Impact of FCA case on trust in insurance revealed
Two-thirds of insurance professionals feel the FCA’s business interruption case has reduced trust in the sector, according to a Chartered Insurance Institute poll.
A social media survey of 142 of the professional body’s members in September showed 29% feel the FCA case resulted in the public’s trust in insurance being greatly reduced and 39% thought it somewhat reduced the faith consumers have in policies paying out when needed.
Keith Richards, chief membership officer of the Chartered Insurance Institute, said: “Consumers continue to value transparency and clarity as integral to trusting services and their providers. The poll results show how pragmatic insurance professionals are about the role of trust in their relationships with consumers and how important it is tied to not just their actions but the actions of everyone involved in the market.
“Since the FCA test case was announced we have set out a clear blueprint as to how insurers could respond to the situation, predicated on settling claims outside of the courts where possible, looking towards improving clarity standards in product governance and looking to the future, supporting a comprehensive look at the role insurance can play in future pandemics, and where government liability needs to be introduced.
“We are pleased to see many of these actions have been followed, and we hope that the recent judgement will be a catalyst for the sector to take further action, where it is needed.”
The professional body has urged the profession to focus on three areas of activity:
- Product governance processes, including gaining greater clarity on product wordings. Where the same words and phrases are used in different contracts, there should be a consensus among professionals about what those terms mean, so that consumers can be reassured that two policies that look the same on paper cover the same risks.
- Improve advice processes (and non-advised buying processes) to help clients understand both the insurable and non-insurable risks they face, and what they can do about each one.
- Establish an approach to pandemics and other systemic risks that clearly sets out the scope of government intervention. If the government clarifies the risks it is prepared to cover, the market can be clear on how it will cover the risks that it is capable of covering.
