Better risks, better disclosure, fairer outcomes for insurers and policyholders

By 24th February 2021 Insights

A few weeks ago, I joined the team at Mactavish. I have known the firm for a number of years and have always been impressed by both their work and the unique perspective they bring to our industry.

What attracted me most of all was the passion with which they go about their business. There is a genuine belief that insurance can be a great product when it is bought correctly. As someone who has spent a thirty-five year career working for insurance companies, that is something that I wholeheartedly agree with.

The ability to transfer risk from one party to another is an essential component of our economic system. It allows entrepreneurs and business owners to take the considered risks that ensure the most productive use of capital and resources. We may not have the same profile as the banking industry, but our work is crucial to the viability of businesses across the world.

In my experience, when things do go wrong in our industry it is usually the case that either the policyholder has not fully understood what they have bought or that the underwriter has not truly grasped the nature of the risk they are taking on. In other words, miscommunication, rather than miscalculation, is the root of the problem.

As an underwriter, and later the leader of underwriting teams, I believed that a crucial element of my role was to both share our expertise with our clients and to build an accurate understanding of their risks. My aim was to close that ‘information gap’ so that things did not go wrong as a result of miscommunication. Unfortunately, whether because we are constrained by time, or by brokers jealously (and quite understandably) guarding their relationships, it is not always possible to meet our clients and get to know them in the way we might like.

This brings me back to Mactavish. What the firm does is to provide buyers with the information they need to make informed decisions on coverage. Yes, we try to drive down costs, but much more importantly, we also seek to improve the quality of cover our clients purchase. We do not seek to manipulate the market to get the lowest possible price, we simply create a level playing field on which a fair transaction can be arranged – and on which we can secure high quality insurance risk transfer at reasonable prices.

Naturally, our primary focus is on policyholders and their needs, but we also believe that our work is valued by conscientious underwriters. Our proposition to the insurer community consists of four key strands:

1. Firstly, Insight: we act as an additional source of insight to underwriters who want to really get to know the risks they are taking on. Unlike so many brokers, we do take the time to understand our clients – and are very happy to communicate that knowledge.

2. Secondly,  Insurer/Client Relationships: we do not see ourselves as being ‘gatekeepers’ to client relationships. We always recommend that clients meet their insurers and will go out of our way to make that happen, even on our SME accounts.

3. Thirdly, Disclosure: our intense work on the Insurance Act 2015 with the Law Commission means that we understand the Duty of Fair Presentation better than anyone else in the market. Our clients’ submissions and prospectuses provide meaningful information that goes far beyond the usual standard.

4. Fourthly, Independence: we are entirely financially independent of all brokers and insurers. We have no commission arrangements and derive every penny of our revenue from policyholder fees. As a result, we have no preferred markets. When we invite an insurer to quote through the broker we appoint, that insurer will be treated fairly.

Put simply, a Mactavish client is a well-informed one who has chosen to put their insurance buying in the hands of an expert independent team. We apply the same standards of diligence and fairness to everything we do. As a result, the relationships our clients build with their insurers are long-lasting, mutually beneficial and based on accurate information.

I will be sharing more of my thoughts in the weeks and months ahead. In the meantime, if you would like to find out more about how we manage our relationships with insurers I would be delighted to take your call.

Tom White

Head of Corporate Customer Solutions