Regulation and responsibility: transparency as a capstone of the insurance industry
17 Aug, 2023

Charlene Lawrence, Head: Brokers and Outsourced Partners, MiWay Insurance

 

At its most fundamental level, the building blocks of the insurance industry are relationships. The long-term success of these partnerships – whether between the insurer and its intermediaries, or brokers and their clients – depends wholly on the principle of trust. For this reason, transparency is one of the most important pillars of the industry. Regardless of how the sector responds to market trends and evolves with the times, transparency will always be one of the cornerstones of how insurance products are developed and sold.

 

Transparency is not only an ethical obligation, but a central part of an insurer’s mandate, as regulated by the Treating Customers Fairly (TFC) policy as set out by the Financial Sector Conduct Authority (FSCA). Regulated entities are expected to demonstrate their compliance with six key outcomes that govern customer service through the entire product life cycle.

 

From product design and promotion, into the advisory and client service processes, and finally through to complaints and claims handling, insurers and their brokers have a fiduciary duty to provide clients with clearly communicated information.

 

Not only does abiding by the TFC outcomes protect the interests of end users, but it also protects the integrity of brokers and provides a foundation on which to build successful client relationships. An important part of this commitment involves disclosing commission structures and outsourcing fees upfront and within policy documentation.

 

Providing this information from the onset goes a long way in providing clients with the assurance that their brokers have a vested interest in ensuring that their own roles and responsibilities are adequately fulfilled.

 

Insurance policies are often complex and contain technical jargon that can be challenging for the average consumer to decipher. From the perspective of insurers, therefore, transparent practices can bridge this gap by simplifying policy language, providing clear explanations, and offering easy access to relevant information.

 

By making insurance products and processes more understandable and accessible, insurers empower consumers to make well-informed choices and reduce the risk of misunderstandings or disputes being escalated to the ombudsman. In the long-term, maintaining this level of trust is a vital contributing factor to customer loyalty, repeat business, and positive word-of-mouth referrals.

 

Transparency also acts as a catalyst for accountability and ethical behavior within the insurance industry. When insurers commit to transparency, they are more likely to be held accountable by their stakeholders, including customers, shareholders, and regulators. This fosters a culture of integrity, which ultimately benefits both the industry and the customers it serves.

 

The challenge, for those involved with the sales process, is to find ways to strike the delicate balance between time spent selling insurance products and providing the most efficient level of service. Being able to strike this balance requires much discernment in terms of the needs of individual clients, how to engage them on the available options and how to provide them with all the information they need.

 

Understanding how to steer these conversations takes practice and is perfected with experience. But, when transparency at all levels is prioritised and upheld, clients are ultimately empowered to view their insurance products as crucial safeguards against risk, rather than grudge purchases.

 

On this front, broker support can provide the much-needed after-sales service that clients need to feel heard and valued. While much has been done over the last decade to simplify complex jargon and make policy more understandable to new entrants to the industry, brokers still need to intervene when clients need technical explanations and advice. Taking clients through their policy documents as a first port of call, can provide the grounds for building a relationship that could potentially last a lifetime and even extend to the next generation.

 

ENDS

 

 

Author

@Charlene Lawrence
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