His call comes on the day that ABI and KPMG publishes a survey of 57 insurance leaders, which highlights concerns about the new regulatory structure, the influence of the EU, and shows that reputation is seen as the industry's biggest weakness.
ABI Director General, Otto Thoresen said:
"The reputation of UK financial services firms was undoubtedly harmed by the banking crisis. Insurers are not banks. Despite this, we have to tackle our reputation head-on and we have a good platform to do this from.
"Consumers recognise the importance of insurance, and every day insurers pay out £173 million in pensions and life insurance and £58 million in general insurance claims, such as on motor and household.
"Yet, despite the valuable role insurance plays in millions of people's lives, the public perception of our industry is not high. We need to do something about this."
The survey shows what executives think about the strengths of the industry and the impact of regulatory and economic pressures. It was conducted alongside the ABI's quarterly consumer survey of over 2,500 UK adults.
The key findings show:
- Industry leaders think that the industry's greatest strength is helping customers at their time of need (top answer at 39%), closely followed by its contribution to the economy (21%)
- The industry's ability to help people when they need it is also the top answer for customers (18%)
- But executives believe the industry's greatest weakness is its reputation, cited as top by a third of people, ahead of how the industry interacts with customers
- Two thirds of executives recognise that more needs to be done to show customers that it delivers a good service, in light of wider implications of the financial crisis
Looking to the future Otto Thoresen pointed out that:
"Unprecedented reforms in how we sell to our customers and how people save present real opportunities to raise our reputation and improve understanding of insurance.
"We need to grasp these opportunities with both hands, and make sure that we create an environment where our reputation reflects our value to society and the economy."
On regulation, the Survey data shows that:
- Almost half of industry leaders surveyed say that the new UK ‘Twin Peaks' regulatory structure will do nothing to improve customer trust. Over half of consumers believe that they are responsible for the products they buy; only 4% think that this is the job of the regulator.
- The growing impact of Europe and EU regulation is being felt by firms. 98% of industry leaders are somewhat or very worried about the impact of the EU on the UK market. Nearly a half are worried about ensuring a coherent regime, with a third very concerned that the EU does not understand the need for a cost benefit analysis when proposing new regulation.
Consumers are also sceptical: only one in ten thinks EU intervention is appropriate; 57% think that the EU intervenes too much in Britain's financial services.
It is also very clear that the industry needs a lot more convincing that Government is serious about making the UK the most competitive location in the G20 ahead of the Treasury's consultation on controlled foreign companies:
- Over half of industry executives are neutral on whether recent tax changes make it more likely they will stay in the UK
- Over half of the executives surveyed did not put the UK in their top three locations to base their business, based on the tax and regulatory regime
Drew Fellowes, UK Head of Insurance at KPMG, the ABI's Biennial Conference partner said:
"The insurance sector is undoubtedly facing a period of unparalleled change. It is likely that the industry we will see over the next three to five years will be structurally very different to what we have today.
"However, with this change comes a unique opportunity for the insurance sector to strengthen itself and become more competitive. The survey highlights the need for the industry to reinvigorate its relationship with customers and reinvent its reputation.
"From a strategic point of view, the big question remains around where future growth will come from - a feat not to be underestimated in these challenging times.
"Regulation has clearly risen to the forefront of the agenda, which comes at a time when many insurers face significant market pressures.
"As insurers battle through the waves of regulatory change, their challenge is to manage this in line with their strategic priorities and duties to shareholders and customers."
