11 May 2001
- Insurers' obsession with products has alienated consumers and contributed heavily to the broadly unattractive image the industry conjures up in the public mind.
- The industry needs to put beyond doubt its commitment to professionalism and the great social need it meets.
These are key points made by Ray Greenshields, chief executive of Zurich Financial Services' UK life business, speaking at the Westminster and Industry conference on Friday 11 May.
"Insurers' obsession with products has alienated consumers and contributed heavily to the broadly unattractive image the industry conjures up in the public mind.
"What we should be about is infinitely more attractive to consumers: responding to their needs with solutions.
"Our products are no more than a set of standardised services. When consumers buy one of our products, they're buying no more than a set of promises to pay, invariably a long time in the future.
"And yet we persist in developing products that are too complex, or whose construction and structure are obscure, leading to the suspicion that we have deliberately designed them that way, to disguise the true nature of charges.
Solutions-led approach
"One area where the whole industry is already moving away from a product led approach is the design of investment products.
"Now, it's typical for investment bonds to have multiple funds and mangers, along with a charging structure that makes switching between funds attractive.
"This is one step in the right direction: but it can go a lot further. Many consumers do not switch funds - either through a lack of confidence or through inertia. So while they own a product that could solve their needs, they do not have a genuine solution.
"In time, it will be normal for an investment bond to be set up to switch funds automatically, according to a risk profile built up between the client and his adviser.
"So what of this 'new era'?
"Scary things are starting to happen to consumers as employers and the welfare state soak up fewer and fewer risks.
"All this means consumers will face hard choices. Awkward choices, that come with messages like 'you will have to provide for your future, you can no longer expect the state to'; 'you'll have to sacrifice something now for something we can't guarantee in future' and 'we can help you but we can't make decisions for you.' Messages that consumers don't want to accept without having the chance to argue with them, to get a feel for what they really mean.
"Hence the central role of Advice. Alongside that, more demanding consumers will want to know where their money is going, what they are getting in return for the money they spend on advice.
"So the industry will have to do three things:
- Educate and inform the consumer
- Offer choice, and a sense of control
- Put beyond doubt its commitment to professionalism and the great social need it meets.
"As for products: they will merely be part of much wider solutions: merely a means to an end.
"Advice will remain central to what is called the life industry, although we will have to discover how to offer it in better ways. But we will have to develop a new capability: how to assemble the components of the solutions we offer. And then, perhaps, we may once more comprise a profession which deserves to regain the recognition we once enjoyed: the privilege of being entrusted with the nation's lifetime financial needs."
Ends
