What’s irking the insurance industry?

The country is awash with insurance marketing, whether on your TV, computer, phone or doormat. But what’s driving the decisions of the insurance companies vying for your attention?

We spoke with Mark Hallam, head of marketing at Swinton Group about the issues affecting the insurance industry at the moment and how they are being tackled.

“Aggregator sites have had a massive impact on the industry. And as household budgets get squeezed the perception is that the best deals are to be found online. This market is all about being top of the list, they are Price Comparison Sites and therefore rank on price alone. They’re a distribution channel that’s evolved heavily over the past three years in which you have to compete very strongly.

“However you can’t win every time. Therefore you can tailor your pricing to win in certain segments and thus acquire the New Business which is the most valuable for your organisation. If you’re prepared to price aggressively enough, you can go and find them and be very targeted in your approach. This type of targeted marketing is obviously not possible through the traditional Marketing channels.

“The one interesting development over the past 12 months has been the improvements across all our media channels. In particular Directories and Direct Mail are seeing somewhat of an Indian Summer, which is in part due to the rapidly rising Insurance Premiums but also the huge amount of TV advertising being undertaken by the Aggregator. People are therefore shopping around more so acquisition rates are going up, but this obviously having an effect on retention rates and therefore retention activity.

However, says Mark, the biggest challenge facing the insurance industry at the moment is fraud. And there are a few different elements to this, but the most significant at the moment are:

“The biggest challenge facing the industry at the moment is fraud. There are a few different elements to it, but the most significant right now are:

“Cash for Crash Fraud” around customers inventing motoring accidents.

“This is a major issue for the industry particularly in terms of how much it’s adding to people’s premiums. It’s growing out of the rapidly expanding personal injury sector, which is developing a very aggressive claims culture which can be highly lucrative . These costs are obviously having a serious impact on Insurer loss ratios which comes back on rates, pushing up premiums and making insurers less competitive.

Misrepresentation of Information.

“Customers are using the internet to arrange their insurance and because they’re not talking to a person some customers are misrepresenting their information to reduce their premium. The most common not disclosing accidents or convictions. In extreme cases we have even seen instances where customers have claimed to be female when they’re not, or that they live in Central London but their car is housed in a garage in Devon. This means that customers are not paying the correct premium for their risk, which means insurers are not receiving the right amount of premium to cover claim costs.

“To combat this issue, the industry is starting to include a number of fraud checks on internet sales. Credit checks, collecting driving licence numbers, anything that you can find that will discourage fraudsters and make it more difficult to submit false information. This obviously has a knock on effect in that you lose sales and probably some are genuine sales, however you’re discouraging fraudsters from giving you false information which has a much greater impact on our business over the long term.

“In terms of the effect this has on marketing activity, it is minimal. We still need people to call, so our marketing objectives are still all about acquiring and retaining more customers. These checks are done in the background whilst quotes are being done or insurance arranged.”

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