For the protection industry, the subject of consumer trust has more often than not been wrapped up in the potential pitfall that is non-disclosure. However, the year began on a positive note with the Association of British Insurers’ announcement of changes to its guidance. For the most part, it is true that the announcement has formalised what is already being undertaken in practice but it does provide the industry with the sort of consistent approach it needs.
The ABI has split non-disclosure into three areas – innocent, negligent and deliberate or without any care. This framework delineates each area much more clearly although eradicating the problem of non-disclosure is probably impossible.
However, it is a step in the right direction and the guidelines form only one aspect of what we could be doing more broadly as an industry. Another option would be to share some of the responsibility for decreasing the number of non-disclosure cases with consumers themselves. If we can encourage them to become more engaged with their protection products and really understand what they are buying – and why – then it is less likely that the purchase will result in a declined claim.
The call to educate consumers is nothing new. The difficulty comes when thinking about how to initiate this process. How do we get ourselves out of the cycle of consumers buying protection almost as an afterthought, with claims subsequently being rejected, which leads them to distrust the industry and therefore to buy the bare minimum necessary to cover the mortgage repayments, for example? It is not an easy task we have before us, nor is it a quick one to implement.
However, there are products entering the market which are aiming to shift the focus of traditional protection insurance from something you buy and then all but forget about, to something you can interact with on a daily basis.
The idea is that the more the consumer engages with their protection product, the more likely they are to take that product seriously from the outset, ensuring they understand what they are buying and how it meets their needs. This kind of purchase goes hand in hand with the non-disclosure guidelines produced by the ABI.
The creation of independent claims review panels could not only ensure that customers are treated fairly but also dispel any negative perceptions they may hold about the industry. This is an option already being looked at by some providers as a means of generating – and maintaining – consumer confidence and trust in the protection industry.
The independent claims review panel will provide an arena for consumers to air grievances and have their claims reviewed, so avoiding the potential for accusations of bias on the part of providers. There is considerable need to build bridges and dialogue between the protection industry and consumers.
The start of 2008 has already seen non-disclosure come under scrutiny, with problems addressed and guidelines drawn up to provide fairer treatment for consumers and an easier framework for consumers and providers to follow. If we could also make this the year of greater consumer education and engagement in the protection products that are right for them, we will be making progress.
If we view these as the prerequisites necessary to bring down the number of disputed and declined claims, then eventually independent claims review panels will not be necessary. However, until such a time, they will provide a safety net to make sure the progress continues and consumers and providers converge rather than diverge.
Sammy Rubin is chief executive at PruProtect