Negative headlines have become too common recently and the industry needs to figure out why, writes the ABI’s director of general insurance policy, James Dalton
For a sector that does so much good, that plays such an integral part in people’s lives and in society, it is important for us to continue to seek to understand why the industry has such an issue with its reputation.
The FCA’s recent confirmation of a Market Study into pricing practices in the retail motor and home insurance markets, the Citizens Advice super-complaint to the Competition and Markets Authority on overcharging of loyal customers in five markets, and last week’s confirmation by the Treasury Select Committee that they would be looking into prices charged in some insurance markets have put industry practices under the spotlight like never before.
Headlines like ‘Loyalty Rip-Off Probed’, and ‘The FCA’s report into insurance pricing is deeply troubling’ have sadly been all too common recently.
True, the focus of these investigations will not exclusively be on motor insurance, but no matter. Whether or not motor insurance practices are at the forefront of any scrutiny, from the treatment of existing customers to the fairness of risk pricing practices, what happens in the motor insurance market is critically important to the industry’s wider reputation as the insurance product most commonly bought by consumers.
This is why reputation will be centre stage at next week’s ABI Motor Conference. Challenges and opportunities arising from issues such as the development of autonomous vehicle technology, keeping pace with ever more ingenious insurance fraudsters, and the rise of insurtech, will debated at the Conference and all have a clear reputational dimension.
However, against this negative backdrop, we should not lose sight of the fact that the industry is significantly further ahead than many other markets in our work to address key reputational challenges:
- Renewal communications. In April 2017, the FCA introduced a requirement on insurers to show both the current and new premiums on renewal documents. This followed the ABI’s call in 2014 for this to be made a requirement across the market.
- Vulnerable Customers Code. In 2016, the ABI and BIBA published a Code of Good Practice to help vulnerable customers at renewal. This Code aims to ensure that staff are adequately trained to recognise and understand potentially vulnerable customers at renewal, and are able to offer flexible options to help address specific needs; identify vulnerable customers to ensure they are aware of any more suitable alternative products now available; and ask potentially vulnerable customers at renewal if their current policy and renewal terms meet their needs.
- Improving outcomes for long standing customers. Earlier this year the industry announced voluntary, industry-wide action to improve outcomes for long standing customers, when the ABI, in collaboration with BIBA, launched the Guiding Principles and Action Points. As well as making fair treatment of long-standing customers a Board priority for firms, this includes a requirement for insurers and brokers to review their pricing approach for customers who have been with them for longer than five years, and assess whether this approach delivers a fair outcome. We will publish a report by May 2020 showing how firms have been tackling this issue.
The reputation issue will loom large in the opening plenary session debate kicking off the conference. What do motor insurers need to do, as part of a wider industry drive, to engage more effectively with their customers?
Craig Tracey MP, Chair of the All-Party Parliamentary Group on Insurance and Financial Services, will set out how parliamentarians view the industry.
And throughout the sessions during the day, the reputational challenges and opportunities to improve will never be far way. And that is exactly as it should be.
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