Are competitive times convincing some of our industry’s less compliant advisers to cut corners? There is a real difference between good marketing, a good salesperson and winning business unfairly. We all have experienced data manipulation, from non-disclosure and ’spin’ to outright lies. With many of the day-to-day breaches falling below the FSA’s radar we need to introduce a code of ethics where poor behaviour is not tolerated.
Losing a client through competitors using questionable practices leaves a bitter taste and we should not just accept unethical and borderline illegal behaviour as something we cannot do anything about.
We lose clients, just like everyone else. Although our persistency is very high it would be stupid not to recognise that sometimes another adviser is a better fit for the client. But we have seen several examples of unethical practice this year. They range from misrepresentation of quotations that do not make it clear that cover levels are reducing to non-disclosure of cancers in a bid to obtain lower quotes to bending the truth to get appointed or even using an authorisation letter to dupe the client into appointing.
We have come across a number of cases where a client was surprised and embarrassed to discover they had in error appointed someone else. It is therefore very pleasing that AMII has introduced a standard template – hopefully this will be adopted and enforced soon by all the insurers.
Clients facing large increases are inclined to believe an easy answer to their problems can be found. With financial pressures they are quick to take advantage of perceived bargains. But they need to be aware that if there is an ongoing cancer or a consistently high loss ratio and someone offers you a saving that looks too good to be true, it almost certainly is.
Some insurers need to be more aware and take responsibility. We have had instances where another broker has quoted with differing claims information and an insurer has chosen to believe the lower figures to allow a lower quote over the holding broker’s true figures. Removal or withdrawal of intermediary agencies is rare, but in our experience unethical sales are not.
Losing a client through an unfair advantage also grates. Do some brokers have an unfair advantage? I had always thought not. But there is one area where we cannot compete – high commission deals. In one recent example, an Advo client was told by a competitor that they can undercut our rates. How can this be when the holding insurer provides a level playing field? Through a commission rebate, that’s how.
We have seen several examples of unethical practice this year. They range from non-disclosure of cancers in a bid to obtain lower quotes to bending the truth to get appointed or even using an authorisation letter to dupe the client into appointing
As this broker received double our commission, they could rebate 50 per cent and still make a profit. We had to decide whether to match to retain the client, effectively handing over £4,000 and working for free. The holding insurer’s costs would have increased by the extra commission, so who will pay for this? Ultimately the client.
Clients are becoming increasingly quick to take the “commission cashback”. But is the intention of insurers with these deals to place their already on risk business through another broker that then costs them more?
Insurers complain loudly about high commissions when brokers use their volume influence. But has this influence been unwittingly provided and paid for by the insurers? We know this practice is becoming more commonplace as some clients are asking for rebates “up front”.
Insurers are aware that this practice exists, but as Linda Wallace, Bupa’s head of intermediary management commented recently, “the industry should take a sensible approach around commission policy so that clients are able to make decisions about their healthcare needs based on the quality of advice they receive from their broker, the reputation of the provider and the quality of the product they are purchasing rather than any financial incentive they may be offered.”
It is therefore pleasing that Pru Health has just announced level commissions and commission uplifts dependent on persistency and not just book size – a transparent system open to all.
My plea is that we create a truly level playing field, and that those individual advisers that use questionable practices be named and shamed. Let’s not just shrug our shoulders and accept this as a barrier to sales. Lets make our industry an example not only to other UK insurance sectors, but to the world. Because if we don’t, the FSA or its successor may do it for us.