Better Tomorrow Claims Essentials
RISK & COMPLIANCE Consumers - more than just a duty
ILC
www.iloveclaims.com
Event Sponsors
Claims Essentials
RISK & COMPLIANCE
ILC
Insurer Partners
Industry Body Partners
Insights Partners
Contents Consumers – more than just a duty
04
Mark Hadaway
The business case for Consumer Duty
06
compliance Ian Hughes
Practical steps towards compliance
08
Sharna Thomson
Consumer Duty comes down to culture
10
Andrew Jobling, Dan Chesney and John Fern
Turning data into good decisions
12
Stewart Griffiths and Kate Archer
Feedback fundamental to Consumer Duty
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compliance Vicky Webster, Graham Wilkinson and Rob Stewart
Consumer Duty can ‘redefine our industry’
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Suneeta Padda
14
Vicky Webster, Graham Wilkinson and Rob Stewart
ILC 2
Claims Essentials
10
06
Andrew Jobling, Dan Chesney
Ian Hughes
and John Fern
12 08
Stewart Griffiths and Kate Archer
Sharna Thomson
16 Suneeta Padda
DISCLAIMER Contributors The views and opinions expressed within Better Tomorrow are reported from live events and are those of the individual contributor/s. They do not necessarily reflect the official policy or position of the contributor’s employer, organisation, committee or other group or individual. ILC While every effort has been made to ensure the accuracy of information, ILC will not accept responsibility for errors or omissions or for consequences arising from reliance on information published. The opinions expressed in Better Tomorrow are not necessarily the opinions of, or endorsed by ILC unless otherwise stated. COPYRIGHT All rights reserved. No part of the material contained within this publication may be reproduced or copied in any form or by any means without written permission from ILC.
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Risk & Compliance
Consumers – more than just a duty
M A R K H A DAWAY ILC
Welcome to this issue of Better Tomorrow focusing on ILC’s inaugural risk and compliance conference, themed ‘Consumers more than just a duty’. The event proved a key catalyst in provoking discussion and thought amongst stakeholders from across the claims sector, bringing to the fore a topic which has clearly been on many radars in recent times not least of which due to the implementation of the Financial Conduct Authority’s (FCA) new Consumer Duty rules. Sponsored by Albany Group; ILC Insurer Partner, First Central; Gallagher Bassett; and Padda Consulting the crucial event explored the challenges and opportunities Consumer Duty provides within insurance claims. Taking place on 15 November at etc venues, Manchester the event attracted circa 100 of the
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leading influencers within risk and compliance from across the insurer and supply chain space.
Every single thing that has an impact on what the consumer pays is part of Consumer Duty.”
Through the use of the ILC App – providing a platform for audience engagement - attendees on the day felt Consumer Duty had impacted their business and their role personally with 80% suggesting the change had been very obvious. When asked what they felt could have the greatest positive impact on customer success, some 40% of attendees suggested business cultures was the key with a further 23% pointing at external communications and 22% at people/human resource.
While Sharna Thomson, Head of Customer, UK Claims, Zurich provided an insight into the practicalities of aiming to meet Consumer Duty and said, “Having a customer-centric culture used to be a choice, a strategic decision. It’s not a choice anymore.”
See the back pages of this issue for the full results.
We very much hope you enjoy this round-up of the day and it provides further insight into a subject which is set to continue to evolve.
Exploring the evolution of consumer duty, CEO of Consumer Intelligence, Ian Hughes told attendees, “Most people in the supply chain think Consumer Duty doesn’t affect them. They think it’s only about insurers. But it’s entirely about the supply chain.
Further sessions throughout the day provided a host of discussion and insight from a variety of perspectives directly and indirectly involved in the insurance claims sector.
Kind regards
Mark
Claims Essentials
ILC
www.iloveclaims.com
The business case for Consumer Duty compliance
IAN HUGHES CEO Consumer Intelligence
Ian Hughes, CEO of Consumer Intelligence, made the business case for putting customers at the heart of everything an organisation does during his presentation. During his session, ‘The Evolution of Consumer Duty,’ Ian brought the issue back to people to emphasise the personal aspect of good service and fair value. He said, “In 1962 John F Kennedy said it was an age of change and challenge, knowledge and ignorance, and that the greater our knowledge, the greater our ignorance. He was talking about putting a man on the moon, but what he said then is still true today; we have great knowledge and great ignorance.” Ian explained how lessons around delivering fair outcomes have not been learned, pointing to the case of Susan Plevin, who took out a loan from Paragon Financial Services and was disgusted by how much commission they got paid for payment protection insurance. She took them to court, and eventually the Supreme Court ruled in her favour, establishing the Plevin Ruling.
