Insurance Brokers Loose Ground to Dial Direct Approach

Successful domestic short-term insurance company, Dial Direct, which offers consumers direct access to and advice on motor and household insurance, has once again angered the Broker fraternity with its all out approach to cutting out the middleman. The Company was taken to the Advertising Standards Authority (ASA) by SAFSIA (South African Financial Services Intermediaries Association) which, along with the IBC (Insurance Brokers Council), previously lodged a complaint in late 2003.

Dial Direct recently launched an outdoor billboard campaign that depicted a rather tubby man sitting at a table with his feet up, smoking a cigar. There is also a visual of a big saw cutting the billboard in half. The pay-off line on the billboard states: "Cut out the middleman - Save up to 25%".

The nature of this new complaint by SAFSIA is that the visual of the man depicted on the billboard is disparaging to Brokers as it implies that all Brokers are well rewarded and prosperous. Further, it allegedly implies that "there is an obstructive and greedy presence in the form of insurance brokers that these should be dispensed with by 'Cutting Out The Middleman'".

The ASA ruled that the advertisement, in so far as the depiction of the tubby man was concerned, was disparaging. The decision relating to the disparagement was argued on the basis of the demeanour and looks of the man in the picture which suggested a wealthy 'fat cat', which is normally a derogatory reference to a wealthy and powerful business man. The ASA ruled further that ".the visual depiction seen with the wording on the advertisement was likely to create the impression that brokers unfairly charge fees and accordingly, are unfairly wealthy as a result of the unfair or unnecessary charges levied."

The ASA believed that the representation of the broker combined with the saw which appears as if it is physically cutting out the broker along with the statement "cut out the middleman", negatively portrayed Brokers. The ASA said that the consumer would believe that Brokers are unscrupulous, and should not be considered when purchasing insurance.

The first complaint to the ASA, lodged by the two associations in late 2003, dealt with Dial Direct's print, brochure and e-mail ads which referred to the saving that consumers could enjoy by going direct and cutting out the middleman. The ASA ruling allowed Dial Direct to continue referring to a saving in their advertising. On a second point, that by going direct, consumers would gain the benefit of having a longer and better relationship with their insurer, the ASA ruled in favour of Dial Direct, stating that Dial Direct customers would certainly have a longer and direct relationship with the insurer since customers using brokers have no direct relationship with their insurer at all.

A second complaint in 2003 was one the Insurance Broker Council (IBC) SA lodged with the ASA regarding another further Dial Direct advertisement in which is was stated that there was no need for an insurance broker "as a broker can take 25% or more of your insurance payments".

Here, the ASA ruled in favour of Dial Direct. The ASA ruled that Dial Direct's claim was not factually inaccurate and felt that it was unlikely to mislead the average consumer.

Says Lenerd Louw , director of Dial Direct, "It is Dial Direct's mission to be the consumer's hero by saving them time and money. For too long, brokers have been allowed to dominate and dictate to the insuring public in South Africa . Consumers should be given the right to choose and we will continue to remind them of that right. Despite these numerous attempts by Broker organisations to stifle us from telling the SA consumer the truth about the savings they can enjoy by going direct, we intend to strenuously defend our right to explain the savings to consumers. We will continue to advertise the benefits that the consumer can receive if they go direct."