The FCA has introduced a swathe of new requirements with its Consumer Duty rules, leading to a significant increase in the compliance burden at a time of challenging market conditions and significant cost inflation.
But in the case of Consumer Duty there is an opportunity that could pave the way to winning new business, increasing customer retention and boosting profitability.
The first step to making the most of this opportunity is internal honesty within an organisation. Insurance companies should not be afraid of shining the spotlight on those areas that are proving problematic and are not conducent to good customer outcomes or fair value.
To do this, having the right data, insight and understanding is essential.
The FCA has already given some guidance here – albeit limited – highlighting a number of key areas where it sees data as vital for implementing Consumer Duty and delivering the good customer outcomes that is the purpose of its introduction.
The likes of complaints handling, net promoted scores and other customer experience metrics all seen as key was of evidencing good customer outcomes.
A behind-closed-doors roundtable hosted by Insurance DataLab following the FCA’s multi-firm review of Consumer Duty implementation echoed the regulator’s thoughts on data.
But it is equally – or arguably even more – important for insurance businesses to focus on those areas whereby these outcomes are not as strong as they should be for the customer, or indeed value is not being delivered through a policy.
The important part is then to respond in a manner that drives real change in the business to turn these problem areas into areas of strength for the business, enhancing the customer proposition and turning the new regulations into a business win for the company.
In order to achieve this, however, insurance companies need to demonstrate an ability to respond quickly with the changes that have been highlighted.
Insurance, however, is not traditionally known for its agility and speed of response.
But insurtechs are. And that is why they are perfectly placed to make the most of Consumer Duty.
Without the weight of legacy systems around their necks, these lean start-ups can quickly adapt to changing customer needs and behaviours.
This will be essential given the iterative nature Consumer Duty will take following the July implementation deadline. And the insurtechs that embrace the regulations and respond with the honesty needed to deliver real change for their customers could be setting themselves up for even greater success in the future.
Insurance DataLab is helping insurance companies with Consumer Duty by providing access to a range of customer experience and financial metrics. Apply for your free trial here to experience our insight platform.