Once you had recovered consciousness and picked yourself up off the floor, what sort of trust and loyalty would such a move engender? How much more business would find itself winging its way onto the lender’s balance sheet? Certainly enough to more than compensate the little bit extra it had given back.
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The problem is that lenders, like financial providers generally, are too focused on the next sale to really consider how to best manage the ones they have already completed. If financial providers could service, retain and grow the business they already hold on their books, their future would be a rosy one indeed.
However this is not the case and all too often the battle for market share boils down to a price war. Certainly this is the case at the moment in the critical illness market. As the Association of British Insurers (ABI) recently released updated definitions for critical illness, a number of providers came to market offering improved terms for their policies.
This is smart thinking and by coinciding with the release of the ABI’s announcement they have been able to piggy back on the publicity it generated. To attract further attention, these same critical illness providers are also cutting prices for new customers. This, however, simply fuels a price war and exacerbates the current situation where consumers already buy too readily on price alone.
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In delivering improvements to their policies, it would be fantastic if the providers had decided to backdate these changes to existing policy wordings and extend the level of cover in place for existing clients.
This is an approach that Kevin Carr at Lifesearch has vocally supported in recent weeks and one, which the industry as a whole should get behind. Not only would it create huge amounts of goodwill among clients, but it would also generate faith in the market from potential clients who had hitherto swooned over the integrity of insurers and the value of the policies they offer.
Providers have claimed such a move would be unaffordable, but in the face of the falling premiums they are charging for new policies, this seems ridiculous. Others have claimed it would be too complicated. Surely critical illness providers are capable of writing to existing clients, informing them of an extension to their cover and then honouring it when needed? If not, they should shut up shop here and now.
In an environment that is so focused on treating customers fairly, it also seems incredible that providers can introduce benefits for new clients, but not extend the same level of cover to existing clients who will actually be paying more for their insurance in many circumstances.
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In such a cut throat market, any critical illness provider making such a move, would doubtless lose market share to competitors, but if the financial services industry is to regain a significant measure of trust, it must focus on doing the best for existing customers, before press-ganging new ones with little more than headline rates.
Of course, rates will always be important, but what about content and value for money? What about rewarding existing clients as a way of attracting new clients? After all, word of mouth marketing has always been more effective than billboard promotions. If financial providers could better align commercial pressures with long-term returns, rather than short-term sales, everyone would benefit, but as ever taking that first step is proving so very difficult.
Sara-Ann Burgess
Director
British Insurance Limited
