Insurance isn't the problem

In a special guest blog, chief executive of the British Insurance Brokers' Association, Eric Galbraith, argues that the industry needs to work together to improve public perception.

'Insurance tops the list of complaints' blares the headline of an article in the Money section of this weekend's Financial Times featuring the latest annual review of personal finance disputes from the Financial Ombudsman Service (FOS). 

The piece is damning for our industry and sadly, factually correct, insurance complaints are on the rise in a number of areas. For many FT readers Elaine Moore's article merely confirms what they already believe - that the insurance industry's reputation is damaged and justifiably so given our poor behaviour towards the customer.

However, headlines, as with statistics, require an understanding of the detail behind them.  They are a matter of interpretation. Understandably, the headline focuses on the obvious while the story does not dig below the surface to find out what and more importantly who really is driving the complaints trends that the FOS is experiencing. It is not insurance that is the problem, but the way many insurers have allowed it to be sold. 

Bundling it up, bolting it on, allowing non-specialists to distribute specialist products that require explanation. The deluge of payment protection PPI complaints currently hitting the ombudsman is very much about the banks misselling, not just about the insurance.

Once again the value of insurance has been eroded and all who work in the industry tarnished even if they have not contributed to the problem. It sums up my frustration about our industry's lack of cohesive and proactive activity with regard to reputational issues that affect us all. We need to find ways in which we can work together to improve how the public perceives us.

We must also differentiate ourselves from the credit, banking, savings and investments sectors many of whom can distribute general insurance products too.  The public also needs to be encouraged to value and trust advice and actively seek it out when buying insurance products.

The Ombudsman too has a responsibility to ensure that the statistics it publishes are not misunderstood by its many different audiences and that those driving up complaints are exposed. This is not happening at the moment.

The Ombudsman's statistics show that complaints in certain areas of insurance are rising, for example with motor and travel business, but not from what channel those risks originated from. It is time to start identifying the source of bad sales and in the interests of fairness attributing the responsibility for complaints correctly.

The insurance industry also needs to address reputational issues collectively on a wider front and Biba will continue to work to in support of this objective. It is particularly galling for the professional insurance brokers and intermediaries to be bundled in with all those who are offering poor value for money in terms of their services and products while damaging our reputation to boot. Government, regulators, the media, the FOS and the Financial Services Compensation Scheme please take note.