News Review: General Insurance


We must reinstate consumer confidence by


Kevin Paterson, sales & marketing director, Assurant Intermediary


Back in april the High court ruled that banks must obey the new rules imposed by the Financial Services authority that require banks to review all their past sales and identify customers who may have been mis-sold payment protection insurance. many expected the British


Bankers’ association to appeal, however last month it abandoned its legal fight. in my opinion this is welcome news. the banks’ decision not


to appeal means that several million people may now be eligible for a compensation payment. Lloyds Banking group has made a £3.2bn provision for possible claims. Barclays Bank has stated that it has set aside £1bn to pay compensation. HSBc has pledged £269m. Quite what the final sum


will be is unknown at this stage, as it depends on how many people come forward with a valid complaint. the administrative burden will be extensive as the new rules suggest that banks will have to contact all past PPi customers, even those who have never complained. given the scale of the


exercise, it isn’t going to happen overnight. However, the decision by the banks means that the one remaining dark cloud hanging over the PPi industry is being gradually blown away. and not a moment too soon.


i would argue that the general public currently has next to no trust in this type of insurance. despite the good work undertaken by many in the industry over the past few years and the thousands of successful claims made by policyholders since the credit crunch first took hold, PPi’s reputation has taken a battering during the competition commission inquiry and the BBa’s legal action. But given the uncertain economic climate, consumers need access to financial protection products more than ever. We now have clarity over


the sales and marketing of this type of insurance as well as how to handle complaints about potential mis-selling. the industry must now focus on restoring trust amongst consumers and delivering a product and service proposition that its customers can have confidence in.


After sales service consumer trust in the uK’s financial institutions is struggling to recover in the wake of the financial crisis. a report by the Financial Services research Forum at the university of nottingham earlier this year found that a significant number of customers have faith in their financial providers only because they feel they have no choice. asked how strongly they trusted their own financial providers, ranked


respondents intermediaries


comfortably in first place. Banks, building societies,


16 mortgage introducer JUNE 2011 general


companies, life insurance companies,


insurance investment


companies and credit card companies fared worse. none of them came close to the score for intermediaries - although brokers can’t rest on their laurels as their score was down from the previous year.


While some consumers


feel that, because it is essential to have bank accounts and many other financial products, they have no choice but to trust these institutions the research also showed that an equally significant number experience “active trust” based on good reasons, including past experience. and the customer


experience is one of the key areas where the insurance industry can make headway in restoring trust and confidence. the industry is gradually


waking up to the fact that customers don’t just want a product - they want “after sales” service. and by that, i don’t mean a 15-page policy booklet detailing terms and conditions. i mean an approach that allows the customer to deal with their financial provider in a simple and transparent way. this is especially true when it comes to making a claim. this is generally an emotional time for the customer - particularly if their job has just been made redundant. they simply want the process behind the promise made at the point of sale to kick in and deliver. in the past i think that it would be true to say that


the industry didn’t talk to its customers enough. that’s all changing. the combination of greater regulation and increasing


competition


as aggregators has made it easier for consumers to compare financial propositions and has opened the lines of communication. as a business we have


made it a matter of policy to survey the experience of our customers - both following the purchase of their policy and following a claim. We want to know if they are satisfied with the speed of service, whether policy terms and conditions are easy to understand and whether the level of cover was satisfactory. We also want to know whether they


think


the procedure to make adjustments or cancel a policy is straightforward enough. We have to know that what we’re delivering upfront - before any claim situation - is hitting the right buttons because that’s the point where we start setting expectations. and when it comes to a claim situation, this represents the most important time to have a good dialogue with the customer. it can even turn a negative situation, such as declining a claim, into a positive experience if managed well. there’s no doubt about


the scale of the challenge facing the financial services industry if it is to win public trust in the aftermath of the financial crisis. But if we get our “after sales” service right, we’ll be a long way down the road to doing so.


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