There is a place for regulation – an underregulated financial services industry is not in the best interest of consumers, as we have seen – but we need to be mindful of the task that is now at hand.
What is needed is true effort from insurers to make their businesses more consumer-focused. Regulation is just one element of what should be a comprehensive renaissance in this industry. When New Zealand has one of the lowest rates of insurance take-up in the OECD, that’s not just about law. And the current crisis of consumer confidence only makes it hard to increase take-up.
Clearly, we need to strive for relevance, simplicity and honesty in our relationships with customers, suppliers and partners.
Loss of trust is one of our biggest challenges, because it prevents engagement. Consumers don’t respond to the advances of organisations they don’t trust – particularly when, they can justify not making that insurance purchase.
The absence of trust puts the onus squarely back on the industry – we the insurers – to tell Kiwis why our services are necessary, and to make it easy for them. We need to get back to the core of what our business is really about: protecting people.
This will require substantial changes in how our industry operates, and has very little to do with regulation. Rather, we need to address key problems such as churn, in which policyholders sit on an insurance merry-go-round while little is done to increase the overall number of insured. Too many people remain unprotected.
In 2011 we will tick the box marked ‘regulation’. The new challenge is consumer engagement. Sooner or later, insurers will have to get real.
It is interesting that Darrin and his peers wait for regulation to force the industry to address the issues he refers to rather than taking the steps now . . . all they need to do is get on with it! There is nothing to stop Darrin taking on the lead on customer centricity if he truely believed in what he wrote.
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http://www.chatswood.co.nz/moneyblog/2011/06/cavalcade-of-risk-132-fifth-anniversary-edition.html
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