Delivering better outcomes for customers
28 October 2010
The Association of British Insurers has over 300 members which account for approximately 90% of premiums in the UK domestic market. Its Customer Impact Scheme lobbies the Government and industry regulators, and informs policy around customer strategy in order to deliver better outcomes for its customers.
The Association of British Insurers (ABI) is the trade body for the UK’s insurance, investment and long-term savings industry. The industry can be “impenetrable” to most customers, and the ABI uses the Customer Impact Scheme as a way of putting the customer back into the heart of considerations.
According to Pete Jolly, Assistant Director of Consumers and Distribution at the ABI, “The Customer Impact Scheme aims to ensure that the customer is at the heart of what we do. The annual survey is a key component, benchmarking the progress made by individual firms and the industry as a whole. Crucially, it helps the industry to identify and prioritise strengths and weaknesses to focus the activities of members and the lobbying of the ABI, with the aim of improving consumer outcomes.”
The Scheme, launched in 2006, now has 32 participating companies varying in complexity and covering the spectrum from small to large providers; open and closed-book companies (ie, those no longer writing new business); and friendly societies to PLCs. The board of each company signs up to three Customer Commitments:
- Developing and promoting products and services that meet customer needs
- Providing customers with clear information and good service when they buy products
- Maintaining an appropriate and effective relationship with customers, providing them with a good service after they have bought a product
The Scheme measures the results for the three Commitments through the Customer Impact survey, which sees over 20,000 customers interviewed via telephone over three different segments: customers who have recently purchased a product; those who have recently received a payment from their product; and existing customers who have held their policy for more than one year. The interviews are conducted by ORC International’s call centre, which has been carrying out the survey for the past four years.
The first commitment relates to the product, an area that has faced consistent criticism within the industry and which has seen a dip in satisfaction scores over the past four years. With products getting more, rather than less, complex, this longer term trend is unsurprising.
The last four years have also seen considerable volatility in terms of market conditions, and as a result customers’ underlying investments have been affected. This volatility affects consumer confidence and feeds directly through to scores for key indicators in the survey, such as how well customers rate their providers for managing their expectations in terms of potential return on investment. Importantly, this also impacts on customers’ broader perceptions of their providers.
Results suggest that there is room for improvement in terms of educating customers about the potential risks associated with their policies (ie, that value may be impacted by a downturn in the market). It further suggests that more can be done to clarify the information on forecasting that customers receive: there is currently a considerable amount of regulation in this area but a concern that this may in fact be increasing customer confusion.
An industry working group has now been set up to tackle the issue of communications, with a view to giving customers information that they are capable of understanding. This is important to ensure that customers have the opportunity to understand what they can expect from their policies (before, during and after they buy); and are able to shop around and make the right decisions at the right time by knowing the consequences of their choices.
In the main, aggregated industry results have shown little movement over the past four years. It is difficult to get more than 30 companies, with different-looking business models and complexities, to all move forward in this market. Individual companies are able to use results from the survey to investigate component parts within the three commitments, in order to highlight areas where improvement is needed to ensure better outcomes for their customers. Indeed, scores for certain individual participating companies have seen encouraging improvements over recent years.
Participating companies use the results from the survey to feed into the requirement that all financial organisations have to evidence TCF (Treating Customers Fairly: the principles-based regulation which is centred around six core outcomes as defined by the Financial Services Authority, the industry regulator).
Independent oversight and governance of the Scheme is provided by the Customer Impact Panel: a group of industry and non-industry representatives who are in place to be an informed voice of the customer, and to challenge both the ABI and individual members of the Scheme regarding steps that have been put in place as a result of the survey results.