Contract certainty or getting what you paid for?

It is like paying a higher mileage rate for a taxi to ensure it actually gets you to the right destination. Or a higher fee to a builder that guarantees to finish the job in hand.

Of course, what Airmic meant was that buyers should look for an insurance partner that they trust and fully expect to deliver contract certainty – rather than simply buying insurance on price alone. In other words, they should place claims efficacy, as they put it, above any industry moves to commoditise commercial insurance.

Which is a very fair point. You get what you pay for, and Airmic’s point is that there is a cost to contract certainty, for the insurer and for the client, just as there is when it comes to compliance in multinational insurance programmes.

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Airmic is saying that for business critical insurances, don’t go cheap. Go for experience, stability, trust, security and so on – and if that costs more, so be it.

Nevertheless, it seems a damning indictment of some parts of the insurance industry where commoditisation is becoming the norm, that having some sort of certainty over claims being paid, which after all is why anyone buys insurance, is seen as an extra, an additional service that somehow requires an additional or higher fee.

Using the construction analogy referred to earlier, what actually happens is that a contractor gets penalised if they don’t make the deadline, or fail to honour the contract. So perhaps Airmic should have said that insurers should be prepared to face penalties and lower premiums if they fail to ensure contract certainty.