Isn’t Insurance Business supposed to provide insurance?
"Values, People, Relationships", and the Digital Capabilities to deliver them - A resonating analysis
“The Unexpected is pretty hard to expect”! It triggered my special thoughts and attention. By the way, Thank You for the big annual CPC cheque!
To resonate, I would also like to add: “The Unexpectable happens with predicable regularity, and the expectable happens with unpredicable irregularity”! I read that in the Reader’s Digest long time ago, and have since proven it with immense evidences over the years. What I have learnt and concluded is, how can the expectable happen if people are not doing what they say they do and what they are supposed to do in the first place! Or perhaps they don’t even know how to, like to or want to, or simply not allowed to, but just hide themselves behind all kinds of guidelines and rules made, and authority delegated?! People say: just doing the job! But in fact doing what? Camouflaged Schadenfreude and bullying in action, allowed and justified? It is particularly so when the job and business we talk about is taking risks and paying claims! Nowadays even worse, people can simply blame it all onto technologies! The truth is, if we handle clients’ risk aversion and add our own risk aversion, innately, uncontrollably and negatively, also together with ‘claim aversion’, what would happen? Not counting the fact that our current “system” is cultivating and promoting unreasoning, inexperienced, and even irresponsible people who….……….….but just exercising their authority, essentially in avoiding to take risks and avoiding to pay claims, therefore practically just say no, successful in driving business away, destroying credibility and client relationships, though maybe just "unintentionally"! It is human subconscious being let loose and gone wild, yet in fact against our very own value proposition as an industry in insurance, almost knowingly!
Our job as insurance broker is to select, screen and bring in business (risks). After all the due processes, if the business ends up in claims, that doesn’t mean they are proximately caused by you or us, or even the client! In fact, claims are something so natural and important essential for maintaining our business as a business and as an industry! That’s what insurance and insurance business for! Theoretically, the more claims we have, the better business and more money there will be, if done properly! There should be a close relationship between us, and not otherwise, in working together to build business and to deal with the business so built, together! Yet, most are somehow wrongly educated and improperly trained with misconceptions, and thereby all the misunderstandings and mistrust so arise! Simply misoriented!
Only as an academic discussion, with no intention to challenge anybody: the key to success in insurance business is underwriting, and then ultimately luck! At the core, it is about selection of risks, applying agreed terms and conditions accordingly, with consistency and according to market condition, and then spreading of risks. The whole process is based on reasoning and common sense, together with knowledge and experience about the risks. The more proper we work, the more luck there will be for us! I believe that’s how money in insurance business is made and should be made. On top, we also have to rely, or presume, on the efficiency, specificity, and accuracy in our claim services, including legal services, and genuinely normal Industry Regulatory functions! It is way more than just actuarial number crunching and playing, financial engineering, creating and mandating everything, but all after the facts, by professionals who are not even in the muddy frontline trenches, dealing with clients and all the intriguing relationships and business directly, doing hand to hand combat, every day! My experience and research often begs the question, have they really done what they say they do and what they are supposed to do?
The end game of insurance business is paying claims. Before money is to be made! Yet, most mistakenly believe insurance money can be made or should be made through avoiding risks and avoiding claims, by whatever! They want more money, but don’t want more risks or claims! That wrecks up everything totally! All capitals and efforts are provided and directed to support the wrong theory and approach, and perhaps also the wrong people, and also in dealing with the messy consequences so resulted! Particularly when trying to make profits and more profits, and also beyond profits simultaneously, and almost insatiably! All the risks in question probably haven’t changed a single bit, but people are becoming more unsteady, inconsistent, and unpredicable! They just don’t see there is a better way! A proper and profitable way! Usually the most obvious is easily being overlooked, and missed! Ignoring the issue or issues will just allow and perpetuate, or even encourage, all the unreasoning and unreasonable “phenomena” to continue to everyone’s detriment! “Don’t care” and “giving up”, and to make and allow that to happen, including all their corollaries, are just part of the foolish “game”! I have collected herewith some revealing examples, out of many, for your perusal and as proofs, the names were all deleted for the purpose in only trying to prove my points. Just for one thing, can creating and installing more conflicts amongst people bring out the best answer? Is “compromise” a true best answer? How can Utmost Good Faith and True Agreement of Minds be arrived in the making of insurance contracts, in view of all the conflicts, natural and man-made?
