Sunday, June 12, 2016

Insecurity of insurers

Insecurity of insurers
The relationships with customers are not exactly the strong point of insurers. The insurance market has walked a tightrope for years, beset on some occasions by a triggered accidents, in others by competition arising from business smallholdings, sometimes by outdated legislation and, finally, perhaps for financial or work settings companies of any market in times of crisis require that, for various reasons will not deferring to thin the corporate atmosphere. The general descriptions run and is intended to describe a specific market (financial strangulation, technological advances, changes significant in customer behavior and etc.) forget that companies in almost every sector often face similar difficulties; and that corporate management is (or should be to) precisely understand that times are changing every day and every hour, and the commonplaces of the crisis or the challenges just clarify the present or the past or, at least, the future.

The insurance market now undergoing one of the multiple and continuous phases of adjustment characteristic of mature businesses, where profitability is vented into the details. In theory, they should learn from the banks, which begins convinced that survival requires getting used to narrow margins and wait for a next cycle of higher rates. The low interest rates also hurt insurers, but they have more room to raise rates. This is not the ultimate solution, it seems clear; but business development consists of interim patches applied pending cycle changes. The first business, however, task is to examine what is the margin for improving the service; margin in each company will be different, but in any case there. Does the insurer commitments and customer expectations? Do you respond with diligence to notices of accidents, starting with the telephone access service, which is usually deplorable? Do you have precise relationships, with automatic effects, to reward the loyalty? Because in many cases if there is no claim occur.

And so could expose several examples. Relationships with customers are not exactly the strong point of insurers. It is a problem common to large companies too; once a relatively high and stable customer volume is reached, managers tend to relegate relations with users to the category of minor matter. There are few companies that reduce or abolish offices customer relationship because, while reducing cost. One decision that seems required in setting times, when profit and the dividend may not always be maintained or increased by growth the business rid the company of complaints or suggestions you have no time or patience to filter. If however, one of the few guarantees of stability for insurers is to maintain a loyal clientele, the traditional way, which is not easily fold to claim competition to lower premiums.

That said and recalling further that the insurance market adjustments ahead and important legal changes in the short term, we must admit that yes, that financial conditions are harsh and that low interest rates strangling some growth assumptions. They are cyclical conditions, however; it is not foreseeable that the euro area keep the cost of the next money to zero beyond mid-2018 (to quote a difficult horizon to calculate) and, of course, is also true that the ECB buy debt of insurers (and other markets) as collateral and that decision is a relief of liquidity.