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Claims Essentials
“That proved that you can’t rip off customers,” Ian said. “But we haven’t learned our lesson.” Ian then cited Hamish Ogston, who introduced insurance against losing your bank card, only to be fined £10.5m by the FCA for selling customers products they didn’t need.
Scope Explaining the scope of current legislation and obligation, Ian then pointed to the case of Karen Beaumont, a resident who discovered that Providence Wharf Property Management Association had been paid a commission of £1.6m by an insurance company to ensure insurance claims from their tenants went through them. Although Karen wasn’t a direct customer of the insurance company, the practice impacted her costs and, again, the ruling went in her favour. Ian explained, “Most people in the supply chain think Consumer Duty doesn’t affect them. They think it’s only about insurers. But what this shows us is that it’s entirely about the supply chain. Every single thing that has an impact on what the consumer pays is part of Consumer Duty.”
Warning While Consumer Duty is still in its infancy and has yet to really bite companies that aren’t complying, Ian believes it is just a matter of time.
Short-term For some, the immediate cost implications are a dissuading factor, but Ian believes this is shorttermism and ignores the benefits to businesses in terms of reputation, customer satisfaction, and profitability. He revealed how Consumer Intelligence had worked with one customer who had been investigated by the FCA for over-charging on online transactional fees. By reducing fees immediately, which cost the company about £20m in fees in a three-month period, the company not only avoided FCA sanctions but also improved revenues by upwards of £100m a year as customers attracted by better terms flocked to the company. Ian said, “The money that can be made in the next quarter is often blinding and bewildering, but if you do Consumer Duty right, you will make more money, without a shadow of a doubt.” He concluded, “George Mallory once said he wanted to climb Mount Everest because it is there. Well, Consumer Duty is there, the everevolving needs and expectations of customers are there, and the possibility to build confidence is there. With every step we take towards better outcomes we move a little bit further, a little bit higher, and deliver a little bit more for our customers and for our shareholders.”
In a recent open letter to CEOs of UK pension providers and investment firms, Lucy Castledine of the FCA said, “Too many firms are not considering all the revenue streams from consumers across all aspects of the value chain. We expect your firm to change these practices if they exist and to regularly assess the overall cost and value for money of your products and services and make changes where you think value is poor.” This, Ian insisted, applies to insurers too, and he urged them to consider every single thing within the value chain that impacts pricing before the FCA comes calling.
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Risk & Compliance
Practical steps towards compliance
S H A R N A TH O M S O N Head of Customer, UK Claims Zurich
Sharna Thomson, Head of Customer, UK Claims, Zurich, took delegates through the practicalities of trying to meet Consumer Duty during her presentation. “The bar has been raised,” Sharna said. “Consumer Duty is about delivering a higher standard of care, and good outcomes are expected.” There is much to improve on throughout the industry. The FCA Financial Lives Survey last year found that only 41% of consumers trust financial services firms, while motor insurance complaints surged 54% between the start of 2021 and end of 2022. Meanwhile, coming out of the pandemic, research by the Call Centre Management Association revealed that the customer perception of insurance service was that it had worsened between 2022 and 2023. “So we have to change,” Sharna said. “Having a customercentric culture used to be a choice, a strategic decision. It’s not a choice anymore.”
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Claims Essentials
Detail However, meeting Consumer Duty standards demands a forensic attention to detail. Every product, process and communication needs to be scrutinised in order to identify the areas where improvements can be made. Zurich is focusing on the policyholder and putting itself in their shoes. Sharna said the objective was to ensure that making a claim and going through the claims journey was as straightforward as taking out a policy in the first place, and that it was critical the customer was well-informed of all the options available to them at every juncture. “How you communicate with the customer is so important,” Sharna said. “They need to understand what we’re offering them and what decisions they can make. So you need to review your written correspondence and make sure it’s fit for purpose. Remembering that communication is more than written correspondence; your handlers also need to communicate in the right way over the phone too.” And, she added, the outcomes must be the same for vulnerable customers, and insurers need to find a way to evidence it.
We need the supply chain to know that we’re reliant on them and that because they’re not regulated by the FCA in their own right, we are accountable for their performance.” All this brings cost at a time of inflation and financial pressure. However, Consumer Duty is not about cheaper premiums, but offering customers the right products at the right value. Sharna concluded, “There is still more to do. It is very much about continuous improvement so we need to keep evolving. What should happen is that complaints should decrease and consumers should start to trust us more as an industry. If it doesn’t, I’m sure the FCA will have something to say about that.”