So, when you zero in on "Values, People, Relationships" , in order to make things happen properly, and profitably, is so true and correct, despite what is in fact actually happening out there, yet most people continue doing their insurance job and business, wrongly, by way of trading dollars, and called it "leverage", and use it as a justification in what they do, and sometimes, without even saying it out as if it is the business norm in doing insurance business anyway! Ending up writing same risk for less and writing risks that shouldn’t be written in the first place, yet declining or driving away risks they should not! And then, finally also end up paying claims that should not be paid, but denying claims that should not be denied, and costing even more in doing so! Absolutely contrary to the Theory and Principles of Insurance Business, and what is supposed to do! How can we win? It is actually the initial beginning point of an inconspicuous global unfair subsidy system! In the course, also creating abnormal market concentration and polarization that aggravate things further, and eventually come back in whole to "haunt" and "wag" us all, especially for risk takers and capital providers, who therefore usually just come and go, no matter how big they are, and our people just continue to revolve around such system, including their unofficial and informal but perhaps also unproductive “networking” and “comparing notes”, and that’s why the industry always stay same and never change, or simply just cannot change! Forming negative impression and perception from consumers, and even from our practitioners themselves! Hiding behind business volume so built just cannot sustain! It blinds people from seeing the true big picture! The current Industry Education System is mass producing more inadequate and even incompetent people just to justify and maintain the said system and culture……………… The current "flourishing" MGA business is an unhealthy sign in such development! Would less claims happen and more quality business and volume be produced with such “business model”? It just adds up more people layers structurally, and separates farther apart the selling function and the actual contract binding function in doing insurance business! That will make insurance “products” on risks even more incoherent, finally reduce their accuracy and effectiveness, and therefore just create more ignorance and inability in the insurance food chain and at the last mile! Insurance Business to rely on ignorance and inability will have its cost and consequences, before being caught up even faster, as we add more digital technologies to do same, and eventually all just go out of hand! Who will suffer at the end? Is insurance business truly about taking risks and paying claims, or anything but?
Frankly and to the point, can winning in insurance business be achieved and sustained by such “business model”, just by identifying risks for sales purpose, then only selling “products”, but actually take no risk, and also pay no claim, relying on the interpretation and manipulation of some “well-designed” policy and fine print………………? Winning in insurance business is by deviation from underwriting guidelines, and even rules, based on underwriting expertise as applied to the individual risk under consideration, not by trading dollars or ‘leverage’ based on business volume, or some other pseudo reasons disguised as insurance considerations! That’s what guidelines and rules are truly for, as guiding light and reference, otherwise we won’t even need them, and no need for underwriters either! Deviations and discretions not based on underwriting of risks but twisted by way of ‘leverage’ or through some non-insurance consideration and perspectives will have only one outcome, as already described! Same for claims! Who are the true beneficiaries and who will actually benefit from such manipulated and deformed “system”? I have more observations and insights to share for our industry and for the future!
Our purpose and efforts are not only about insurance business and just our own work! Because we believe people will simply learn and copy, from what they have come across and gone through in involving insurance! Especially for those in their leadership and governing roles! What they learnt will then permeate to every sector of the society! Risks and insurance actually touch on everything in this world! And so producing more risks! Hidden risks! And more unexpected deviations too (the Unexpectables and unpredicables)! And when we apply digital capabilities (Insurtech) and hope things will change for the better, I think we got to change what is happening first, as elaborated, that means have to change and improve on the old traditional insurance business model itself, and the whole business approach and attitude as a whole! That really takes a contrarian stance, by people who can change, and who see and understand! In reformatting the industry professionally, productively and profitably! Otherwise, everything, actually the whole world, will be handicapped and disabled, and just limping forward, and continue on like what is happening now!
Someone has prepared and been practicing the ‘contrarian idea’ as a competitive advantage. There are others too, currently though still small and in small numbers only, who already built a foothold in their respective market segments to change insurance. Just like what the Judge in the Lloyd’s debacle and Equitas of the 90s’ summarized: “we need someone who dare to go against the tide!” It will be the real disruption and transformation of insurance business people have been talking about! With great prize and reward waiting! Seriously, it will be the Mother Lode, on a world scales! The dream of “Frictionless Commerce” in the “Speed of Thought” will become true, when it happens! We believe it will! It will be a blank cheque for the pioneers!
I was there when “Email” capability just began to be used, while others were still only using telexes, faxes, and phones. Yet, because the same old never changed traditional business model and strategies, so everything just continued to evolve and ‘carried on’ until now. At that time, there was no Web, no Google, no AI, not many captives, no ART or ILS, and not much “M&A” or similar “consolidations” either! And people just continued on basically the same old way, and became………………worse! What can digital capabilities and their easy accessibility do, if we just allow the industry to keep on repeating the same ‘game’ the same old way? The faster (wrong) things become, the faster things will catch up! In fact, if we don’t change and find the change quick enough, my question is, realistically, could true values ever be created and appreciate, or hard built relationships maintained and not destroyed, and people succeed, or at least happily survive? Should we allow all the efforts be just wrenched away?
Thank You for your kind attention and consideration.