Keith Richards reflects on the new Chartered transparency forum and the FCA business interruption test case
The dedication and professionalism shown by our insurance and personal finance members in recent months has been nothing short of exceptional. As we work through the remainder of a most challenging and unusual year, the CII plan to meet that commitment with some significant work aimed at continuing to serve our customers when they need it most, while building and maintaining trust in our profession with wider society.
We have now created the CII Chartered transparency forum which will bring together expert practitioners from across insurance to explore ways the profession can continue to best meet the needs of consumers. Insurance is a promise, but when there is any disparity between what the customer thinks they are buying and what the product protects, we have an expectation gap which we must work to reduce. We look forward to sharing proactive ideas from the forum with the wider profession to help find positive solutions.
The well-documented Financial Conduct Authority (FCA) business interruption test case in the UK continues, a case which was welcomed by the CII. If we are to be trusted by customers, we must exercise openness and transparency and, moving forward, we will continue to encourage insurers, regulators and government to act to avoid similar cases in the future.
Finally, we have also seen the FCA propose significant reform of pricing in home and motor markets, seeking to enhance competition, ensure consumers will receive fair value and increase trust.
The FCA plans to require firms to charge the same price for existing as new customers and their proposal to ban price walking, along with the product governance proposals that it has suggested, is reasonable.
However, there may be times when, for example, the nature of a risk changes and an insurer may need to reprice existing customers, while at the same time wanting to set a lower price to continue to attract new, lower risk customers. In this way, it would be trying to retain cover for as many existing customers as possible, while also providing a competitive rate for new customers, not because of price walking, but because of a genuine change in the nature of the risk, we therefore need FCA to work with the sector so as not to create unintended consequences.
It may be useful for the FCA to consider producing governance standards that would allow firms to do this, without breaking the spirit of the rules.
Keith Richards is chief membership officer of the CII