Melissa Collett explains what to expect from the CII’s Chartered Transparency Forum
The past year has seen the insurance sector face unprecedented challenges to its policy wordings, as exemplified by the test case brought by the Financial Conduct Authority (FCA). Claims for business losses caused by the pandemic have highlighted an expectation gap between what policyholders thought they were covered for and what cover the policy actually provides.
In light of these developments, the CII has created the Chartered Transparency Forum to examine ways the profession can best meet the expectations of consumers. Transparency is key to ensuring customers understand what is covered under their policies.
Transparency is also an ethical principle that underpins the CII’s Code of Ethics, which all CII members sign up to when they join.
Sian Fisher, CEO of the CII, says: “When people buy insurance, they are buying a promise of help when things go wrong. But too often, there is an expectation gap between what customers thought that promise was and what the provider intended. To improve trust, we must understand exactly what leads to that gap, and how we can reduce it together.
“This forum will establish ‘what good looks like’ and encourage good practice across the profession. I look forward to working with everyone who wants to build trust in insurance to put the insights of the forum to good use and establish principles for the profession
One of the key recommendations of the companion guide is that policies have a reading age of 13 or less. That will ensure that the majority of the UK population has the ability to understand the wording in the policy
The forum has brought together consumer representatives, legal experts and leading practitioners from across the insurance profession to:
- Calculate the insurance expectation gap in policy coverage versus customer understanding – with indications of how it can be addressed.
- Publish and promote guidance, outlining the principles by which all professionals should take accountability for improving transparency, engagement and comprehension of communications relating to policy coverage.
- Identify existing learning materials and prioritise the development of future learning materials to improve the profession’s broad expertise in how policy wordings work, and how their drafting can better match brand promises, marketing messaging and consumer expectations.
- Lead a campaign to promote the above standards and learning with the objective of collectively improving public trust by reducing the expectation gap.
The guidance being prepared will take the form of a Transparency Companion to the CII’s Code of Ethics, which uses the five core duties of the Code of Ethics to give guidance as to how insurance professionals can ensure their actions are transparent at all times.
While the guide does not aim to provide the ‘right answer’ for every conceivable circumstance that professionals will face, the Transparency Companion does highlight some case studies and examples of best practice from around the insurance sector, to provide inspiration and ideas as to how transparency can be upheld
One of the key recommendations of the companion guide is that policies have a reading age of 13 or less. That will ensure that the majority of the UK population has the ability to understand the wording in the policy. It also recommends that insurance professionals themselves have a thorough understanding of the policy wordings, as well as any implications that are associated with certain terms and phrases. The aim is to ensure that communications with clients are accurate and expressed in a way that the individual client can understand.
Improving policy transparency should lead to better outcomes for customers reducing the need for court cases like the FCA test case in the future. A more transparent approach will also benefit businesses, meaning improved customer retention and fewer complaints.
However, surely the greatest measure of a more transparent approach will be how it impacts public trust. If professionals are to be trusted by customers, openness and transparency are essential. There is a clear incentive to ensure that we get transparency right, now. Get it wrong, and the future of public trust will be far murkier.
Read the Transparency Companion here: https://bit.ly/37QGa3ge
Chartered Transparency Forum
The Chartered Transparency Forum is chaired by Melissa Collett, CII professional standards director, and consists of:
- Peter Blanc, group chief executive, Aston Lark
- Graham Trudgill, executive director, BIBA
- James Daley, managing director, Fairer Finance
- James Dalton, director of general insurance policy, ABI
- Mandy Hunt, chief underwriting officer, RSA Commercial and Society of Underwriting Professionals (SUP) member
- Philip Williams, managing director, Simply Business MGA and SUP member
- Jennette Newman, partner, Clyde & Co, and chair of the CII’s Professional Standards Committee
- Dr Matthew Connell, CII policy and public affairs director
- Ian Simons, CII customer director
Melissa Collett is professional standards director of the CII