An expert is by definition someone who knows more and more about less and less. Management consultants employ bright young people – usually with no business experience - to advise mere mortals of what to do with their businesses. They charge huge fees for the privilege. The world’s business press and business leaders bow before their wisdom. They are the modern equivalent of soothsayers or priests. Every word is hung on to.
However, they can individually and collectively be totally wrong on major areas. In the last decade they predicted that computers would mean shorter working weeks for all. You must be kidding! We now work longer than ever with fewer breaks. Three out of four individuals would buy private health insurance. Sadly, way way out.
Bankassurance would rule. Banks would control most general, health and life insurance. We would all fall over ourselves to buy insurance from banks as we are so closely connected to them. I never subscribed to this one, as most customers’ relationship with their bank is nearer loathing than love.
Banks adore management consultants. They employ them in bulk. So many went out and bought or set up their own health, life and general insurers. The first domino to fall was health. Few bank owned health insurers lasted. Next to go was life insurerance, many banks sold out or closed down their operations. One by one, the banks have moved from owning insurers to outsourcing operations in badged deals to insurance companies.
Despite all this the ‘experts’ predicted a new wave of bankassurance. They pointed to RBS and all the insurance brands such as Direct Line it owned. Now, RBS is short of cash. For years Direct Line has been a cash cow pouring profits into the bank to make the bosses look good. But in recent years, the shining star has waned, with management shake-ups, loss of direction, stupendous public relations disasters such as the 2-day u-turned decision to refuse to cover baggage claims for Terminal 5, and a dreadful decision to make war on insurance comparison sites, a war it is inevitably losing. In recent years, RBS has turned down bids for its insurance business - something they may now regret. RBS has put all its insurance companies up for auction. At the final bidding stage, seven groups are interested. Significantly, not a single one from banks.
The final nail in the bankasssurance coffin comes as Barclays hides behind the smokescreen of the RBS sale to admit that it is considering selling its closed life assurance business. Translating bank speak, this means it is up for sale to the highest bidder as soon as possible please.
The bank love affair with insurance is finally over.
So what else have the ‘ experts’ got wrong? That’s easy, McKinsey reports that the medical tourism industry where millions of people travel between countries for treatment, consists at most of 80,000 people worldwide, of which 30,000 go to the USA. These figures could not be more wrong.
Health insurance: Hot Topic: June 2008
