All for One, and One for All

In an age in which the consumer has taken the lead role in his or her own personalized shopping experience, it is somewhat of an anachronism to see the insurance industry still predicated on consumer relationships with intermediaries.

These days, when intermediaries are part of the equation, excellent communication is required to make the relationships with consumers work. It is more important than ever, therefore, that all of the industry’s main players be on the same page with each other and with consumers.

Depending on the nature of a claim, for example, consumers may be called upon to deal with insurance brokers, insurance company agents, insurance adjusters, car collision repair people, risk managers and/or insurance company claims representatives. All of these people, in turn, will be affected by their dealings with each other, as well as with reinsurers and outside vendors such as software developers.

Given the number of people who make an impact on a consumer’s claims experience, it seems unusual there isn’t really a single “voice” or forum in which all of these various facets of the insurance industry come together as a collective to represent their best efforts on behalf of the consumer.

Yes, individual associations represent insurers (IBC), brokers (IBAC and its provincial associations), adjusters (the CIAA and its various provincial associations), reinsurers (RCC) and risk managers (RIMS).

But in one way, this only serves to illustrate the lack of cohesion within the industry when it comes to solving broad issues affecting both consumers and the industry as a whole.

The insurance-to-value (ITV) issue is a prime example of the need for the industry to take a more coordinated approach to resolving an industry-wide problem affecting consumers.

Very simply stated, ITV is a problem related to underinsurance. If policyholders are not insured to the full value of their homes, for whatever reason, then insurers are not going to be collecting enough premium to cover reconstruction costs when damaged homes are rebuilt. It means consumers paying full value for their insurance are subsidizing those who aren’t paying for the full value of theirs.

ITV affects every facet of the insurance industry, and it affects consumers as well, because their premiums will be based on the outcome. Everyone has a stake in resolving the problem, including re/insurers, brokers, adjusters, third-party software vendors (and in the case of a commercial property claim, the risk managers), etc. And so it would make sense to see a single, consolidated forum in which the various industry players could resolve this dilemma.

But there isn’t such a forum, and that has proved to be awkward for the industry.

True, the individual associations mentioned above are working among themselves to sort out a solution to the ITV problem. But at the end of the day, that activity does not necessarily include certain actors critical to the resolution of the problem. The relationships between associations, for example, does not include a trade body representing the third-party software vendors that manage reconstruction cost data (mainly because there isn’t such a body). And, at the end of the day, if the individual associations run against any principle they don’t like, there’s nothing to stop any one of them from ending the discussions and playing ball in their own separate corners while the issue remains unresolved.

So what kind of solution is proposed here? Well, one could imagine a kind of non-binding, national confederacy or forum with a mandate to discuss issues that broadly affect the insurance industry as a whole. Members of the body, representing all conceivable parts of the industry, could decide on what forms part of its own agenda. Rather than be used for the purpose of ratifying decisions binding upon all, it would provide a place for discussion of and education about issues that hopefully would inform the industry as a whole on best practices or the need for certain forms of behaviour modification.

If nothing else, such a national forum would provide an opportunity for the entire insurance industry to speak in the voice of a collective whole, rather than as individual actors in a production lacking overall choreography — sometimes to the detriment of consumers.