Supply chain However, getting your own house in order is just the first step. Consumer Duty puts the onus on insurers to ensure that good standards and fair value is being achieved throughout the supply chain. Sharna said, “The high bar that we are working to needs to be set and met when our customer goes into the supply chain. There could be 100 other companies dealing with our customers and I can’t put my hand on my heart and say, ‘yes, they are all giving good outcomes.’ We have review meetings and metrics, but I don’t necessarily have the level of detail I need. So we need to be sharing data.
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Risk & Compliance
Consumer Duty comes down to culture
A N D R E W J O B LI N G
DA N C H E S N E Y
JOHN FEARN
Supply Chain Leader Aviva
Director/Owner Onyx PDA
Chief Client Officer - UK Gallagher Bassett
Achieving Consumer Duty compliance is not a once-and-done task and requires buy-in from everyone in the business. Speaking during a panel discussion, Andrew Jobling, Supply Chain Lead, Aviva; Dan Chesney, Director, Onyx PDA; and John Fern, Chief Client Officer, Gallagher Bassett, agreed that compliance demanded a company culture of putting the customer first, and that needed commitment and focus from both the top down and the bottom up.
Priority Andrew said, “Compliance means making the customer your top priority and focusing on delivering good outcomes. That is not straightforward as each customer is different and their requirements are different. The challenge is creating a solution that is convenient and appropriate to your entire customer base, rather than developing something that works for only one type of person.” John agreed. He said that delivering for the customer first and foremost needs to be engrained in the business and outcomes reviewed on a regular basis to ensure standards were being met.
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Claims Essentials
Fundamental to success, he continued, was consistency. Simple principles around what fair value and good service means need to be established and employees need to be empowered to meet these principles in their daily working life. He said, “Our focus is on treating customers fairly. That needs to be measured and evidenced because what is important is consistency. You can celebrate individual successes, and maybe we don’t do that enough, but Consumer Duty is really about consistency throughout the business and to achieve that you need to ensure that the right processes, procedures and support are in place.”
Easy wins But while this can be a daunting challenge, there are easy wins available that can move a company a long way towards compliance. One of these is establishing realistic expectations among customers. Processing claims is not always aligned with a world where instant gratification has become the norm, meaning customers are often left feeling disappointed. However, realistic expectations can be set by being proactive at the start of the journey. John explained, “We don’t do enough to speak to customers before events and warn them of potential problems. We need to be proactive rather
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than reactive. If you have to come to me first then you’re already annoyed, but if I come to you then you are likely to be more receptive.” Dan supported this view. He said that what constitutes good value will be different for every customer and insurers need to communicate with them clearly to understand what matters most to them, and be transparent about what they should expect during a claim. He said, “The product may be the same but its value will be different for everyone. So whether policyholders are satisfied or not often comes down to expectations and you can prevent 80% of complaints by explaining the process clearly – and warning them of any potential problems or delays.”
support and service insurers are only delivering what they should already be delivering. Dan suggested that returning policyholders to the position they were in before a claim is not going above and beyond – “That’s why they have insurance in the first place,” he explained – and instead insurers need to look to their supply chains for improvements that the customer will notice. He said, “Rebuilding trust and delivering extra customer satisfaction will only come when the claims experience improves, and that will come from the supply chain, who are the face of the claim and the ones providing the service and the tangible delivery of it.”
Response In many cases, insurers have already responded positively to the introduction of Consumer Duty and raised their game accordingly. For example, Andrew explained that following the fire at Luton Airport carpark Aviva had acted quickly to set up a dedicated helpline for policyholders and implemented a range of other measures to support those affected. This positive reaction had a direct correlation with Consumer Duty. But while this is encouraging, there is a sense outside the industry that by improving
Risk & Compliance
Turning data into good decisions
S TE WA RT G R I F F ITH S
K ATE A RC H E R
CEO Albany Group
Partner & Head of Motor Injury DAC Beachcroft LLP
The value of information is in the understanding of it, and tech partners can help businesses gain deeper insights to support better decision making. That was the message of a panel discussion with Stewart Griffiths, Chief Executive Officer, Albany Group, and Kate Archer, Partner and Head of Motor Injury, DAC Beachcroft. Stewart and Kate explained how Albany and DACB have been working together to interpret individual and aggregate claims data to get a better understanding of processes, trends, and where improvements can be made. Kate said, “As lawyers we’re dealing with a lot of claims, but working with Albany Group allows us to assess the aggregation of what we do, to monitor trends and feed it back to insurers. Their technology enables us to know what good looks like in individual claims but also identify where there is room for improvement.”
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She continued, “We are constantly referring back to the data. You have to make sure you’re measuring the right things for the right claims, and then come together internally to develop good practices and share them with colleagues and throughout the supply chain.”
