Believe it or not, insurance companies are NOT out to scam you!

I’ve read several quite disturbing (and in one case, utterly disgraceful) articles on various media recently, absolutely slamming the general insurance industry and, some of the aligned industries therein i.e. Loss Adjusters.

The general theme of negativity contained in these articles seem to be one of piggy backing off the Financial Services Royal Commission last year. In addition, the use of low-brow scaremongering tactics is all too common. The ‘authors’ of these articles seek to ultimately, denigrate our amazing industry whilst at the same time flogging their own products and services, as opposed to adding any real value to a topical discussion.

Now far be it from me to play all innocent here; indeed, I am happy to 100% own the fact that over the past few years, I myself have written any number of insurance-related articles that have called into question the reliability and comprehensiveness of certain insurance products in the market, especially those sold by direct-to-consumer insurers. However, I have never once claimed that insurance companies are cheats and robbers out to scam you and there is a very good reason why.

They are not.

From my perspective, the problem primarily lies with direct-to-consumer insurance products and the fact that far too much onus is put on the consumer to read the insurance documents they receive i.e. policy schedules and more importantly, policy wordings. This exact point was touched upon during the Royal Commission into General Insurance last September.

Sadly, the average insurance customer does not have the time and sometimes, does not have the ability, to interpret and understand these documents which in the case of policy wordings in particular, can sometimes be more than 60-pages in length and full of complex terms, clauses and language. This can most definitely lead to problems when the customer goes to make a claim.

Furthermore there are without question, dangers inherent in shopping for insurance using price as the only key measurement metric and again as I've stated many times previously, this is where a Qualified Practising Insurance Broker comes in handy when it comes time to buy your insurance (but this is not a plug for our sector of the insurance industry, so we’ll come back to the benefits of using a broker in another article).

A significant failing of our industry is our lack of self-promotion. We know all too well when someone has had a negative insurance claim experience because they will tell ‘100 people about it’ however, I would suggest that for every single negative claim outcome (from a consumer’s perspective), there are probably hundreds if not thousands, of successful and 'good news' stories. As brokers we see them every single day. But no one seems to want to hear about the positive impact insurance has and, those that would choose to vilify our industry certainly do not at all seem interested in acknowledging the good our industry does.

The reality is that I know full well after 20-something years in this industry (the first half spent working for the insurers i.e. Allianz and CGU respectively, and the second half as a general insurance broker), is that the insurance companies simply cannot afford to SCAM and CHEAT you. Our industry is no different to any other and the success of any insurance company no matter how big or small they are, is customer retention.

Let's consider some examples; if a motor vehicle mechanic consistently does poor work on people’s cars and misses vital things like adding oil when servicing customer vehicles, how much repeat business are they likely to get? The same goes for the florist whose gorgeous online pics of bunches of flowers do not end up reflecting the awful, dreary and half-dead finished products their clients receive. And what about the grocery store that only has poor quality and out of date items on their shelves? Or the Tax Accountant that isn’t very good at tax accounting? Are these businesses likely to succeed and ensure valuable repeat business? Hardly not and without repeat business, the examples I’ve used above are likely to go OUT of business.

In this respect, insurers are no different. Without repeat business and retention of customers, insurance companies (particularly the larger ones with shareholders) will soon find themselves in all sorts of financial trouble.

And in our industry, what guarantees repeat business and high retention rates? Ensuring clients have positive claims experiences! Ensuring clients get exactly out of insurance, what they need from it in the event that they need to fall back on their policy come claim time.

For sure this process will fall down from time to time and for varying reasons but by and large, insurance does work, it does perform its intended function as needed and provides vital protection for millions of Australian individuals, families and businesses. To say otherwise simply to sell a product or to attack our industry with zero respect for the facts, is completely disingenuous and extraordinarily misleading.

The Australian public deserve better.