The last time I wrote, the main issue is on PIAM trying to either delete clause 5.3 of the Inter-company agreement on General Insurance Business or to delete off the word “member” from the said clause. After much deliberation and checking out with the industry experts…..or so-called experts (nowadays, people always proclaim themselves as experts when talking in the pubs and coffee shops), my views are that this 1st July “black” uneventful day is going to come….. but the agents are not in any state of preparedness. Wonder why? Perhaps they have been relying on their principals for direction or because they thought the rebating is only applicable to naturalised individual Insureds only!
Judging from the development of things this rebating would be applied to the commercial motor portfolio as well, albeit the rebating is not mandatory but discretionary basis. This looks like going to hit the agents and brokers hard.
But then, the agent should be able to find ways to deal with this new found obstacle, like providing some credit period (ie. 5 days) as well as some discounting (ie. 2.5% – 5%) to entice their commercial customers staying put with them. Now…this the insurers can never do because it would be a breach they can never hide from the authority but the agents are more agile to sort this out despite there is going to be a breach of the Insurance Act! On the other hand, the brokers would be most unhappy. They are never organised to be as agile as the agents and moreover their commercial customers are larger and would not hesitate to seek full possible discount on their motor premium.
The more savvy Insureds buying their way through the internet is likely to be an uptrend; just like what happened in the case of Air Asia. The saviour to the intermediaries would perhaps come in the form of inefficiency of the current ISM-NCD system….. The multiple inefficiencies would translate into frustrations for direct buying customers – imagine after having keyed a host of data and find the NCD entitlement is not what was prescribed. The next best thing is you received a notice stipulating if you failed to pay up the balance of the premium connected to the NCD, your policy will be cancelled. You jumped up and the next thing is you found yourself talking to your previous insurer and researching how the ISM-NCD works…..
However, I reckon the insurers will not be spared either as they (the motor players) may need to employ additional marketing staff to provide the much needed services to some of their larger commercial customers who not only wanted a first year rebate of 5% but also wish to capitalise on a 10% rebate comes next renewal. Larger customers usually required the marketing personnel to provide the much needed service and in order to retain those accounts, it is not making choices but to rope in more resources…. Now it is a reality; the costs are on the uptrend.
So far for now…. perhaps I will write about Agency Internet-based strategies the next time…..