June 28, 2005 – The Insurance Integrity crisis shows no signs of subsiding. Major brokers have agreed to pay over US$1 billion in restitution, new business models and compensations systems have been launched, over twenty state and federal investigations are underway, dozens of shareholder and beneficiary suits have been filed, thousands of people have lost their jobs, and at least ten industry executives have pled guilty to criminal charges and are cooperating in ongoing investigations.
So the industry has a problem. Part of the problem is based on past behavior, and part on current perceptions. The solution must be built upon future actions and changed perceptions. As insurers and brokers turn to the task of improving perceptions and images, brand becomes critically important.
A new Celent Report, “The Insurance Integrity Crisis: Re-establishing the Brand,” examines what an insurance brand is and the state of insurance brands.
|Sector||The Good||In Transition||The Bad|
|Government||Marine Corps||Homeland Security||Post Office|
|Goldman Sachs||Morgan Stanley||Fannie and Freddie|
The report also identifies three industry responses to the integrity crisis. The first if flight, choosing to not respond. The second is fight, responding directly to the accusations, either by contesting them, or by admitting wrong doing and showing how things will be better. The third is hunker down, not addressing the specifics of the attacks, but instead pointing to the social and economic value of the insurance enterprise. The report provides examples of how insurers and brokers are pursuing each strategy.
“There are grounds for optimism that the industry can emerge from the insurance integrity crisis with a stronger brand,” comments Donald Light, senior analyst in Celent�s insurance group and author of the report. “It is clear that a flight brand strategy will not work-too much damage has been done, too much of that self-inflicted. Fighting might work, especially if fighters like Hank Greenberg win. Even better is a fighting brand, like Marsh, that honestly admits mistakes and credibly shows how its people will do better going forward. Best is a brand that people and businesses easily recognize as being on their side, easy and predictable to work with, and delivering value to them and society as a whole.”
The 23-page report contains 2 tables and 6 figures. A table of contents is available online.
Celent’s service offering falls into two categories, consulting and research, each of which is dedicated to technology in the financial services industry. We help banks, brokerage firms and insurance companies use IT to enter new markets in the shortest possible timeframes. All of our services are geared towards facilitating better informed, faster decision making. For more information visit www.celent.com.