Seamless The challenge comes through the multitude of stakeholders and touchpoints within a claims journey, each working in siloes with little transparency or connectivity. Albany Group has developed solutions such as Conect to deliver greater visibility for everyone involved, creating a more seamless process. Stewart said, “Information is just information and you can’t do much with it until you understand it. One thing insurers aren’t short of is data. What Conect allows us to do is drill down into that and turn information into intelligence, and the next phase is actionable intelligence. That is where we help teams make decisions.
Claims Essentials
“It doesn’t need to be complicated. For example, we capture customer complaints data for a client and found that the biggest issue was communication. If you think of a claims process, you have different people in different departments or different companies, working on different systems. How do you connect it up to make it seamless? That’s what systems like ours do.
“DACB is very good on the policy and regulatory side of things, which has allowed us to focus on and deliver the technology.” And certainly DACB and its customers have benefitted, as Kate concluded, “Consumer Duty means we have to innovate, we have to make it a priority to deliver better service, and if we can’t do it ourselves we need to find partners to help us.”
“The data can then be fed back into the supply chain to make them better suppliers, delivering more, meaning you get value all the way through.”
Pressure Like most industries, insurance is under intense pressure in terms of cost, resource and regulatory demands, such as Consumer Duty. While this puts greater emphasis on using data to improve service, efficiencies and offer fair value, it also means departments are sometimes stretched to breaking point, making implementation difficult. Stewart continued, “What we’ve found is the biggest barrier to technology implementation is not the cost or the technology itself but the capacity of the teams. They are doing their day jobs, dealing with Consumer Duty and trying to be innovative. It just becomes too much. But by taking that deployment burden off them and providing a seamless transition, we provide the best way to move forward.
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Risk & Compliance
Feedback fundamental to Consumer Duty compliance
RO B S TE WA RT
V I C K Y W E B S TE R
G R A H A M W I LK I N S O N
Head of Sales Claims Consortium Group
Head of Strategic Delivery - Claims & Fraud First Central
Senior Partner Manager Trustpilot
The value of collecting and responding to customer feedback, both good and bad, was underlined during a panel debate at the inaugural event. Panelists Vicky Webster, Head of Strategic Delivery, Claims and Fraud, First Central; Graham Wilkinson, Senior Partner Manager, Trustpilot; and Rob Stewart, Head of Sales, Claims Consortium Group said that a key part of achieving Consumer Duty compliance is understanding what the customer wants and where there may be issues, and then making the necessary improvements to process and communication to ensure good outcomes. But that can only be achieved by removing the barriers to feedback and then listening to what your customers are telling you. Vicky said, “There is no such thing as bad feedback. A poor review should give you an
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Claims Essentials
opportunity to not only show to other customers that you are responsive to customers and can answer their queries, but that you take it on board and will improve.”
Social proof Graham suggested that insurers are sometimes reluctant to use third party review platforms such as Trustpilot for fear of negative feedback being in the public domain. “But that’s exactly the sort of information you need,” he insisted, “because then you can address it. Also, being visible on third party review platforms can generate new customers.” Explaining this, he pointed to the concept of social proof, which suggests customers follow customers. “Two businesses might offer the same level of service, but a new customer will almost inevitably go where previous customers have gone. It’s a massive driver of consumer attraction because nothing drives marketing like good reviews. You can have the best offering, but if you don’t have social proof underpinning it then it means nothing.”
Expectations This is even more critical in the insurance sector, where competition among carriers is intense and customers, who are often in a vulnerable or stressed state at the time of claim, can quickly feel disappointed. Often though, the potential for complaints can be mitigated by setting expectations at the outset and telling customers what they should expect.
He said, “Feedback is food and you need to make sure there are no barriers to getting that feedback. What we’ve done across our supply chain is build systems to enable feedback to be shared quickly up the chain to the insurer.”
Consistency Apart from enhancing transparency and more accurate information sharing, what this also achieves is a more consistent claims experience, with customers benefiting from the same methods and terminology regardless of supplier. Rob continued, “When we’re talking about Consumer Duty, one of the key things is consistency of outcome. And one of the best ways to get that is through automated technology. You can’t automate everything and it might not give you the best journey every time, but if you automate nothing you’ll get really good journeys, but they will be quite sporadic. It’s about finding the sweet spot in the middle and there will be a learning period over the next couple years. Ideally, we want to humanise the complex – front-load customer-facing roles with lots of experience - and automate the mundane.” As more tech is introduced and customer expectations continue to evolve, it is not an easy balancing act. Vicky concluded, “We need to give our customers the option to go through the claims journey in whatever way they see fit, digital and non-digital, but it needs to be done perfectly and consistently and offer the same outcomes for each, and that’s really difficult.”
