will also be treated both promptly, respectfully and fairly by these large insurance companies and their Plan Providers? Are they not aware that the World of the truly empowered consumer is now here?

So far, I have seen little to encourage us that the New Regulators have yet taken on board the view that the best friend to the UK Consumer right now, certainly in the medical health insurance field, is the genuine independent, specialist intermediary or broker. Too many Insurance Providers take the first decision to "deny a claim" then even accuse the Client of dubious or possibly fraudulent behaviour. Fraudulent clients are very rare in our experience. If the Intermediary backs up his client, then sometimes the Broker is accused of "miss-selling". We cannot win back the trust of the Public, in such an environment of cynics in this Industry, with money/profit always coming first, before service and backing genuine customers in their legitimate medical insurance claims.

Should the Regulator proactively engage with the independent broker/intermediary and their Trade Association BIBA , matters may start to improve. To date, all we have seen is more paperwork, more overhead costs and a lot of compliance work, with customers service standards falling over the past five years from several major insurance companies in our Sector. Until transparency, the Internet and IT systems of communication force the Insurance Sector to finally realise that the customer is now "King and Queen" being firmly in the driving seat of power, the Plan Providers will not wish to be compared "apples to apples" on price and "pears to pears" on benefits across the market place. Brand Push marketing strategies are dead in my view, certainly across the Web.

The Internet based consumer WANTS comparisons and choices, genuinely placed before them, by an independent specialist. They also now demand speedy, intelligent, clear service from real human beings, who handle their claims diligently, not with constant prevarication, or delay. We need to remember that under the Law of Agency the Broker or Intermediary must have loyalty to the client, the customers always pays us even if we are remunerated later by commissions. The new empowered Consumer is getting irritated and has a short fuse. We ignore such consumer’s needs and demands at our peril as an Industry. We need stronger independent Advisors not weaker or compliant ones. In this information overload world, the new Client wants a professional friend who they can trust. They do not trust the Industry or the Big Insurer to provide that service- it can only come from an independent broker or specialist Advisor. The proof is in the pudding as our client retention rate is very high, with our claims ratios according to our Health Insurance Partners, in the top best 5% of all their new business coming through.

Mr. J. Leslie Smith
former Chairman and Managing Director
Medibroker Limited
April 2006

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