Thoughts before going - Peter Hubbard

Peter Hubbard, shortly to step down from the top job at UK General, offers some thoughts to the insurance markets people - this is a full version of a piece that appears in Post Magazine (C-Suite) 17 February.

Over the years that I've been in the industry we have become expert hand-wringers when it comes to our public image. Much has been done to try and improve our reputation, but the sense (and the data) still support the fact that we behind most other industries and, even given the horrific self-inflicted traumas of banking, behind the banks too.

So, given all these efforts by the great and glorious, and the industry as a whole, what is our problem?

It is in my view all about risk, or rather the fact that in general terms we are now more risk averse than most other industries. When insurance was created in those heady days in Lloyds’ coffee shop, a new and fantastically innovative market was created, one that mutualised risk, one that accepted it could not control everything and one that rapidly wanted to expand its appeal to customers.

Just one emerging new product at that time was attaching Personal Accident insurance to railway tickets, when trains were in their infancy. Death and injury were common. The Rocket first ran in 1829, and the insurance product emerged before the middle of the Century. Insurance, as with other industries, innovated in step with the rapidly changing needs of customers. Insurers took far greater risks and pushed the boundaries.

We still do some of this, but do we do anywhere near enough? Are we happy that consumers of motor and household insurance now turn to what are marketing companies for the product and service? Are we hiding behind our spreadsheets and complex models, analysing everything that moves, rather than being bold?

Sadly though to me there is a darker side of being risk averse. It is how we treat our people, the very staff who interact day in day out with our customers. We envelop them with processes that purport to be about control, which drive for efficiency, and tick boxes we think are needed by the Regulator.

We stifle the creativity of human endeavour and risk taking, and then wonder why customers who interact with us don’t like us.

So before you rush off to invest in your next system for big data, big control, fraud prevention, efficiency improvements, please think about the human elements of insurance; the mutual bearing of risk; the smoothing of results over time, and challenge yourself whether you need to be bold and return to the roots of insurance to really understand how to connect with your customers.