As the new Chartered Insurace Institute president Tom Woolgrove starts his year-long term, he says in addition to the ongoing aims improving professionalism and consumer confidence he is particularly keen to help improve consumer outcomes.
”The traditional focus of the CII has been on brokers and the commercial insurance market but the way in which most customers experience insurance is through retail insurance.
“So we want to cause a debate about what does professionalism and professional standards mean for retail insurers and how can that be combined with a lot of the FCA’s focus in terms of delivering better customer outcomes.”
Away from the CII, Woolgrove’s day job is managing director of personal lines at Direct Line Group and so his focus is very on general insurance but he says the business shares a number of issues with financial services.
He says: “Some of the debates overlap with the PFS. If you think about professionalism of the industry, if you think about qualifications, there is a real media interest in terms of the trust of customers and the outcomes they are getting, they feel like very similar aims and goals.”
Woolgrove started out as an engineer and worked for Rolls Royce aerospace but found the job did not suit him.
“I found I enjoyed the leadership part of engineering, the structured thinking but the overall environment was not fast paced enough for me.”
He left engineering to become a management consultant and ended up specialising in financial services. He spent eight years at Gemini Consulting but having decided he did not want to spend his career as a consultant he was introduced to James Crosby, then chief executive of HBOS, and joined the HBOS executive development programme.
Woolgrove spent eight years at the bank including two spells in the financial services advice and distribution. His first role was in the life and pensions side of the business working with the bancassurance business and its network of advisers and included being appointed a director of Clerical Medical.
He then spent time working in other parts of the business, including motor finance, corporate banking and was given his first exposure to general insurance during his time at the bank. However, the financial crisis and Lloyds’ takeover of HBOS was the catalyst for his second stint in financial services.
“When HBOS failed and Lloyds bought HBOS, all the various MDs were invited to apply for roles and I ended up running UK private banking.”
Although many banks have now backed away from the business of financial advice he says while he was at the bank the RDR was seen a positive initiative.
“We saw RDR as a real opportunity in terms of showing the quality of our financial advice. Going into private banking it became clear that professional qualifications, and evidence of that, was a very important for customers and that holds true today.”
In 2010, Woolgrove was invited to join the management team that had been tasked with preparing Direct Line for either an IPO or sale following the EU’s decision that Royal Bank of Scotland had to sell at least 50 per cent of the business because of the Government bailout it received.
Woolgrove says the preparation for flotation was harder work than the management team was expecting but the IPO went off smoothly in October and RBS sold a second tranche of shares in March.
As many GI products are mandatory it does not face the same same issues as financial services does when it comes to stimulating demand. Woolgrove says the demand for GI is there but this is balanced by an increased focus on price.
“The demand is there but that creates a competitive pressure within the market. There is fierce competition.”
But Woolgrove says there are other areas of overlap.
“The financial services business and general insurance share some issues, such as regulation, service and the need for consumer trust. When you look at the CII’s priorities, they overlap between the two markets.”
Commoditisation is an issue that protection advisers in particular are keenly aware of and Woolgrove says the move away from intermediation and the rise of price comparison websites has made this focus more acute but Woolgrove says there is a lot of evidence that price is not the only factor which determines a sale.
“As price comparison websites have taken a bigger share of the distribution a focus on headline price undoubtedly is still there. But what we see is that many customer groups look for trusted brands because that infers service quality or product quality. Some people do look for differentiated product, so they are willing to pay more for extra cover. We see customers tailoring their cover so they buy add ons to make sure they get the cover they want.”
When Direct Line was founded in the mid 80s it was designed around a telephone based service with a high profile advertising campaign to build brand awareness. Woolgrove says power of brand remains a strong one as distribution models continue to evolve and this could be an interesting development in the protection market.
“Brand remains very important because it evidences consumer trust. But I think the interesting thing in the protection market is how does the direct distribution of simple protection products develop? Particularly given the way the RDR has developed and the cost benefit models that if you look at the GI market, price comparison websites are a very efficient way of distributing product and I think we as large insurers, we have to look at all routes to market.”
Many IFA business have been looking at the non-advised channel as a low cost way of serving lower value clients and Woolgrove says developing compliant business models should be straightforward.
“Getting a compliant sales process which delivers a good outcome, that is well within people’s scope to design. The challenge, which is one that financial advisers do very well, is showing where the gaps are in [consumer] protection needs or investment or accumulation needs and providing products to meet those gaps. That is where the non-advised, direct processes will be a challenge.”
Woolgrove says one thing that all sides of the financial services business have in common is the need to restore consumer trust in financial services following the credit crunch in 2008.
He says the new regulatory structure, with the FCA more focussed on better consumer outcomes, will help but says organisations like the CII, the PFS and individual firms and employees all have a role to play.
“A good regulatory environment where customers can trust firms and brands is important and people can get the advice and products and services they need, we should all support that. Consumers have lost trust and it is in all of our interests to regain customers trust for these products which are essential for their future wealth and livelihoods.”
Lives: St Albans
Education: Masters in Engineering and Management, Oxford University;
MBA, University of Chicago Booth School of Business (Fulbright scholar)
Career: 2010-present: managing director for personal lines, Direct Line Group; 2002-2010: various managing director roles at HBOS/Lloyds Banking Group; 1994-2002: strategy consultant, Gemini Consulting (part of Cap Gemini); sponsored student, Rolls Royce Aerospace;
Likes: Running; gym; food, wine and whisky; time with family
Dislikes: Not much
Drives: Ford Fiesta (to station and back)
Book: The Alexandria Quartet by Gerald Durrell
Film: The Breakfast Club (80s crush on Molly Ringwald)
Album: Sign O’ The Times by Prince
Career ambition: Keep finding interesting and challenging roles, where I can make a difference
Life ambition: To balance competing goals of work and family life and to keep vaguely fit
If I wasn’t doing this I would be…. In another commercial role or an academic