The Corporate World of Insurance: Decade of Reckoning
I’ve published a few articles about product and service degradation in my chosen profession, insurance, and the gradual but inexorable increase in attention from the regulators in response.
I’ll likely have more to say on this subject (noting NZ’s Contracts of Insurance Act 2024 has just passed into law – effective date yet to be determined), but two articles published in the last 24 hours on the Australian Broadcasting Corporation’s news site caught my eye –
The first relates to the annual Macquarie Dictionary Word of the Year 2024 - which I hasten to add won't become part of my vocabulary.
Australians and their Kiwi cousins have a history of inventive word creation/use, with edgy overtones and/or veiled sarcasm which often goes right over the head of those from other cultures. While I haven’t researched the origin of this years winning word, it comes as no surprise that Australia’s main dictionary has picked it out of a maul of competing words that express, in many ways, the mounting frustration over the declining quality of goods and services, especially (but not exclusively) those provided by large corporations.
The second, triggered by recent issues with Australian superannuation funds administration of death and disability insurance claims, relates to the conscious underinvestment in people, systems and processes (incl. the workflow applications and dashboards that should be overseeing delivery of services) that cruels the user experience.
It introduced to me a term, attributed to the insurance industry, I hadn’t come across before, ‘rationing by hassle (inconvenience)’. While it seems this is a term originally coined in relation to health care (and, by extension, health insurance), it is now being used to include deliberate decisions by corporations (and government departments) to ‘balance’ resourcing of service delivery, in part by shifting the burden of certain activities to/extending wait times for customers.
Both of these examples fall into the “can we get away with it?” category and are typified by the revenue-driven race to the bottom that is often an outworking of unrestrained competition.
But the thing that got me was that the insurance product - which is founded on the three core principles of utmost good faith, fiduciary care and moral rectitude – has now been linked to what has been a pattern of corporate behaviour previously confined to the producers of goods rather than the provider of services.
At a time of most need and vulnerability, e.g. following the injury/death of an individual or a natural catastrophe affecting many customers, the insurance compact, which expects a prompt and focussed response, is now fundamentally compromised.
That we have allowed this to happen says a lot about how the extremes of corporate behaviour have permeated our profession and explains why governments are waking up to their electoral responsibility to ensure the ‘right’ balance is struck.
While communities accept a certain reality when it comes to the rationing of health services (so long as they’ve been informed and decided via the ballot box), the rationing by stealth that’s occurred across the corporate sector and other key government services (and the attitudes that accompany it) have no place in the delivery of fiduciary services.
While informed/connected consumers can actively select/manage their service providers within a free market, the majority neither have the time nor resources to cope with the current pace/complexity of life, let alone push back on poor service delivery, and will look to government to act on their behalf.
The dynamic that’s changing governments today, i.e. the dogma overreach driving a lurch to the right, is also starting to play out in the private sector. Based on the current trajectory, this practical/ethical rebalancing, hopefully back to an acceptable middle ground, will reach its peak before the end of the decade.
I, for one, would not want to be left standing when the music of insurers hard market revenue ‘growth’ party stops. There will be many less chairs than current invitees. Only the most nimble will score a seat!