Cedric Stephens | Stress-inducing service culture

Three readers contributed content for today’s column. Two of them, unusually, wrote about decades-old universal life insurance policies. The third person spoke with me at length and wrote about her experiences with a motor insurance claim.

Life and motor insurance occupy different planets, however, the three policyholders had one thing in common: negative experiences with their providers.

The Fair Trading Commission, FTC, also helped with their invitation to me to attend the 19th annual Shirley Playfair Lecture.

Carolyn Cooper, PhD, in her article in last week’s Sunday Gleaner titled ‘Risky Business at Cross Roads Tax Office’, wrote that “doing business at government offices in Jamaica is a major cause of deadly stress”. Her observation, as I will show by way of anecdote below, is true. Her assertion is also wrong.

Poor and indifferent service are stressors. They can trigger heart problems and increase the possibility of a stroke, according to information from the source that she quoted.

She is also wrong on two fronts. Tax Administration Jamaica (TAJ) is taking steps to reduce the problems that Dr Cooper identified at Cross Roads. As I wrote last week, TAJ is moving another part of its tax collection process online. This should increase efficiency and help to eliminate some of the stress that employees and taxpayers have had to endure for many years. Visitors to the TAJ website will see evidence that the latest initiative is part of a series of ongoing activities to modernise tax collection.

The premise of Dr Cooper’s argument was incorrect on another level. It suggested that all government departments provide poor services and, implicitly, gave private sector companies – such as insurance providers – a ‘bligh’. A piece that I wrote two months ago, ‘Lessons for Insurers from NHF Service Delivery’, refuted that argument. Even more to the point: The motor insurance claimant to whom I previously referred, volunteered last Wednesday that during the pre-settlement phase of her claim she was so stressed out that she was placed on medication to reduce her blood pressure.

Universal life insurance issue

The Insurance Act 2001 calls life insurance long-term contracts. Non-life contracts like motor insurance are short-term contracts — they typically do not run for more than 12 months.

Life policies remain in force for decades. The life insurance complainants bought their policies over 30 years ago with the same company. They have independently concluded that they were not treated fairly. The products they bought did not perform as they were led to expect. Thousands of dollars in premiums that were paid over the years appear likely to have gone up in smoke.

When insurance products fail to meet consumer expectations this can also contribute to stress-related illnesses. This topic is invariably ignored in insurance texts, training courses, and the rules decreed by the regulator. Insurance service providers are invariably left to connect the dots – which they often do not – or interpret the rules to their advantage. The United Kingdom’s Financial Conduct Authority (FCA), has mandated that insurers treat consumers fairly and that this principle is placed at the centre of insurers’ business model. Fair treatment of customers is interpreted in the context of six outcomes as follows:

Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.

Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during, and after the point of sale.

Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.

Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change products, switch providers, submit a claim, or make a complaint.

In Jamaica, the FSC 2019 Market Conduct Guidelines were drafted by the Financial Services Commission (FSC) four years after the FCA’s outcome-based principles, and the commission subscribes to the authority’s fair treatment doctrine. The FSC claims in its rules to “establish specific standards for insurance companies and intermediaries in conducting business with customers”. However, it omitted to outline anything specific in those rules that remotely resembles the FCA’s six outcomes of fair treatment.

From my information about the universal life insurance product, and the changes that have occurred over the years, it is unlikely that the consumers who bought that product will get any redress for the losses they may suffer. Proving unfair treatment, based on the FCA’s Outcome 5, and the actual experiences of consumers would have been easier if outcome-based principles were in operation in Jamaica.

Motor claim issue

Poor service quality comes in many forms. Making representations that one believes to be true but are inaccurate is one. Another is product ignorance, but acting as though one is informed. Both were on display in an email that an insurance company official wrote.

The first revealed ignorance about standard terms and conditions of that insurer’s policy. The other concerns the person’s failure to understand the legal framework within which the motor insurance business is to be conducted.

These obstacles notwithstanding, the claimant prevailed by the sheer force of her personality and knowledge about the claims process and is now in the final stage of settling her claim. And the bonus: Her blood pressure is returning to its normal level, and she is now off the medication.

Final words: A Jamaican IT professional working in the UK contacted me after reading last Sunday’s article. He stated that he has developed a solution to the problems that were identified in the piece.

Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com