Modern Insurance

25 years ago there was an insurance broker on every high street. You got to know him after a few years, and he usually handled everything. If you had a claim, and you had a good relationship, then no problem. If you had to cancel because you sold a car, then he'd refund you pro rata. Then the internet came along and a huge relaxation of what and what could not be advertised on TV. Direct Line started it all, even befoe the internet - cut out the middle man. What we see today is an orgy of direct selling in a highly competitive market. Baby Boomers remember the old times and shake their heads in dis-belief, yearning for the old days. Do you really want to buy a financial service from from a bald headed bloke in half a suit, hotpants and a wiggly fat arse? Or are you going to be impressed by some bloke with a big moustache? No, me neither, but what's the alternative? The trouble is, our sons and daughters, the millennials, have fallen for it hook line and sinker, because they grew up with it. We try and warn them, and get called fuddy duddy. Of a £300 premium, the underwriter probably gets just over half. The rest goes on a raft of middlemen - TV companies, creatives and web entrepreneurs to name but three. And it's ultra competitive. The only way the new style brokers can make any money is by squeezing margin out of every aspect the process. So you get recorded announcements about terms and conditions, and web pages that won't allow you to progress unless you click "accept". They have people who's job description is entirely predicated on creating loopholes that generate margin. The oldest trick in the book is the numbers they make you call from which they get a kickback per minute from the phone company. I used to work in that industry. Callshare paid for my first Hymer. Only in the last couple of years have the regulators finally started to do something about the scandal of premium numbers. For years they had a cosy cartel because 0845 numbers were charged at full whack from mobiles. It's not just insurance, it's almost every aspect of modern life. Mobile phone roaming abroad is another one. But the corporates are such a strong lobby and they fight every aspect of regulation - so government becomes bloated and corrupt trying to sort it all out. They are now legally obligated to provide 03 numbers - but you try and find them on their webpages. And Brexiters take note - you can thank the EU for a lot of effort in trying to get a better deal for us all in this and many other respects. It wasn't perfect, but they did some great work. And If you try and take them on, they tie you up in procedures designed to make you get bored and just give up. They threaten your credit rating, which can be a big thing for many of us. If you have the time, and treat it like a game, you can actually take them on and win. They actually cost in a percentage for complainers that go the whole distance. The trick is to get your case allocated to that percentage. If you turn up at County Court fully documented up, you will win 9 times out of 10, because they won't actually send a lawyer - it's too expensive. Same with the Ombudsman, as long as you have six months or more to spare.

So what to do? You vote with your feet. Three years ago I went back to a high street broker - they still exist. He - it's a she actually - gets all my business, and it's not actually that much more expensive. In fact we are lucky when it comes to insurance, because we actually still have a choice. Bank managers have all but disappeared unless you are a big account. And just look at the mess with energy prices. So you just don't use them. OK sometimes you don't have much choice, so you just do what you can with your eyes wide open, but with insurance you most certainly have a choice. You find a broker, make an appointment, sit in front of him and watch his eyes, ask all the right questions, and make a judgement call. If happy then you give him all your insurance. Don't begrudge him his cut, but make him work for it. If you cost your own time at £25 an hour, which is dirt cheap, then it's worth paying 10% extra, in fact it's a bargain.