The insurance industry could struggle to implement new FCA rules on pricing and fair value this year. But there is an example to follow – the retail banking sector.
Ian Hughes from Consumer Intelligence and James Yerkess from HAL Consulting speak to Ben Johnson from Sheffield Haworth about which lessons insurers should learn in 2021.
The FCA’s reforms on general insurance pricing come into force in Q3 2021. They will force firms to review the “fair value” they offer customers long term. That includes the value of add-on products and premium finance. Not just the core policies.
According to James Yerkess, Managing Director of HAL Consulting, “The fair value transformational changes that are about to begin are the start rather than the end. The future for insurance will be very similar to the recent past of retail banking in terms of fair value regulation.”
“From the banking perspective, hire the right talent with the mindset to deliver fair value outcomes consistently. That’s one of the most important steps any business can take to unlock long-term sustainable growth,” says James.
Insurance hiring trends for 2020 show a lack of focus on fair value so far. UK financial services – including insurance – has a talent pool of just over 2,600 candidates with “Treating Customers Fairly” (TCF) as a skill. Only 23% of these are in insurance. The remaining 77% of the pool are in other areas of financial services – mainly banking.
Sheffield Haworth hiring data for 2020 shows that digital and data-related recruitment grew between 7% and 9% in insurance, compared with 2019. Similarly, insurance roles related to agile methodology grew by 17%.
Compare this to the slower 3% - 5% growth in product and pricing roles. Or the glacial 1% - 3% growth in underwriting and actuarial roles. Insurers are focused on digital transformation. Just as the banks were prior to 2012.
By contrast, the banking sector hiring data for 2020 shows a high volume of TCF roles. These include customer value management, fair value benchmarking, and fair value governance.
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