It’s almost four years since the FCA announced the Consumer Duty and over two since it was introduced. Jay Prosser, director of partnerships and propositions at Arag, looks at the challenges it has presented for legal expenses insurers and their business partners
As we approached the second anniversary of the FCA introducing the Consumer Duty, Arag hosted a roundtable with a selection of our large insurer partners. Between them, they represented a good cross-section of the general insurance market.
The goal was to share knowledge, best practice and understanding of how governance is interpreted. For Arag, there was the added incentive of understanding what more our business partners need from us, what we do well and, perhaps, what we could do even better.
A lot in common
The most obvious common denominator was that every insurer around the table has invested heavily in getting it right.
These are all businesses with long histories of serving customers well and exceeding expectations. However, the Consumer Duty has still required focus, attention and no little expenditure.
That’s not to say that the investment is begrudged. There was a consensus that meeting the expectations created by the Duty has real benefits.
No matter how customer-centric an organisation may be, getting under the bonnet and taking a good look at customer outcomes and how they are measured and evaluated can only be good for business.
It was also reassuring to see that we’re all interpreting the duty in a similar manner and governance frameworks were aligned.
The challenges
The most obvious challenge for legal expenses insurers (LEI) is that we are always one step away from the consumer. Smaller LEI providers, even those that are well-established, may also struggle to resource the demands the Duty places on them, but all intermediated businesses have to make sure partners are put in the best place, so that we can all fulfil our obligations.
What that entails depends on the scale and business model of the partner. Its clear our insurer partners know their customers well and Consumer Duty has helped us put focus on education about legal expenses and ensuring customers understand their product and the benefit it delivers, not just when it comes to claim.
For example, Arag has invested heavily in our EduMe training platform that helps business partners to train employees, monitor their progress and keep records to help track compliance.
Nonetheless, we often still find ourselves delivering bespoke training, in-person or online, to a single person or to hundreds of a partner’s employees, through webinars, across multiple sessions around the country. The value of building awareness cannot be underestimated.
What legal expenses insurers need to offer is the flexibility to deliver what their business partners need to fulfil the Duty, in a way that supports their model. That will vary across product development; ensuring that cover meets needs – embedding cover into digital services, training insurer employees, delivering management information and other aspects of the intermediary relationship.
While there are still some businesses that pay mere lip service to their Consumer Duty obligations, they’re thankfully few and far between. On the whole, the Duty has definitely raised the bar for customers.
Arag’s focus, since entering the UK market 20 years ago, has always been extending access to justice, so every aspect of our business is already centred on clearly defined customer outcomes.
It’s not just a duty, it’s our mission.
