Education in the insurance sector has long been neglected. Now, says John Jackson, the race is on to develop training and testing that will keep the FSA at bay
The insurance industry is woefully under-qualified. The Chartered Insurance Institute (CII) reports that there are just 34,000 people out of 60,000 in general insurance who have qualified for its insurance examinations -Fellowship of the CII, Associateship of the CII and Certificate of Insurance Practice.
The question is why are insurance qualifications treated with such apathy. Is it because employers undervalue the qualifications that exist? If so, does this mean a complete overhaul of the current examination structure is required?
Now that the Financial Services Authority (FSA) is breathing down the necks of insurers, companies can't afford to pay lip service to qualifications and competence. The FSA has enthusiastically endorsed the value of qualifications and wants to streamline the examination structure into something clean, straightforward and effective.
The CII is determined to have a role to play in this and director general Sandy Scott is aware that the CII, as a provider of qualifications, needs to change to fulfil this role.
"In 2001 we underwent a period of self examination. We began the process of refocusing our activities to make ourselves more relevant to today's concerns and requirements.
"This year we will make progress towards realising our ambitions."
Progress has already been made. But with just two years to go it is a race against time.
In the past 12 months the CII has launched foundation level tests (FIT) for general insurance and, just recently, an e-learning project designed to make learning and development more accessible.
Its online education programme - www.ed.cii.co.uk - has two strands: learning management system (LMS); and compliance and competency system (CCS).
LMS provides employees at all levels with access to the CII's portfolio of training material, including interactive tutorials to suit the needs and objectives of employer and employee.
CCS, currently being tested, is designed to embrace current and future regulation. It will help organisations comply with FSA regulations.
CII marketing director Steve Wellard says: "At foundation level we will probably have online testing for certain levels, but not the chartered titles. There are no reasons, apart from security at this moment, why the CII cannot get people to do the basic insurance exam, the foundation insurance test, online."
He adds: "We are taking the areas that the General Insurance Standards Council (GISC) and the Financial Services Authority (FSA) are particularly interested in with regard to compliance - for issues such as money laundering, law of agency and competence and training rules, and putting tutorials and self-test questions in that. A company can track its own staff and set tests for them."
Individuals can also log their own CPD records, which would be integrated with the CII's own CPD system, which is under review.
Wellard adds: "We want to bring an electronic and no-fuss format to that. It will be an online record.
"This is the way we see the future, in terms of accessing everybody in the industry and at least bringing them up to foundation level," he says.
Many in the industry have welcomed this move towards a learning and competence-based structure.
Robin Wood, a specialist in training and competence in the insurance industry, believes the critical thing is not so much the exams themselves, but that all firms must have in place a robust training and competence scheme.
He argues that record-keeping is crucial and individuals should be able to take their files with them to different employers.
"On-the-job assessment should happen at least annually and should apply to directors down to the most junior members of staff," he says.
Insurance companies seem to be moving more towards the idea of a qualifications-based profession though. At Kwik-Fit Insurance, for example, its new managing director, Martin Oliver, has set an example to his staff by sitting the CII's foundation insurance test.
Kwik-Fit Insurance is a telephone intermediary with 650 staff. It has a dedicated trainer for staff on the foundation test. There are two courses a month, with 30 staff going through the week-long test. By the middle of 2003, the company is hoping that all customer-facing staff will have taken the test.
Kwik-Fit HR director Karen Edwards says: "Any member of staff who speaks to a customer in any manner, shape or form, be they in customer care, claims or renewals, will all be qualified in insurance and will have taken the first step."
AXA too has enthusiastically taken up CII qualifications for its staff. HR development head John Harkness says a small number have so far enrolled for FIT, but this will grow.
More than 200 sat the IFC last year. AXA also uses National Vocational Qualifications (NVQs) in customer services.
Harkness adds: "Some 77 are currently following the CIP route and will be taking their exams in April, while a further 41 are completing an ACII qualification at the moment."
But is this enough? Taking an insurance qualification requires a commitment by both employees and employers. Something that had not been happening if the current pass rates in CII examinations are anything to go by (see box below).
For example, fewer than 50% passed the highest qualifications - the Associateship or Fellowship of the CII. In the basic Insurance Foundation Certificate (IFC) , fewer than 60% passed the general insurance paper.
And according to the Insurance Times 2002 Salary Survey, just 54% of the respondents said they had an ACII qualification.
The FSA might be able to push the matter more effectively when it comes into effect in 2004. Standards of competence will then come under its control, and there are probably lessons it can learn from the investment sector.
FSA spokeswoman Jackie Blyth says: "Our current examinations review is very much focused on investment business. Obviously, there will be standards we will require of general insurers but, at this stage, it is very difficult for us to say what those will be."
However, there may not be the same regulatory requirements for those carrying out simpler tasks compared to those dealing with complex policies, so the qualifications level will be different.
Blyth adds: "For example, in buying a warranty or annual car insurance, what sort of risk do consumers face compared with someone buying a pension for their retirement?
"We have to ensure we are balanced in our regulatory approach. We do not want to put on unnecessary regulation when it is not actually required."
Whatever the FSA decides to do the implementation of an appropriate competence and training regime for financial services can only be welcomed.
What's on offer
The CII has a pyramid exam structure, starting with the foundation insurance test (FIT) in general insurance, involving a maximum of 40 hours' study. CII marketing director Steve Wellard says: "Most people who work in the business probably would not have to study to that level to pass the FIT. It is ideal for people new to the industry, as induction for school leavers, or those seeking a basic portable benchmark."
The next step, the Insurance Foundation Certificate (IFC), comprises two papers and is broader in depth. It is accredited by the Qualifications Curriculum Authority (QCA) - a national body - at Level 3, equivalent to an A-level.
Wellard explains: "We try where possible to link in our qualifications within the national framework, such as GCSEs and A-Levels, so we can benchmark them. A key objective is portability, so that you can go anywhere else in the world and be recognised for your qualifications."
The CII's emphasis on lifelong learning is underlined by the fact that, for chartered titles, continuing professional development is compulsory. This includes recently qualified associates, fellows and those studying the Certificate of Insurance Practice (CIP) who want to become designated as MSTI - Members of the Society of Technicians in Insurance.
For claims staff, the Chartered Institute of Loss Adjusters CILA is offering qualifications to a wider audience through the Society of Claims Technicians (SCT) - a qualification for claims handlers working at desktop level on higher-volume, lower-value claims. This is a three-part exam and, significantly, the final part is dedicated to interpersonal skills, underlining the growing regulatory need for competency. Having passed, they become an associate, then after two years a fellow, and that qualifies them to take the CILA exams.
Another major educational provider is the Institute of Financial Services (IFS), which includes the Chartered Institute of Bankers. Its certificate subjects such as mortgages and financial services, which used to be written papers and sat quarterly, are now on line.
However, its equivalent of the CII's FPC, the Certificate for Financial Advisers has virtually the same content. Such duplication between two examining bodies seems pointless.
The IFS also works with the UMIST for its diplomas and degrees. One of its higher qualifications is a master's degree in e-commerce.
Vocational qualifications, provided by the Financial Services National Training Organisation (FSNTO), are also growing in importance.
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