With the insurance hearings of the Financial Services Royal Commission currently underway, explosive revelations about unethical and illegal practices within the industry have dominated media headlines. Already, numerous insurers have seen real-world consequences, with stock prices dropping and potentially-irreparable brand damage.
Insurance Business spoke with the managing director and CEO of Integrity Life, Chris Powell, about how the insurance industry as a whole can help restore its standing in the eyes of the Australian public.
“Unfortunately, we’ve seen big business rewarded for bad behaviour for too long,” says Powell. “There’s a level of community expectation around paying claims, and the moment you go against it, you’re saying that you’re not prepared to be reasonable and meet what a normal person would expect.”
Powell believes there are three key facets to helping restore the image of the wider insurance industry.
“First of all, we need to behave with integrity in everything we do,” says Powell. “We didn’t pick the name ‘Integrity’ by accident. But across the industry, managers need to hold staff accountable to act with integrity, and management needs to be similarly held accountable by the board.”
The testimony around the Royal Commission suggests that for many insurers, life and otherwise, this has been an ongoing issue. Claims have frequently been denied for seemingly arbitrary or overly technical reasons, which leaves policyholders feeling frustrated or cheated.
“Secondly, the focus needs to be on customers,” Powell continued. “Customers today have more power and choice than ever before thanks to social media, increased competition. Many of the larger institutions don’t seem to have caught up to that – if you’re not putting the customer at the centre, you’re going to lose out.”
As an example, take the complexity that often peppers modern insurance policies. Legal terminology, jargon and sheer length combine to the extent that many consumers – even operating with professional advice – do not necessarily have the capability to properly engage with their policies. Rather, this is an area that requires innovation to make things as simple as possible.
“A typical modern policy document will run 150 to 160 pages,” says Powell. “We’re in the process of finalising our policy document and PDS now, but it will be much simpler and less than half that length.”
Simpler tools will provide greater clarity for consumers, enabling greater trust in the process.
“The third thing is to operate with respect and fairness, towards both clients and advisors,” says Powell. “Too often the industry merely tolerates advisors as intermediaries, but they can actually serve a valuable role for the insurer and client alike. So, insurers should actively partner with them and build everything so the advisor and policyholder can deal with you as easily and practically as possible.”
The fundamental purpose of insurance is to look after people who need it when they require it most. Accordingly, this means that insurers must work to provide the products their charges require.
“A one-size fits all product doesn’t work anymore,” says Powell. “Consumers need to have choice, and organisations need to be innovative, not only by providing improvements to existing products but by providing both new complementary products and products that allow new markets to be entered.”