To the frustration of some, it seems little progress has been made. But is this really the case?
It is important to understand the debate. In general terms the majority of brokers – but not all of them – believe this information should be released. Most insurers also believe this information should be available and most would release it if all the other insurers also did so. However, a significant minority do not agree. And that minority controls the significant majority of the market.
Brokers generally say they are constrained in the way they can do their job without this information. Insurers and brokers in favour of information release believe the practice is against the interests of the customer because it stifles competition. In brief, it does not treat customers fairly.
Very few insurers articulate a reason as to why this information should not be released, beyond that it would disadvantage them commercially, and that there is a risk of Data Protection Act (DPA) breaches in certain circumstances.
So what can we read into this? Firstly, the basic reason for no information release by the big players is their belief that competitors will cherry-pick their best risks. The DPA argument has some validity, but with no sign of those that consider this to be an obstacle doing much to try and overcome it, one is left with the impression that they are not keen on finding a solution.
Occasionally it is suggested that we should return to the days when all SME risks were pooled and insurance operated without price differentiation on the grounds of performance. Whatever the value of this argument, you cannot hold back progress, particularly when it is driven by customer demand and this is what has led to price differentiation in all markets.
In any event, those who contend that pooling is best all too often do not follow it through in their own business practices.
The obvious conclusion then seems to be that SME claims information really should be released by all insurers. But, as we all know, what should happen and what might occur are not always the same. So what is the likely outcome?
Despite what some might think, PMI insurers are a reasonable bunch and, with a product that sits on the top end of the low-risk category as defined by the FSA, they are unlikely to resist a strong argument that says they are not treating their customers fairly.
The basic reason for no information release by the big players is their belief that competitors will cherrypick their best risks
In addition, some of those arguing for the release of this information have indicated that they intend to keep this issue high on the agenda until it is resolved. It is clear they have support from across the market. But the big players are not just going to roll over and let go of what they consider to be a clear commercial advantage.
From the outside, control may appear to rest with the major players, but those campaigning for the release of claims data occupy the moral high ground and by keeping the topic in the spotlight, those in favour of sharing have sharpened the focus on what sits behind the objections and whether they are valid. Consequently, unless it is thought that the issues posed by the DPA are insurmountable, the most likely outcome would seem to be some recognition by the big players that there are inconsistencies and a lack of fairness in current practice.
This does not mean they will agree to the release of information in all cases. What is perhaps more likely is a reduction in the size of group on which such information is released. This was offered by AMII and BIBA as a possible solution some while ago. At the moment information is available on cases with 50 or more lives but if it does move down, how far might it go? For now the debate is purely academic.
Why might the big players offer some ground on disclosure when they do not want to? Because the argument could swing to the question of releasing data where the DPA cannot be an issue and that is where no claims have been made at all, and that would just focus even more on data they do not want to release. It might be easier to make enough of a compromise to get the topic out of the spotlight, rather than to have to try to defend this position.
That said, this debate is not going away, but don’t hold your breath for a resolution any time soon.