a local champion - d10ou7l0uhgg4f.cloudfront.net · 14 regularsspecial features customer service...

Issue 4 November 2014 The British Insurance Brokers’ Association

THE SHARING SOCIETY TAKES OFFCan brokers access opportunities?

FRESH INSIGHT INTO CUSTOMER SERVICEFrom transactions to relationships

Grant Scott heads our new Regional Chairs’ Advisory Board

A local champion

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14 SPECIAL FEATURES Customer service

Why the relationship economy matters – insight from Jo Causon of the Institute of Customer Service

16 COVER STORY Regional Chairs’ Advisory Board

We are putting the regions’ interests to the forefront with this new advisory board, led by seasoned brokers Grant Scott and Ian Langley

19 Code of conduct The membership has given a

mandate to proceed – Steve White explains the next steps

25

Money Advice Service Discover how the government-

backed service will be working more closely with BIBA

Contents

While every care has been taken in the compilation of this magazine, errors or omissions are not the responsibility of the publishers or editorial staff. © All rights reserved. Products and services advertised within The Broker do not carry endorsement or recommendation by BIBA. The BIBA logo is added free by request to members’ advertisements. It warrants or signifies nothing more than the advertiser is a member. The views expressed in the articles within The Broker are those of the authors alone. They do not represent the views or opinions of BIBA.

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THE BROKER ISSUE 4 / 2014

Regulars05 CEO update Steve White’s address to members 06 News Latest from BIBA and the political party conferences

13 Technical news Steve Coates of Pool Re discusses the role of

terrorism insurance 18 Media Spotlight on the BIBA-Acturis Price Index and digest

of latest press coverage 20 Regulation David Sparkes looks at FCA activity within premium

finance, social media and price comparison sites 21 Motor Graeme Trudgill looks at the activities of our Motor

Panel 22 Schemes Profiles of GAP insurance, cover for cleaning

businesses and our private motor management facility

28 Representation Graeme Trudgill briefs members on the sharing

economy 30 Professional indemnity Alan Drury of Griffiths & Armour looks at why

negligence claims are on the rise

03

Member Helpline:0844 77 00 266

Promoting brokers at the Labour Party conference – steve White and Graeme trudgill meet ed Miliband

WelcomeRobert Burns spoke of the gift of seeing ourselves as others see us, and the sentiment remains true – understanding people’s opinions matters.

This is why the appointment of Teresa Fritz as a Non-Executive Director is such a positive move for BIBA. With years of experience as a consumer advocate, she brings a welcome approach in terms of understanding insurance and what brokers offer from the customer’s perspective.

Brokers have a strong consumer focus and the regulator and government expect all firms across the financial services spectrum to have the consumer at the heart of their thinking. We believe it will make us even stronger by having consumer needs embedded at main Board level.

Teresa will help make sure BIBA is thinking hard about customers and how we can best serve them. Through the way brokers have embraced signposting, to the support that is so often provided in the event of a claim, we are determined that brokers will become differentiated by being seen as unassailable customer champions.

We would like to thank all the members who responded to our A Pathway to raised standards consultation. This was a major project and will, we believe, help further raise professionalism. We will keep members updated as it develops.

Leighann ForsythHead of Communications

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We’re willing to tackle everything together – from the everyday to the most complex commercial risk. If you want more from your relationship - a global network, outstanding and award-winning claims services, and personable underwriting experts - then meet us online . To learn more about our thoughts on risk and how the world is moving forward go to FastFastForward.com.

Want an insurer who works harder to help turn risk into opportunity?

and MAKE YOUR WORLD GO are trademarks of XL Group plc companies. XL Group is the global brand used by XL Group plc’s insurance and reinsurance subsidiaries. Not all products are offered in all jurisdictions.

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MAKE YOUR WORLD GO

The_Broker_fullpage_131014.indd 1 17/10/2014 10:01:33

As autumn sets in, so the BIBA diary gets busier and busier. Our 2014 Autumn Regional Tour is now well under way and gives the BIBA Executive team the chance to both listen to and identify the key issues that are affecting our members and to set out how we have been lobbying and promoting the interests of insurance brokers.

