The Chartered Insurance Institute (CII) is to set sector-wide standards baseline expectations for identifying customer vulnerability and develop practical guidance help firms move beyond identifying characteristics of vulnerability, and put customers ahead of targets.
The commitment follows the release of a CII roundtable report which called for a ‘coalition of the willing’ to move beyond identifying characteristics of vulnerability, and put customers ahead of targets.
The Managing Vulnerability in Insurance Roundtable Summary Report called on boards and senior leaders to ‘walk the walk’ by engaging directly with customer experiences, instead of delegating responsibility to compliance or customer service teams.
Participants raised the need for clear, consistent standards to guide firms in delivering better outcomes for all customers, especially those in vulnerable circumstances: ‘while current regulation provides the framework and guidance, there is a gap when it comes to practical application’.
The development of sector-wide standards as proposed in the report, would set out baseline expectations for:
- Vulnerability identification processes
- Training and capability building across all roles
- Incorporation of vulnerability in product and service design
- Monitoring and evidencing customer outcomes
The CII said it planned to develop practical guidance for firms to address the issues identified in the report.
The guidance will help translate the FCA’s expectations and the insights from the roundtable into clear actions, helping firms move from principles to practice.
The CII will also support the sector by hosting a follow-up session concentrating on data sharing across the distribution chain, a crucial element of Consumer Duty delivery and vulnerability management, as well as a webinar to delve deeper into the key discussions from this roundtable.
“Many firms are stuck in a tick-box mentality and not striving for genuine customer-centricity,” the report said.
Representatives from the Financial Conduct Authority (FCA) and Financial Ombudsman Service (FOS), joined consumers and representative bodies, sector leaders, academics and other experts to examine vulnerability management within insurance at a CII roundtable last month.
Drawing on work done to manage vulnerability in other sectors, and the FCA’s review of the treatment of customers in vulnerable circumstances, the report set out key areas for improvement, in order to drive meaningful change for vulnerable customers.
Panellists identified a lack of high-quality management information, and the challenge of joining the dots between data, actions, and outcomes as a key consideration.
“Many firms are failing to demonstrate the causal chain between identifying vulnerability and achieving improved outcomes, so improvement efforts lack meaningful evidence of success,” panellists said.
While highlighting the importance of creating an environment where customers feel safe and supported in disclosing vulnerability, it is stressed that firms must move beyond identifying characteristics of vulnerability, to delivering consistent, meaningful support throughout the customer journey.
The findings also encouraged handlers to move away from rigid scripts and towards empathetic, patient and flexible conversations, with staff trained on verbal and non-verbal cues, which requires a shift towards a culture that puts the customer ahead of targets.
But the report also cited ‘significant training gaps’ across the profession, particularly for non-frontline staff, who are often overlooked in vulnerability strategies.
It suggests that training on vulnerability and empathy need to extend to product design, underwriting and leadership teams, to help them understand the lived experiences of those in vulnerable circumstances, to enable the creation of inclusive and accessible products.
Matthew Hill, CEO at the CII, (pictured) said: “Managing customer vulnerability within insurance services is still in its infancy.
“In recent years, work has been done to define what it means to be vulnerable, and how such individuals should be considered within our work, particularly with regards to client outcomes.
“The CII Roundtable Summary Report on Managing Vulnerability in Insurance aims to build on these premises, and develop effective processes that may be implemented by firms to deliver tangible improvements for vulnerable customers.”
