The insurer’s real position and responsibility

It is a dangerous attitude to take perception as reality. In fairness, there are far too many situations in the insurance world where perception, namely, how one experiences and assumes things, overshadows the facts, and thus, reality.

When perception overshadows reality

What is it like then, or rather, what should it be like?

Let us say at the outset that much of the impetus to turn a perception into reality comes from the insurers themselves. It is not the core values of insurance that are paramount, but the competitive position in which most insurers find themselves. 

The flip side of this approach is that far too often there are negative experiences in how the insurer communicates its position to the customer. Too often there is a lack of clarity, too often there are frequent delays, too often there are delays and too often dissatisfaction arises.

The core value of insurance: the transfer of risk

The core value of insurance is an insurer’s willingness to accept the ‘transfer of risk’ ensuing that the balance sheet of the assured is fully protected in the unlikely event that they are hit by a catastrophic event totally beyond their control. 

To put it boldly. The insurance is not about paying your claims. Wrong. They do pay covered claims in excess of deductibles.

More clearly, there is no threat to an insured having to pay smaller claims themselves. What is threatening, however, is a claim that is so large that the insured’s balance sheet cannot pay that amount, jeopardising its livelihood. In that case, there must be certainty that the insurer will pay the claim.

Perception is not reality. The key step we need to take is improving the relationship between the insurer and the assured by fostering greater understanding and respect for the unique position the insurer takes in covering the assured’s risks at a relatively low cost. While purchasing insurance involves a transaction, it’s crucial to recognize that it represents a true ‘transfer of risk.’ That is the essence of it.

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