Can't get no satisfaction?

What subjects have really got brokers' backs up in recent months? One does not have to think too hard before several come hurtling to mind quicker than an Andy Roddick serve. First there is the constant need to satisfy the new regulatory regime, where recent back-peddling has provided little comfort for the industry, which is not exactly going to be reimbursed for the time and effort already spent on compliance so far. Then there are the difficulties over contract certainty, with many attempting to change a system almost overnight that had worked well for decades, all because of the demands of the Financial Services Authority, which is also now backing off it seems. Or so departing chief executive John Tiner said at the end of January.

However, it has to be faced, as hard as the regulator may try to irritate brokers, with remarkable success it must be said, even the FSA can not quite match another area of complaint for consistently making brokers sweat and rage. Yes, it is the traditional target of complaint: insurer service standards. Has a year gone by since this magazine first hit the stands when brokers have not had cause to complain about the service they receive from the carriers they place business with?

Cutting the mustard

Of course, one does not want to be too disparaging. The picture seems to be that although some insurers are, quite simply, failing to cut the mustard at the moment, this is far from a universal sentiment. If anything, the market appears to be quite heterogeneous when it comes to service standards, with some of the old names actually managing to maintain or improve their service to brokers in recent months. Unfortunately, however, other insurers are still leaving room for improvement.

This, according to the latest Professional Broking Sentiments Survey, covering the last quarter of 2006, service standards amongst some of the biggest insurers continued to cause concern. Royal and SunAlliance disappeared off the best for service list for the third time in 2006 and was well behind the competition in the voting. Another, which also failed to impress was Axa, which has undergone restructuring recently. On the other hand, the survey revealed that NIG has become the brokers' favourite, with the second top spot in a row, while other notable performers at the moment are Zurich, Fortis, Norwich Union and Allianz Cornhill.

However, do not just take the evidence of the Sentiments Survey alone on this issue. In January this year, the British Insurance Brokers' Association unveiled its Intermediary Satisfaction Survey, which demonstrated that brokers' satisfaction levels have been maintained since 2005, with most insurers performing the same or slightly better. However, the survey also confirmed - and here is the rub - a need for insurers to focus on basic service levels.

The BIBA survey revealed specific areas that need attention, particularly in relation to the proportion of policies being issued right first time for commercial lines business. Furthermore, 33% of personal lines brokers thought that insurers could do more to help them meet the requirements of the FSA's Treating Customers Fairly initiative. On a broader front, suggestions for improvements made by brokers included faster turnaround and response times, and more accurate documentation. Other areas that were cited as important in helping to provide a good service are: access to underwriting decision makers; providing products and services that meet customer's needs; providing competitive premiums; having underwriters who are flexible; and fairness in claims settlements.

"It is pleasing to see that overall insurers continue to provide products and services that meet brokers' needs," comments Eric Galbraith, BIBA chief executive. "However, the target must be to improve service levels. I do not believe we are achieving the fundamentals, for example, correct documentation. While the survey reveals that there is no significant change year on year, we must not become complacent; there is still much to be done if we are to look to achieve excellence. It is clear there is an opportunity for an insurer or insurers to rise above the rest of the competition."

Thankfully for the industry, it does appear that some insurers are actually heeding Galbraith's call. And one insurer that does appear to be consistently praised is Groupama, which is perhaps not surprising given that its sole distribution channel is through brokers. As such, the insurer intends to make sure it continues to actually listen to what brokers want in 2007, according to Cathie Bruce, distribution and customer service director at Groupama. She says that the company is looking to establish broker advisory groups on the basis that "if you are going to put a product in the market that a broker wants to sell to their clients, then you should involve them as much as possible in the design of that product and make sure it meets the needs of their customers".

Issue of disparity

From the point of view of the brokers, there's no doubt that being listened to is something they value - the problem is not only the fact that so many insurers say one thing and then go on to do another but also that there simply does not appear to be any uniformity in what the market is doing.

