Behaviour and culture should be a key focus for industry leaders as recent regulation indicates that insurers are not doing enough

The extension of the Senior Managers and Certification Regime (SMCR) to insurers in 2018 implies that independent financial body the FCA doesn’t believe insurance firms and brokers can take “care of business” when it comes to accountable behaviour change and culture.

Despite describing the regulatory measure as a “hygiene factor”, professional services firm KPMG’s insurance director Rose St Louis feels that some leaders may be “fearful” of the regime if they let standards slip prior to its implementation.

She said: “It’s a hygiene factor – it should not be changing people’s behaviours.

“People should be fearful of that regime because it should be what they should have been doing already. For a senior manager who is responsible and holds themself accountable, it’s nothing to fear.

“What we see with regulation is it’s put upon us as a sector, as an industry, when the regulator sees that we’re not taking care of business. [The SMCR] has come about because the regulator doesn’t believe that we are doing enough, [that] senior leaders are doing enough, so therefore they want to hold them to account.

“Senior leaders that are doing all the right things shouldn’t be fearful of that regime. It’s just a good check and a balance to say ‘are you doing all the right things? Are you communicating properly?’”

The SMCR was initially introduced by the FCA in March 2016 for banking organisations.

According to the FCA guide for solo-regulated firms, updated in July 2019, the SMCR encourages senior staff to take personal responsibility for their actions, improve conduct across all levels of their business and ensure that firms and employees clearly understand and can demonstrate who is responsible for what, in terms of accountability and conduct.

In May 2016, the SMCR was extended to apply to all FCA regulated firms, including claims management companies (CMCs). Furthermore, insurers were included in this broad governance brushstroke from 2018, while solo-regulated firms had a December 2019 deadline for compliance requirements.

With this in mind, St Louis adds that “behaviours” is a key concern for insurance leaders at the moment.


Another prominent issue on insurers’ and brokers’ minds, says St Louis, is the perception gap between the insurance industry as a whole and its consumers.

“There’s so much research that says that the consumer thinks that only 30% to 40% of claims are actually paid by insurers, but actually the truth is somewhere between 98% and 99% of claims are paid,” she explained.

“Every year, insurers publish their claims stats and that’s something that, as a sector, we should be absolutely proud of.

“More needs to be done to bridge that gap between what consumer perception is and what the reality is.”

St Louis views brokers as central to “bridging the gap” and increasing customer trust in insurance professionals. This, in part, can be achieved by demonstrating the value of ancillary products that satellite core insurance offerings, such as additional legal services or courtesy cars.

She continues: “We need to do more to educate brokers on how they can communicate value and bridge the gap of trust.”


Customer trust is a key trend St Louis is seeing across the market, especially in relation to cyber attacks and data breaches. Pricing and the associated FCA market review is a further hot topic, as is operational resilience – an important focus for many businesses in light of the coronavirus outbreak.

Here, St Louis says that brokers can boost their resilience by choosing the right insurance partners, basing relationships on trust and integrity rather than price.

“If you’re a broker, which insurers are you going to work with and why? You just step straight away from price as being the only driver because there are so many other things,” she adds.

“When you look at brand loyalty and what that means, price is in there, but trust, integrity, service, ongoing relationship – all of those things are so important. You’re not just trying to shop for partners solely on price, there has to be more.

“We’re going to see further due diligence on how those partnerships are made up – don’t forget, when you’re partnering and outsourcing different parts of the value chain, you need to have oversight and governance for how they’re looking after your customers.

“The customer is touched by so many different people in the value chain. That ownership of the customer and the demonstration of protecting that customer data is something that’s important to the broker, to the insurer, to the reinsurer, to everyone in the value chain.”