President's Update
Annual Report 2022
Peter Blanc, Executive Chairman of Howden UK & Ireland, became President of the CII in January 2022. In this statement he reflects on his presidential theme, the value of qualifications in his career to date and the rolf of the CII President.
Presidential theme - the importance of advice
My Presidential theme was “The Importance of Advice”.
In line with wider consumer trends, the insurance profession has gone down a worrying path of allowing people to self-serve online for products and services that are poorly understood. The argument has been that so-called ‘simple’ covers such as motor insurance can be more efficiently purchased online and, economically, that is of course true. But are these so-called ‘simple’ covers actually fully understood by the buying public? In a recent survey 30% of motorists believed that their insurance policy covered them to drive somebody else’s car. The reality was that less than 5% of policies provide such an extension.
Insurance is all about trust and delivering three-way certainty is vital. The customer has to know what they are buying, the broker has to know and fully understand what they are arranging and the underwriter needs to know what they are underwriting. If all three parties to the contract get this right, then when a claim occurs, the outcome is highly likely to be successful. Most insurers are really proud of the fact that 98% of claims are paid but one of the challenges we have as a sector is that it’s always going to be the 2% that aren’t paid that hit the headlines. No financial journalist has ever written an article saying “stop the press, insurance company has successfully paid a claim”. That is not news. When claims are
not paid, however, it is very easy to write an unfavourable headline.
When customers don’t understand something, that’s on us. We can’t just say “sorry, Mr/Mrs customer, you didn’t understand that” – that’s not good enough. It’s on us to make sure that customers understand what they are buying and what their obligations are. Customers only tend to find out it’s gone wrong when they have a claim and of course the majority of people don’t have a claim. That can lead to complacency where we, as a profession, believe that our customers understand what they are buying and indeed customers believe that they understand what they are buying but, in reality, they simply don’t. This is borne out by the claims rejection rates that are reported by some of the direct writers. In the most recent FCA statistics, some of the direct insurance company markets have claims rejection rates in excess of 40%. Nobody submits a claim expecting it not to be paid so something has gone very seriously wrong if 4 in 10 customers end up disappointed.
The simple truth is that “you don’t know what you don’t know”. As a layman, nobody would believe that they could go and carry out conveyancing on their next house purchase. Insurance can be a complicated legal contract and the truth is that most members of the public will achieve a far better outcome from their insurances if they speak to someone who can advise them, and a professionally trained qualified insurance broker will be the person that gives that right advice.
Some in the industry have argued that price competition means it is impossible to provide advice cost-effectively. I believe it’s absolutely possible to build a fantastic business which provides great customer service and also makes money. My experience is that the better trained and qualified our staff are, the more they have gone through their examinations journey and have a broader perspective, the better they are at servicing our clients. In all of our branches we have qualified professionals who know what they are talking about and when customers speak to them they think “this is fantastic, I can be properly looked after, be properly advised, sleep easily at night knowing my insurance has been arranged correctly”. That is what we are here to do and I think that being Chartered is a really important part of that.
The Value of Qualifications
During my first year with my first employer, Legal & General, I would spend every Wednesday at Ipswich College, doing day-release, classroom-based, CII training. I found going to a college in a proper classroom setting with knowledgeable lecturers incredibly helpful so I completed the first three parts of the ACII back in my first year with Legal & General. That formative positive experience helped shape my conviction that the sooner young insurance professionals are exposed to all types of insurance, the sooner they realise what a broad universe it is, and how interesting it can be – with the study for and completion of the CII exams being a very effective way of achieving this exposure. The chances are they would have been employed to carry out one specific function at this early stage in their career but if they are undertaking the CII exams they will get to find out about the role of all the other functions and how they knit together, ultimately to the benefit of their careers and to the advice that they provide to customers.
The wider knowledge gleaned from studying for professional qualifications can help to introduce young professionals to parts of the profession that they hadn’t considered before and will set them on a path of lifelong learning which will be incredibly positive for them and, in a wider context, for the whole of the insurance profession.
We insist that all of our staff work for and achieve their Cert CII as a minimum but we then actively encourage them to move on to their DIP and ultimately their ACII. We incentivise this progression financially as we know that it’s a vital part of ensuring that we provide fantastic customer service both now and in the future.
I would like to take this opportunity to thank Julie Page for her support as my immediate predecessor as President – she was incredibly helpful in showing me the reins and I am very proud to have followed someone with her amazing reputation in the insurance market. The CII has done an excellent job of ensuring that the President comes from varied backgrounds – with Julie, as CEO of Aon, representing a large global broker looking after the major corporate sector, myself coming from the SME, mid-market commercial sector in the UK, and the current President, Russell Higginbotham, as CEO of Swiss Re Reinsurance Solutions, representing the International reinsurance market. Russell has made a great start to his tenure and I wish him well for the remaining months of his presidential term.
Peter Blanc | CII President