One point which is starting to really concern me is how poor the consumer perception of our industry is. I think we would be staggered if we took a view of friends and neighbours about how many claims we pay and how hard we make it to buy cover.
A lot of these comments would be based on nothing more than perception or hearsay but I think that makes it even more serious. Modern life surrounds us with so much information that we can not process it properly so we attribute convenient clichés to subjects. And the cliché consumers are increasingly attributing to insurers is dishonest.
A few years ago I was fortunate enough to receive an award at Buckingham Palace. Standing around before the ceremony I met a well-known actress who asked me what I had been given the medal for. When I mentioned insurance her friendly demeanour changed and she speculated very publicly on how anybody in any area of financial services could possibly merit any sort of public decoration.
Part of this is contagion from the banks and a large part of it is PPI but it is fair to say we have not managed our public reputation particularly soundly. We have to realise that a large part of the reason that we do not sell more policies is because people do not trust us.
What really concerns me about this is the fact that decent people with financial needs, many of them urgent and compelling, are not engaging with us. And that is depriving them of cover they desperately need.
Just under a year ago we attempted to address this by developing an Income Protection Charter which was designed to raise the public awareness of and industry commitment to IP.
The industry met it with polite and constructive approval but it was obvious that most regarded this as yet another thing that forced them to comply-and many also believed that there were too many ‘so whats’ in the original draft.
The penny then dropped that if we were to make a real difference to the public perception of income protection we needed engagement and input from consumers themselves.
We have talked at length with Teresa Fritz, who has done a massive amount of work in demystifying IP,The Consumer’s Association and we are currently talking to the National Consumer Federation.They have been very frank and honest and it has helped us to think about the consumer perspective, something we do not do anywhere near as often as we should.
We also needed to know where problems have the potential to occur. While I am very conscious that the Financial Ombudsman Service can not help re-design a charter of this nature it was important to look from their reports at where they thought problems were occurring. We also asked some of the providers, reinsurers and advisers to rethink the way the charter should be presented. Talking to personal finance journalists is very helpful too. They see problems that their readership are having often when it is too late to do much about it.
Added to this we are conscious that a new Professional Code Of Conduct is being worked on for advisers. It makes sense that if we are bringing new standards to the market that they are as compatible as possible and we are liaising with the PCOC team to ensure this happens.
I am also visiting the Council for Disability Awareness in the USA in the next two weeks to see what progress they have made in this direction.
The biggest change that we will have to make is to commit to more explicit pledges. Which? was very strong on this because it pointed out that insurers come with form in that they have made lots of attempts to get alongside consumers but problems and real scandals have still regularly occurred. Which?’s parting comment to me was “If it’s not consumer-facing, how will consumers know the improved cover and service they’ll get from an IPTF member?”. That is a very good point and cuts to the heart of the matter. Consumer-facing means looking into the eyes of your customer and making them a promise.
It is clear that we have things we can improve. We need to streamline definitions and simplify the product. We must dovetail with state benefits and means-tested benefits better and we must ensure that claim forms and process are as user-friendly as they can be.
The charter is aiming to make a real difference in these areas and to try to rebuild consumer confidence by improving the industry proposition much more effectively.
We will keep you posted on how we are doing but our hope is we can have a prototype ready in a couple of months time.
It has been a lengthy process but most worthwhile achievements do not happen overnight-and I believe this is very worthwhile.