The issue of disparity is one that is raised by Ian Richens, director at broker Bollington. "It's infuriating because what's happening is that some underwriters are improving their service standards quite dramatically, whereas others tend to be stepping back. Groupama has got a good track record doing schemes for lots of brokers but then there are other companies whose service standards, even in a soft market, have stumbled a bit. But there are still plenty of smaller, more specialist insurers that really are providing a good service to brokers."

One broker, who did not want to be named, suggests that one of the reasons for the fall in service standards amongst some insurers might be a correlation with expansion: "I've got a good example of an insurer that has recently slipped a bit when it comes to service. This insurer, which does a lot of business with brokers, is very comfortable taking on increasing levels of business but its ability to process this demand is not as good as it should be and even the claims handling has slipped back quite significantly in my opinion. So what I'd suggest is that not everyone has improved as much as is sometimes made out."

He continued. "I'm not saying that some things haven't got better - God knows they need to! But there's been such an influx of business lately that, quite honestly, a lot of insurers have simply taken on the work without really paying heed to what that means in terms of service standards. They've allowed for the extra work but they haven't given as much heed to other issues at the same time such as FSA compliance."

So does he think that the situation is actually going to improve in the near future? "There has been real pressure on insurers to expand and to do this, while at the same time maintaining the same level of service, they either have to take on more staff or improve technology. Now I can't exactly see insurers employing a raft of new staff at the moment, can you? So that leaves better technology, which let's be fair is being introduced but that takes time and is expensive, so it's not going to happen overnight."

And he also provides food for thought regarding another area entirely: "Some of the larger companies are failing to comply with contract certainty standards still."

And, speaking of contract certainty, one area of the market really comes to mind - the London market. Here the issue of contract certainty has arguably been much more relevant than for other sectors of the UK insurance industry but, interestingly, it seems that a good deal of progress has actually been made on this area of service over the past couple of years - though whether or not this has been top of brokers' agendas is a moot point. Still, at least the FSA is now no longer going to intervene in this area, having announced it is satisfied that enough good progress has been made.

Below par standards

Despite such good work, there can be little doubt that services standards in the London market still remain below par. As much was recently admitted by Lloyd's chief executive Richard Ward who conceded the market is "paradoxically renowned for providing the very best and worst service standards".

As he outlined: "Lloyd's and the London insurance market have made their names - and indeed we pride ourselves - on providing innovative insurance solutions to our customers. Sadly, we also have a reputation for having some of the most archaic back office processes, which can mean that some insurance policies have expired before the policy documents are actually delivered to the customer. I'm afraid we simply can't continue to fool ourselves that one makes up for the other. We are basically a service industry that seems to have forgotten what its customers want and need." Specifically, he said that Lloyd's brokers have indicated they would like to have even greater access to underwriters, with more information on their availability and waiting times.

So is Lloyd's likely to lead the market and give brokers more of the direct access that they want? Maybe, and one should never say never but the fact is that such wishes of brokers in an increasingly commoditised age, whether at Lloyd's or in a regional personal lines market, mean that this sort of level of service, with regular face to face contact and detailed discussions of terms and conditions, only likely to be further eroded. Insurers cannot be blamed for this trend - it is simply part of a wider market dynamic. The question for brokers is: how are they going to respond to such a brave new world?

BIBA SERVICE FEEDBACK

The BIBA Intermediary Satisfaction Survey, in its 11th year, was conducted with 962 general insurance intermediaries by Harris Interactive. Top of the list for brokers as far as service issues are concerned were:

- Access to underwriting decision makers

- That products/services meet customer's needs

- Competitive premiums

- Flexibility of underwriters

- Fairness of claims settlements

Other results of the survey included brokers rating insurers highly for their brand perception on being financially secure and reliable and trustworthy but rated them lower in terms of innovation and being open to new ideas. Also, use of insurers' extranet sites has seen a slight increase since 2005 with three quarters of commercial lines brokers using them.