Mystery Shopper - Going undercover


Surveys are a ubiquitous feature of today's insurance market, benchmarking everything in the personal lines space. Buyers of commercial insurance have only their broker as a guide, however, so Ralph Savage created his own company, enlisted an intermediary and waited to see what happened next

The idea of a mystery shopper exercise is not new and it seems there is no best way to do it. This article, therefore, in no way promises to present a definitive picture of the state of the market in terms of pricing, policy limits and customer service levels. It is simply an attempt to obtain an unbiased view of how a fairly average company, through the eyes of its broker, would decide on its insurance options.

At the start of the first Post Magazine Mystery Shopper project, there were two tasks requiring immediate attention. Firstly, what type of risk to place, and secondly, which broker would go to the trouble of placing it for us?

A construction company was selected but for the benefit of future exercises, the answer to point two must remain anonymous, as will the name of the imaginary company.

The only evidence of the construction company itself was a website, created instead of going to the trouble of incorporating a real one and registering it at Companies House, which was deemed unnecessary by various market sources. The main elements of the company's profile - and the cover required (see box) - were written into a market presentation and sent by e-mail to 14 insurers on Friday 3 March.

The aim was to obtain terms for renewal on 1 April, one of the busiest times of the year for business risks of this kind and perhaps a key indicator of how insurers would respond when given specific deadlines for a response.

The deadline was 17 March, two weeks after the presentation was sent out, after which insurers' responses would be collated and compared using a variety of criteria. These included how quickly insurers replied; what their perceived desire was to write the business; and the clarity of the quote's terms and conditions.

The full set of results were returned to Post Magazine at the end of March and can be seen overleaf.


Policy class: contractors combined (contractors' all risks/public liability/employers' liability)

Period: 12 months from 1 April 2006

Insured: XXX Construction and/or subsidiary companies

Address: XXX, London SWXX XX

Trade associations: Constructionline; ISO 9001: 2000; UKAS Quality Management

Situate: anywhere in UK

Business description: general building contractors, painting and decorating contractors, maintenance and repair work and all ancillary activities associated therewith.

C12 3


The following are the results provided to Post Magazine from the broker on the 14 insurers' responses. An overall score has been given on a scale of zero to five in terms of the quality of the quotation and the insurer's speed of response. A score approaching five reflects an outstanding response and zero indicates no response at all.

Ace Europe (0 out of 5)

Ace Europe missed the deadline and failed to respond to a reminder.

Allianz Cornhill (2)

Allianz Cornhill missed the initial quote deadline but had already expressed interest and requested more information regarding health and safety. Allianz Cornhill confirmed that the risk presentation was of good quality but declined to give terms without first receiving a copy of its construction select questionnaire, which had to be completed before a formal set of terms would be released. When it was pointed out that 12 other markets were prepared to quote without an additional questionnaire, Allianz Cornhill suggested that they "did not understand the risk". Eventually, the insurer was persuaded to provide an indication subject to its construction select questionnaire being completed satisfactorily. The resulting indication was quite keen.

Aspen (n/a)

Aspen declined to quote.

Axa Insurance (2)

Axa Insurance missed the first deadline for quotations and needed a reminder to elicit a response. When prompted, the insurer produced indicative terms that put it towards the top of the pile in terms of price but, surprisingly, it appeared to have little desire to write the business. It was prepared to alter its terms and pricing to secure the order but only gave loose details of its cover and stated that it would advise exact endorsements to apply "if the proposed premium appeared competitive".

Interestingly, Axa was the only insurer that had absolutely no questions whatsoever concerning the risk, and appeared prepared to quote solely on the information provided.

Brit Insurance (4)

Brit Insurance's response to the broking enquiry was unbelievably quick. Bearing in mind that the presentations went out to all underwriters at the same time - 5.20pm on Friday 3 March - Brit's response was waiting upon return to the office at 7.30am on Monday 6 March. Although the initial quotation was a very rough indication, the underwriter left the door open for further discussion, although the overall terms for public and employers' liability only were expensive. There was also limited flexibility in wordings, and the underwriter was willing to consider various alternatives for excesses and indemnity limits.

DA Constable (4)

DA Constable was another firm that gave a very prompt response within the required timescale. As with Brit, DA Constable was able to quote only for the employers' and public liability. It was nevertheless a good price and a firm quotation with specific terms and conditions. When the required deadline had passed, the underwriter rang to enquire whether there was any news or whether it could do anything else. The insurer's quotation covered all aspects, including detailed summaries of endorsements to specific conditions with electronic wordings clearly made available if required.

This was a keen and efficient response from underwriters with a strong desire to write the business.

DL Pratt Syndicates (4)

DL Pratt Syndicates was another Lloyd's Syndicate to quote promptly on Monday 6 March, although only for employers' and public liability, and it was not as competitive as some others. The terms were clear and well set out, with possible flexibility subject to further clarification of claims experience and health and safety track record.

Interestingly, this underwriter revealed an almost clairvoyant sense concerning the risk, commenting that "it appeared to be missing something" but that as it was not familiar with the name, the insurer would look into it.

Fortis (n/a)

Fortis declined to quote.

Illium Syndicates (4)

As with Brit Insurance, DA Constable and DL Pratt, Illium quoted almost immediately for the entire risk, in this case including the contract works, on Monday 6 March. Terms were precise, with full conditions set out in detail and very clearly. Some further movement in terms and premium were clearly available, subject to certain additional details regarding authenticated claims experience.

This was not the cheapest quote but the insurer was efficient and willing to write the business.

NIG (3)

Missed the initial deadline for terms, although had made contact to ask background questions. Promptly provided competitive terms upon being reminded, which were well set out although lacking in specific details. NIG also relied on quotations being subject to "standard policy terms and conditions". The underwriter was enthusiastic and willing to amend terms and conditions, to an extent, to win the business. It wished to know if the prospect banked with Nat West and followed the quote process to monitor its position overall.

Norwich Union (4)

Norwich Union was the first non-Lloyd's insurance company to respond and did so on the Monday morning following the presentations being sent out. Although not able to quote until additional health and safety information had been provided, it did so almost immediately upon receiving the additional underwriting information. Overall terms were expensive, given the total marketing picture, but there is a lot to be said for the prompt and effective response. Further movement in the terms were possible and the underwriter was clearly keen to write the business. There was limited flexibility in the terms but some negotiation remained open, especially if NU appeared likely to win an order.

Quinn Direct (3)

Quinn Direct missed the quote deadline and failed to even acknowledge any reminder. However, it subsequently rang to enquire what the position was the week before policy expiry and then quoted without requesting any further information other than to find out what it had to beat. When advised of the leading insurers' terms, Quinn promptly quoted 30% below them, including brokerage, and explained that there was still a little flexibility in these terms.

Royal and Sun Alliance (0)

Royal and Sun Alliance missed the deadline and failed to respond to the reminder.

Zurich Commercial (0)

Zurich Commercial missed the deadline and failed to respond to the reminder.

If the broker had advised a real customer based on this set of results, a shortlist of three was suggested. If pricing was the main factor, then Quinn Direct's quote was obviously the lowest. If the company was looking for a firm that really wanted its custom, then NIG was competitive and appeared to have the most enthusiastic underwriter. And if the key criterion was going to Lloyd's, Illium was the insurer that was happiest to take on all the risk.

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