9/11 timely reminder of need for change

The terror attacks on 11 September 2001 may not seem to have any correlation with today’s IPMI market, however there is a legacy from those events which is still at the heart of much of the market’s challenges.

Following the attacks on the World Trade Center 20 years ago, brokers, insurers and reinsurers were embroiled in a lengthy and complex series of court battles with the leaseholder of the twin towers over the level of payment he was due.

It became apparent that the two towers had been covered by an insurance programme that has been written across three different forms, each with widely differing definitions and limits. The result was three very different legal decisions which left both leaseholder, Larry Silverstein, and the reinsurers unhappy with the end result.

What the legal cases did create was a regulatory requirement for greater clarity in future insurance policies and the demand for policy documentation to be delivered in good time to the insured.

Twenty years on and technology is changing the industry and the delivery of documentation but the complexity within IPMI covers still make the need for expert advice for members vital.

For the industry, the challenge is to make the covers more understandable to the end user, whilst ensuring they have the appropriate caveats in place to manage the exposures.

There is also the issue of how underwriters can enhance their ability to distribute their products to a far wider customer base which is in need of the products but are all too often unaware of how best to access them. They are also concerned as to how they can ensure that the policy not only meets their individual needs, but also ensure they are not being asked to pay a premium for areas of coverage which are simply not applicable.

While there is already a highly experienced and dedicated intermediary sector that will specialise in IPMI, if the market it to truly deliver on its potential it requires the ability to engage with intermediaries which currently do not see IPMI as a viable product due to fears over the complexity of cover and therefore the need for a level of knowledge they simply don’t possess.

What they require is a way in which they can contrast and compare quickly and efficiently the products available on the market, and in a way in which allows them to be confident in their understanding of the products but also enables them to clearly explain the options and benefits of each to their clients.

But the issues for the market do not stop there. The length of time between proposal and quote needs to be reduced. In a world where technology has created an expectation of immediacy, clients do not want to wait days or a week for a quote. They expect that the response will be far quicker. If they can insure their house or their vehicle online with immediate quotes, they view a two or three day gap between the submission of the proposal form and notification of the premium to be charged as outdated and increasingly unacceptable.

While IPMI covers come with a level of complexity, there is a need for an individual approach to cover and a system where quotes are delivered at least in hours not days.

Policy documentation needs to be accessed and delivered within 24 hours of the payment of the premium and in a way that best suits the clients.

Taken as a whole for many the challenges may be viewed as significant but solutions to these issues are being delivered as a matter of course by other areas of the insurance industry.

What is now required is a holistic approach to address the issues and create a viable solution for the IPMI market.

Twenty years on and the requirement for clarity of cover, the timely delivery of policy documentation, and the need for the policyholder or member to understand what they have purchased is still challenging the market. Technology may enable the sector to finally answer the questions.