“We’re fortunate at First Central because we have a connected policy and claims system,” Vicky continued, “which allows us to feed information right through the claims journey. It also allows us to be honest and up front with our customers and manage expectations by signposting any potential issues. “We also work with tech partners to connect data through the supply chain - ensuring it is correct, protected and seamless.” Rob said that Claims Consortium Group has also worked hard to ensure data flows freely through the supply chain and that customer communication channels are open.
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Risk & Compliance
Consumer Duty can ‘redefine our industry’
S U N E E TA PA D DA Managing Director Padda Consulting
Consumer Duty compliance requires a multi-faceted approach and continuous focus, according to Suneeta Padda, Managing Director, Padda Consulting. Suneeta said that companies who fail to scrutinise every area of their business or approach compliance as a ‘once and done’ task will fail to deliver fair outcomes consistently and could face penalties from the Financial Conduct Authority. She said, “The FCA says Consumer Duty is a paradigm shift in regulation, and it is because there are a lot of different facets to it. But ultimately it comes down to a customer-centric approach and adapting our processes to suit their needs. We know there are long-term benefits of making sure the customer is at the heart of everything we do.” She said that while many different areas need to come together to ensure a company is meeting its obligations to customers, there are five key considerations that are relevant to all organisations:
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Continuous improvement – following the pandemic and now the cost-of-living crisis, the industry has a duty of care to customers, many of whom will be vulnerable. Vulnerability, Suneeta said, can take many forms. “A vulnerable customer isn’t just someone with a disability. A person could be going through a difficult time in their private life. Vulnerabilities go on and on and supporting them fairly requires continuous assessment and improvement.” Feedback – businesses need to have channels where customers can easily provide feedback and they need to be open to that feedback in order to make real-time improvements. Training – not all training should focus on tech and process. Call handlers need to be empathetic and patient and some companies have brought experts in to give colleagues the tools to handle difficult situations. Suneeta said, “A call handler solely focused on targets won’t meet Consumer Duty standards because someone, somewhere will need a bit more attention. So maybe training needs to evolve.”
Claims Essentials
Data analytics – by interpreting the data astutely, insurers can gain deeper insights into their business and identify any areas where improvements are necessary. Meanwhile, predictive analytics can help understand where customers are going and prevent issues in the future. Communication – needs to be transparent and clear both with the customer and internally. Suneeta said, “You don’t want to create a culture where people are afraid to admit they made a mistake or that there is an issue. Do you want to spot the problems in your business yourself or do you want someone else to point it out to the FCA?” Following the pandemic and now the cost-of-living-crisis, Consumer Duty poses a real challenge. It requires a fluidity of resource to meet both volume and individual demands, and a flexibility of service to suit older customers and the next generation. However, if done well it is also brings great opportunity. Suneeta concluded, “We shouldn’t just look at Consumer Duty as a rule we follow. It should be a way of life; it’s a chance to redefine our industry with trust, creativity, and the customer at its heart.”
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Risk & Compliance
App survey results
ILC
Claims Essentials
RISK & COMPLIANCE What impact do you feel Consumer Duty has had on your business? Profound
Noticeable
Marginal
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28.4 %
50.7 %
20.9 %
Claims Essentials
What direct impact has Consumer Duty had on your specific role? Significant
Considerable
Little
30 %
50 %
20 %
Would you feel confident in explaining what Consumer Duty is? Yes
No
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75 %
25 %
Risk & Compliance
What do you feel can have the greatest positive impact on customer success? Cultures
People
Technology
Communication (internal)
Communication (external)
Other
20
40.6 %
21.7 %
10.1 %
2.9 %
23.2 %
1.4 %
Claims Essentials
What is the greatest consumer related challenge insurance claims face currently? Expectations
Fraud
General understanding
Specificity
Speed
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47.9 %
12.7 %
26.8 %
0%
12.7 %
Risk & Compliance
Claims Essentials
ILC
RISK & COMPLIANCE
“Really great event, thank you. Really good to hear how everyone else is approaching all aspects of R&C on Consumer Duty”
“Another excellent event” “Thank you. Great event, insight and collaboration by all” “Great event with lots of insight into Consumer Duty” 22
Claims Essentials
“Impressive panel insights today! Navigating consumer duty with empathy and integrity”
“Thanks to ILC for coordinating an insightful and thought-provoking event”
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“A really interesting day. Food for thought” “Every facet of the event was brilliant”
Risk & Compliance
Event Sponsors
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