ABI Director speech on change in UK general insurance industry
James Dalton, ABI Director gave a speech in May 2017 on change in the UK general insurance industry.
Comments of interest in the speech include the following:
- The most transformational project that the ABI has led in recent times has been the establishment of Flood Re – which included lots of sophisticated discussion with the government about regulation. The ABI director says the industry is now a more trusted partner by the government in delivering solutions that back up their policies. No surprise there.
- Insurers must continue to work on their poor reputation to help overcome the consumer "grudge purchase" mentality. This applies equally in both personal or commercial lines insurance, Mr Dalton said. The industry must make it more fun – by ensuring the premium offered is fair and transparent, and make sure that the insurer is there in the customer's time of need (claim time!) This is what customers expect and the industry must deliver. Customers also want new products brought on stream faster to satisfy their demand.
- The biggest opportunity of the future is the digital information revolution. Insurers need to get prepared for a customer base with very changing expectations. For instance the internet of Things devices (such as cameras on cars) can help insurers gain a better understanding of their customers and, as a result, drive innovation and change. This means that the role of insurance shifts from being purely about financial risk transfer to being about preventing the same claims in the first place.
- Standards reducing claims. A good example of the above digital / information revolution is hiring Compliance oversight to offset misselling risk, rather than just paying a higher PII premium. In practice, the hiring of IFAC and others will reduce your PII. Leave your door unlocked and you pay higher insurance premiums.
- Insurers' ability to deliver against changing customer demands and expectations is dependent on an ability to gather, process, understand and use data. More and better quality data will allow insurers to price risk more accurately than ever before.
- There has been a fundamental shift in the relationship between traditional insurers and a number of new and emerging technology companies. Insurers recognise the benefits of collaborating with and investing in these companies, given that they offer ways of working that are more efficient both for insurers and their customers. Reg-Tech will reduce your PII. (use Bat!)
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