Carol Geldard (pictured), personal lines director at Covéa Insurance looks at how the industry can bolster its mixed reputation
The insurance industry’s reputation has had its fair share of ups and downs. In recent years, it’s fared a little better, largely thanks to the huge advances in digital technology that have brought about dramatic improvements in customer service, that are continuing to transform the way customers experience insurance. There’s also been something of a cultural shift; it’s rarer to hear companies talk solely about their own commercial interests, and much more commonplace for the needs of the customer to take centre stage. The result is that the industry is better regarded and those working in it can stand taller and feel proud of their contribution…most of the time!
Credit is also due to trade bodies like the ABI, Biba and the CII who provide the reassuring drip of reasoned perspective on issues that affect the industry’s performance, ensuring that in every public debate, whether on Ogden, IPT, driverless cars or the whiplash reforms, the industry’s message is clearly articulated and its voice heard.
And although there are many challenges to accommodate the constraints imposed by regulators, there’s no doubt that the FCA and PRA have been instrumental in driving the industry to operate in a way that makes customers the priority, protecting against overly aggressive or unscrupulous commercial tactics.
Despite all this change for the good, the insurance industry has recently found itself the subject of damning national press stories that undermine its integrity, damaging its hard won reputation gains. The roots of attacks are in commercially dubious practices that damage customer trust
To an independent observer, spotting the good guys can be hard when insurers, en masse, have been outed in a national newspaper for overcharging each other for ‘non-fault’ vehicle repairs, using their legal right to retain the discount they’ve negotiated with their repairer network and charging the ‘at-fault’ insurer the full whack. Although it’s legal, it highlights a dysfunctional practice that gives the impression that insurers are making excessive profits out of repairs. The reality is that motor insurance is an exceptionally competitive market and margins are slender, but this aggressive attempt at profiteering creates an uneven and opaque playing field; and sadly the attempts by a handful of insurers to tackle the issue have failed. The reality is that no insurer can resolve this in isolation, and neither can the industry as a group, leaving regulatory intervention the only chance to stop it. In the meantime, the casualty is the industry’s reputation.
The other whammy hitting the industry’s integrity is the practice of dual pricing; often attracting new customers with a loss leading price and ‘banking on’ inertia to recover the loss at renewal. For the IT literate, savvy and time-rich, getting a competitive quote at renewal is easy and, now that renewal invitations show last year’s premium, price hikes are even easier to spot. But for vulnerable customers, or the time poor (which let’s face it is probably the majority) the renewal experience can be an infuriating one. How can anyone feel good about a company that opportunistically and systematically overcharges them? It’s an own goal for the industry. Steve White was correct when he pointed out the open field opportunity this creates for any insurance company (or indeed broker or aggregator) that removes the need for customers to hunt around for a better price at renewal. Surely this is a more enticing option than being slated as an industry in the national press, or even worse, having your company singled out to be named and shamed?
As many before me have pointed out, reputation is all about trust and trust comes from honesty and integrity. All the tricky negotiations and challenges faced by the industry – Ogden, whiplash reforms, cyber-crime, fraud, rising costs etc. - will get better outcomes if the industry can improve and build its reputation for integrity. Dual pricing and inflated motor repairs are doing nothing to help those bigger causes, while wounding an industry that makes a huge contribution to the UK economy and provides a vital lifeline to millions of homeowners, motorists and businesses.
So what’s the solution? A forum, funded by levy, to polish the insurance industry’s reputation is one option, but arguably not a good one – surely taking a strong stand against any practice that damages the industry is the better option?
While negative press stories may hamper our best efforts, strong leadership and the courage to make and take a strong stand seems like the best solution. Every day, in every decision we make, considering ‘doing the right thing’ and the consequences of our actions for our own, our business’s and our industry’s reputation feels like a great place to start; and one that’s vital for our industry’s future success and prosperity.
Keeping a sense of perspective is important too though. Undeniably there are issues that need to be addressed, but they should be seen in the context of how far our industry has come; and in the context of all the great work being done by the honest, sincere people who make up the vast majority – the same people who inspire confidence and excitement about our industry’s future every day.