Admiral, Aviva and NFU Mutual give Consumer Duty evidence to House of Lords committee

Insurance bosses have given evidence to the House of Lords Financial Services Regulation Committee for its inquiry into the regulation of the UK’s consumer insurance market.

The committee – chaired by the Baroness Noakes DBE – was seeking to determine if insurance firms are adequately responding to concerns over consumer outcomes, whether regulations including the FCA’s Consumer Duty are having a meaningful impact on the market and how overall outcomes can be improved for consumers.

Alistair Hargreaves, chief executive of UK insurance at Admiral Group, Jason Storah, chief executive of UK and Ireland general insurance at Aviva, and Nick Turner, group chief executive at NFU Mutual, were among those who gave evidence.

One such issue – highlighted by the recent Which? super complaint – is the increasingly poor claims outcomes seen by UK consumers, notably across home insurance policies.

Hargreaves explained that he felt dissatisfaction with claims outcomes is “predominantly because of the customer understanding of what is covered by home insurance”.

He added that claims, as defined by the FCA, include any contact from a customer regarding a policy, even if it does not ultimately proceed to any further action.

“If a customer is calling us about some tiles that have come off their roof, even if there hasn’t been a storm, and we explain that that’s wear and tear and it’s not covered, then we would still capture that,” he added.

The information gathered from those calls, Hargreaves said, could then be used to highlight such outcomes to customers at the point of sale.

Consumer Duty

Clear signposting is one of the targets of the FCA’s Consumer Duty guidelines, which state that communications should help customers make informed decisions and that information should be clear, fair and not misleading.

In Turner’s opinion, the transition towards “outcomes based regulation” is a positive force within the industry, but warned that removing regulations too quickly could lead to friction.

He continued: “For us, [adapting to Consumer Duty rules] wasn’t a very significant piece of work and it was a relatively modest cost. It was largely an effort of bringing together the data we already had into one single reporting environment to make sure that we could demonstrate that we were complying.”

Storah said that Consumer Duty “did cost Aviva quite a lot of money” but has benefited the insurer.

He added: “I can tell you that the visibility that’s been achieved around customer metrics, at both the board level and all the way through the organisation, is really good.

“The type of metrics we look at, the type of dialogue we have and the clarity on what we’re doing and the impact it has on customers is very well embedded in the business.”

However, with consumers still rarely reporting any noticeable benefits from Consumer Duty rules – a sentiment echoed by Baroness Noakes – the industry appears to have some way to go to halt its customer base’s growing disenfranchisement.