The insurance industry needs to address the low standing of its reputation in the eyes of the public says ABI director general Otto Thoresen.
His warning comes as the ABI publishes research carried out with KPMG into the opinions of CEOs and other senior insurance company executives that cites the industry’s greatest weakness as its reputation, followed by the way it interacts with customers.
Almost half of the 57 industry leaders surveyed say that the new UK ’Twin Peaks’ regulatory structure will do nothing to improve customer trust. Over half of consumers believe that they are responsible for the products they buy, while only 4 per cent think that this is the job of the regulator.
The research also shows the growing impact of Europe and EU regulation is being felt by firms, with 98 per cent of industry leaders somewhat or very worried about the impact of the EU on the UK market.
Nearly half are worried about ensuring a coherent regime, with a third very concerned that the EU does not understand the need for a cost benefit analysis when proposing new regulation.
The research also demonstrates the industry needs a lot more convincing that Government is serious about making the UK the most competitive location in the G20 ahead of the Treasury’s consultation on controlled foreign companies:
Over half of industry executives are neutral on whether recent tax changes make it more likely they will stay in the UK
Over half of the executives surveyed did not put the UK in their top three locations to base their business, based on the tax and regulatory regime.
Consumers are also sceptical: only one in ten thinks EU intervention is appropriate; 57 per cent think that the EU intervenes too much in Britain’s financial services, according to the research.
Two-thirds of the 57 senior executives polled said more needs to be done to show customers that it delivers a good service, in light of wider implications of the financial crisis.
Thoresen says: “The reputation of UK financial services firms was undoubtedly harmed by the banking crisis. Insurers are not banks. Despite this, we have to tackle our reputation head-on and we have a good platform to do this from. Consumers recognise the importance of insurance, and every day insurers pay out £173 million in pensions and life insurance and £58 million in general insurance claims, such as on motor and household. Yet, despite the valuable role insurance plays in millions of people’s lives, the public perception of our industry is not high. We need to do something about this.”
Drew Fellowes, UK head of insurance at KPMG says: “The insurance sector is undoubtedly facing a period of unparalleled change. It is likely that the industry we will see over the next three to five years will be structurally very different to what we have today. However, with this change comes a unique opportunity for the insurance sector to strengthen itself and become more competitive. The survey highlights the need for the industry to reinvigorate its relationship with customers and reinvent its reputation. From a strategic point of view, the big question remains around where future growth will come from – a feat not to be underestimated in these challenging times.”