Matt Hutchins, Global Head of Insurance at Capco, has commented on the FCA’s report on governance and oversight of insurance products.
He said: “For insurers to consistently provide fair value to customers, they must consider more than the specific point in time when a product review is conducted. They should develop and monitor data points so that they can track whether customers are consistently achieving the good outcomes that insurers expect. Insurers should use a range of data points, such as claims rates or product usage (and cost), rejected claims rates (along with the reasons for rejections), customer journey drop-off rates, and customer sentiment analysis. These data points should ultimately demonstrate that customers are receiving the level of service they expect and that the product’s pricing remains consistent with the initial analysis used to determine its fair value, as well as its alignment with the associated costs and risks.
Insurer governance and accountability
“The nature of insurance products often leads to scenarios where third parties are used to either manufacture or distribute products. As a consequence, it is essential that firms define the accountabilities and responsibilities throughout the entire product lifecycle and across the distribution chain. A priority for insurers should be to ensure that key data points are being provided from third parties and are of sufficient quality to enable decision making. Equally, it is just as important for firms to be open to sharing information that is required by third parties to enable assessments of good customer outcomes. The governance and oversight of these metrics and the ongoing monitoring should now be embedded into business-as-usual processes and forums to enable the identification of any potential areas of concern and drive any required action.”
