Ethics@Work: Seeking to stifle free competition

By ASHER MEIR
March 24, 2011 22:49

Insurance agents’ attempts to win back the customers they lost to direct insurance by fighting a TV ad are unlikely to succeed.

4 minute read.



Insurance call center

Insurance call center 311. (photo credit: YouTube)

For generations, insurance has been sold through local agents of the insurance company. The agents act as salespeople and also process claims, and in return obtain a commission.

In recent years (approximately the past decade) some insurers have decided that the agents’ services are not worth the commission and have begun offering direct insurance.

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The individual who sells you the policy, or the one who processes your claim, is just the first person to pick up the phone when you call the company. The call center operators get just a regular salary so they save the company, hence the customer, money on the policy.

They are also available all the time, unlike your agent who could happen to be busy just when your accident happens to occur.

On the other hand, the call center operators don’t know the customer personally and can’t act as an advocate for their claims, so in his respect stand at a disadvantage to the old-school type of agents.

It is for the market to decide whether the benefit of cost and convenience outweigh the costs in terms of consumer familiarity and advocacy, and so far both kinds of insurance co-exist, reflecting the varying preferences of consumers.

Naturally, each side resorts to advertising to try and make the customer aware of the unique advantages it provides.

Direct insurer Bituach Yashir recently aired a humorous commercial in which a customer comes to tell his agent that he is switching insurance and is warned by the receptionist that the lost business will force the agent to economize on his au pair, his daughter’s summer school, his heated pool and so on. Ostensibly this is meant to show that the agent is raking it in, but that is obviously an irrelevant message because no customer cares what his service provider does with the money as long as he is satisfied with the service.

The intended association is presumably that buying insurance through an agent is a luxury or an extravagance, the kind of expense that most people seek to limit.

We might have expected that the agents would respond with their own ad.

For instance, they could show an ad in which the same actor who switched insurers needs help choosing a product or processing a claim and is faced with a never-ending series of frustrating and useless telephone calls to clueless call center operators, thus illustrating the unique advantage of having a personal agent.

Or they could have shown him eating from a brown bag and sleeping on a park bench in order to give direct insurance a cheap, downscale image.

INSTEAD, THE agents have responded by turning to the courts. The Association of Insurance Brokers and Agents petitioned the court to have the ad withdrawn on the basis that it “tramples their dignity and harms their livelihood.”

News reports state that they even threatened to sue Shani Cohen, the actress who played the receptionist in the commercial.

This suit is so completely without merit that it can only be described as an attempt to chill free expression and free competition.

First of all, the ad does not even portray agents in an unfavorable light; all it does is hint that they make a lot of money. There is nothing the slightest bit objectionable about having an au pair or sending your daughter to summer school abroad; these are things that we find acceptable or even admirable but practically speaking quite beyond our means. Furthermore, the ad does not generalize or hint that every insurance agent lives the high life. In any case, portraying a class of people in an unfavorable light is generally not considered libel, it is necessary to defame a particular individual.

The claim that the ad “harms the livelihood” of personal insurance agents is truly bizarre. Every commercial advertiser is trying to win business from their competitors, which will certainly harm the latter’s livelihood, but this is not the same as endeavoring directly to discourage people from buying from a competitor.

The Bituach Yashir ad doesn’t encourage people to stop buying insurance from agents per se; it encourages them to switch to a lower-cost alternative.

Ethical considerations aside, the move seems to me very ill-advised. Given the many substantive counterclaims that could have been presented to the message of the Bituach Yashir ad, seeking instead to silence the ad seems to transmit the message that the agents are unable to compete fairly against the direct insurance giant. And showing such animosity to what is really a funny and tasteful ad, extending even to pursuing the actress, is not likely to make friends with the public.


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