October 5, 2004 by Canadian Underwriter
Among the many impacts the insurance industry experienced as a result of the 9/11 disaster was a recognition of the abysmal state of service taking place in commercial insurance ranks. So said a panel of speakers representing all segments of the market at the RIMS Canada Conference in Winnipeg, Tuesday. The interactive session allowed delegates to select topics to be addressed by the speakers, and give feedback on audience opinions – risk managers first and foremost wanted to hear thoughts on the issues around the collapse of World Trade Center. And while the “one occurrence versus two” discussion arose, speakers agreed that the real lesson to be learned from the WTC claims litigation process was that the industry had to do more in the area of service levels. “The key issue is that our industry is just bloody awful with documentation,” says David Pegues, executive vice president of Aon Reed Stenhouse in Toronto. He notes that in some cases insureds don’t see a policy for months or even years after buying the coverage, with business conducted through phone conversations and emails – the result when cases such as the WTC claim go to trial is that the courts are left with a “dog’s breakfast” of documentation.
“The lack of documentation is exceedingly poor,” agrees Susan Meltzer, panel moderator and assistant vice president, insurance & risk management for Sun Life Assurance Co. But, she adds, risk managers must also take the steps necessary to ensure they are receiving policies in a reasonable time frame, and ensure there are consequences if policies are late.
Back in 1999 when RIMS released its first “quality scorecard”, insurers were shocked to learn of the poor perception their commercial clients had of service levels, says Lynn Oldfield, vice president of corporate marketing for AIG Canada. She says that companies are making strides to provide better service and e-mail has helped facilitate this. However, over 60% of the audience felt service levels had not improved since 9/11.
Disclosure of broker compensation was also a key concern for risk managers – 47% say contingent commissions influence broker placement decisions, and while speakers agree that some level of disclosure is necessary, others see the issue as a “tempest in a teapot”. “For at least 10 years, insurance was sold well below cost and [such arrangements] didn’t prevent that from happening,” points out Don Callahan, president of Guy Carpenter & Co.
As to what risk managers can expect from the insurance market moving forward, Swiss Re Canada president Brian Gray says optimistically: “Increasingly it will be less volatile than it has been in the past.” Risk managers may share this optimism – 71% say they are still with the same insurer they were three years ago.