If not for insurance, there’d be no planes in the air, no cars on the road and no skyscrapers on the skyline. Have you made this clear to your clients and business partners and to the public? All insurers should view promoting the exceptional value of insurance as their number one communication strategy, Stephen Catlin, CEO of Catlin Group, the largest Lloyd’s syndicate, insists.
Publicizing insurers’ critical value is well worth the excessive regulation intended to solve industry problems, Mr. Catlin says. The British executive delivered this message at the 47th annual seminar of the International Insurance Society (IIS) held recently in Toronto.
The IIS seminar made it clear that insurers around the world share the same concerns. The gathering took place soon after one of the direst economic crises in history. Besieged from all sides by regulatory bodies and disgruntled shareholders, large public insurers need a radical image makeover. Mr. Catlin shared some ideas about how they could achieve this.
The Catlin Group CEO argues that insurance has proven its value repeatedly in the last decade. For example, insurance helped Lower Manhattan rebuild after 9/11. Without insurance, New Orleans could never have bounced back from Katrina. This year, insurance partly absorbed the shock of the Japanese tsunami and the earthquakes in Chile and New Zealand. In the first six months of 2011, the insurance industry absorbed $60 billion in insured losses. This is concrete proof of its value, which should be trumpeted unabashedly.
Several other events demonstrate the value of insurance or pose challenges to insurers. The hurricane season is in full swing. The pricing of some special risks is unsustainable. Low interest rates are eroding insurers’ profits. The real cost of the Japanese catastrophe remains unclear, while instability in the Middle East may yet drive oil prices upward. In this context, insurers must act in the best interest of policy holders and shareholders.
Insurers and brokers must strive to increase their value in the public’s eyes, but cutting prices is not the solution. A better tack would be to focus on service.
Steve Catlin argues that insurers must better understand the nature of the risks they are protecting their customers against, and improve service related to claims. “There’s no yippee in buying insurance. Real value is the exact fit with the client needs, our ethical behaviour, our transparency and our accountability,” Mr. Catlin explains (see Table 5, Values at the heart of Catlin Group).
Attracting and retaining talent is also crucial. One way the industry can do this is by communicating better, Mr. Catlin says. "The industry needs to improve the talent base and it can be done by the way we’re communicating with people we want to join us. We must insist that nothing’s worth the value of the products we’re offering…in other words, we have to sell our profession just as hard we sell our products,” he points out.
The message was heard. Conference speakers echoed the theme of the value of insurance throughout the event. They also stressed the importance of clarifying the difference between banks and insurers, the second key message conveyed by the Catlin Group CEO. “We have to communicate to the regulators how and why we are different from the banks,” Steve Catlin said.
The Canadian industry should not expect to see any special favours from its regulator. On the third day of the seminar, Julie Dickson, Superintendent of Financial Institutions, confirmed that she would put banks and insurers on an equal footing (see box No special treatment for insurers).