UK insurers must deal with “lack of trust”

Neos CEO welcomes super-complaint

By Michael McCaw | 5 December 2018

The insurance market is “tough” and the product “isn’t loved in anyway shape or form”, according to Matt Poll, CEO of Neos.

Speaking at Fintech Connect, Poll underlined the fact that customers do not traditionally trust insurance providers, thanks to low and negative engagement, dysfunctional pricing strategies, and customers encountering a perceived lack of value.

“There’s a really bad industry relationship with customers currently,” he said. “The UK market is one of the most competitive in the world, so there’s so many different players and the issue’s compounded by commoditisation through price comparison sites etc. Everything is has always been about price.”

Traditionally, pricing structures have confused customers, he said.

"I used to run More Than – a direct consumer brand. What frustrated me was the fact that our pricing strategy was around giving customers who we knew nothing about – and who we had no relationship with whatsoever – our best price," said Poll.

“And then we’d give John Smith, who we’ve known for ten years, never claims, never any problems - and yet every year we put his price up. Then one day John would find a policy exactly the same as his for 40% cheaper elsewhere. How can that be right? For one I’m really glad and really encouraged that the super-complaint has happened. It could make a strong impact on the industry.”

The super-complaint relates to a filing made by the UK’s Citizens Advice to the Competition and Markets Authority (CMA) in late September, requesting the government body to identify remedies and recommendations to put an end to the penalty paid by loyal and disengaged consumers. The complaint targets several markets, including insurance, cash savings and mortgages.

A strategy to deal with the issue features in the UK’s Financial Conduct Authority (FCA)’s 2018/19 Business Plan.

“Citizens Advice has raised a number of important issues and we will work closely with the CMA as it investigates this super-complaint,” said Andrew Bailey, chief executive of the FCA at the time of the super-compliant was announced, in a statement.

“We expect firms to look after the interests of all customers and treat them fairly, whether they are new or long-standing,” said Bailey. “It is important to get the balance right so that existing customers do not miss out on the benefits of competition and innovation, including when they purchase or renew their general insurance products.”

Poll said he hopes the super-complaint could lead to a "rebalancing" of the market.

“Some of the outdated pricing practices used in the UK which penalise loyalty – and it’s not just insurers... people need to look at this because there’s vulnerable customers who need to be protected and it’s a very strange business model.”

However, Poll went on to say the insurance market is “highly commoditised”, and many of the industry’s flaws can be dealt with by collaborations between challengers utilising technology such as smart home devices, and incumbents with large market share.

“I think there’s a bit of a revolution going on within insurance. It's a market that needs a good kick,” he said.

“Customer behaviour has changed too. People expect things to be slicker, smaller, more technology led. Insurance has always been a bit of a laggard in that sense but it’s starting to catch up.”

Research published this week by Line Corporation found that of 5,000 UK smartphone users polled, 77% said they would be willing to buy home insurance through a mobile-based system.

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