After all the Christmas parties and new year dinners are over, many would like to forget embarrassing behavior or over-indulgences of the season. By way of putting all that behind, it’s not uncommon for most to start the year by embracing a sober regime, diet and even a few New Year resolutions. Perhaps this year, for similar reasons, the insurance industry will be better disposed to regulators than ever before. We all want to put embarrassing behaviour behind us. Those of us, who have almost forgotten about mis-sold, low-cost endowments and pensions, do not want to be reminded of the more recent Payment Protection Insurance debacle, or of mis-selling bonds to the elderly. Certainly there will be cleaner air to breathe when there is absolute transparency around fees related to investment products as Retail Distribution Review (RDR) kicks in. Who wants to hear any more about the motor insurance premiums rising on the back of a frictional cost created by referrals fees? So perhaps this is the year that the UK insurance industry offers a reluctant and somewhat awkward hug to its regulator with a view to putting all that “stuff” behind.
It is also the year where many UK insurers have resolved to put an end to some of the other uncomfortable aspects of the industry. For example, passing on the cost of inefficiencies to the consumer is no longer acceptable. So for general insurers, that means stopping more fraud (at the door as well as in the claims process), and it means getting a stronger grip of the causes of leakage, often driven by inaccurate prioritisation and the lack of third party control. Driving out leakage has such a dramatic effect on profitability, or organisational fitness, it is likely to attract a good deal of focus, especially since a price hike is no longer a realistic or acceptable alternative. In short, operational fitness can be built up through attending the gymnasium of applied analytic competence.
For Life & Pension units, the RDR could be the cause of many a red-faced insurers. The resultant shift in distribution could leave many looking for advice and the need to feel valued. Like being caught off-guard when meeting someone you were previously introduced to, insurers dare not admit that they don’t actually know who the person is that the Independent Financial Adviser previously introduced (and perhaps has now abandoned). RDR is driving the need for insurers to pay more attention to the individual (not just the policy number), the method of introduction and current relationship with intermediary. Insurers may not know how many sugars the client takes in tea, but will need to know, regardless of the communication channel, the “best next action” for that person at that moment in time. Once upon a time, we began the year by transferring all (or selected) contacts from the old diary to the new. This year, insurers will be paying a lot of attention to that diary/address book and SAS will be there helping to establish what data is most relevant and what action(s) or communication is most relevant right now.
Start the year well, get to the gym, update the address book and give both regulator and customer a big hug!