Regional tourThe regional tour signals the genesis of the 2015 BIBA Manifesto, which will launch at a Parliamentary reception in Westminster in January so we are keen that all members have the opportunity to have their say

in what goes into our flagship lobbying document.

Party conferencesThe autumn also sees the annual party conference season. BIBA has been representing our members at the Labour Party conference in Manchester, the Liberal Democrats conference in Glasgow and attending and hosting a formal dinner at the Conservative Party conference in Birmingham.

The party conferences give us another chance to raise key Manifesto issues with politicians from each side of the house and

to get a good feel of what will be topical in the run up to the General Election.

Welcome to TeresaFinally, welcome to our new Non-Executive Director, Teresa Fritz. Teresa’s background in consumer affairs, allied to her current role on the FCA’s Consumer Panel, will bring a new dynamic to the association and members will benefit as a result.

THE BROKER ISSUE 4 / 2014 05

steve White, BIBA Chief executive

Ceo UPDAte

On MY dESkPAthwAy to RAised stAndARds consultAtionLet me take this opportunity to thank members for responding in record numbers to the consultation. On such an important subject it was important for us to hear from as many members as possible, hence our decision to actively seek responses from members. The results and next steps are set out elsewhere in this edition of The Broker but suffice to say that the BIBA Board and Executive are reacting to the clear mandate the results give. The ‘codification’ of existing requirements and guidance for members will be a significant development for the association and we look forward to sharing the next stage with members in due course.

MotoR insuRAnce issuesSection 4 of our 2014 Manifesto sets out our six point plan to reduce motor insurance costs. This has seen us meet with officials from a variety of interested Government departments and most recently with Transport Minister Robert Goodwill and his shadow, Labour MP Richard Burden. Issues involving telematics, improvements to young driver training, whiplash injuries, fraud prevention and claims management companies, to name but a few, continue to interest the politicians. BIBA remains grateful for the invaluable support we get from our Motor Panel on these and related motoring matters.

An autumn of activityDirect from BIBA – steve WHIte provides a briefing for members

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We’re willing to tackle everything together – from the everyday to the most complex commercial risk. If you want more from your relationship - a global network, outstanding and award-winning claims services, and personable underwriting experts - then meet us online . To learn more about our thoughts on risk and how the world is moving forward go to FastFastForward.com.

Want an insurer who works harder to help turn risk into opportunity?

and MAKE YOUR WORLD GO are trademarks of XL Group plc companies. XL Group is the global brand used by XL Group plc’s insurance and reinsurance subsidiaries. Not all products are offered in all jurisdictions.

XL GroupInsurance

MAKE YOUR WORLD GO

The_Broker_fullpage_131014.indd 1 17/10/2014 10:01:33

ISSUE 4 / 2014 www.biba.org.uk 06

entries open for 2015 young Broker of the year Award

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Lois is a Corporate Account Manager with Arthur J Gallagher – then known as Oval Insurance Broking

What’s your present role?I work within the corporate team in our Leicester office. We’re a team of 14 and service a wide range of commercial clients.

Why did you choose broking?Having finished an Early Years Education degree early, I returned to Leicestershire from Leeds and took on a retail job. Two-and-a-half years later, I had worked my way up to become an assistant manager position but was bored!

My father worked as an insurance broker before I was born, but always encouraged my brothers and I to find something we would enjoy rather than follow in his footsteps.

But, an SME Account Manager role came up at Oval Insurance so (rather sneakily) while dad was on holiday, I applied and got the job. I started in November 2011 and haven’t looked back since.

do you think winning this award will benefit your career?Winning has been the highlight of my career. I was delighted to win, not only for myself but also for Oval. I could not have been successful without Oval’s support. Their focus on learning and development is a credit to them. If I were looking for another job this is certainly an accolade that would stand out on my CV.

In your experience, do you think there were areas of your entry that stood out?My application for the award was a synopsis of my work and ethos – two elements which may have stood out were my work with our SME team apprentice, Evie, and my desire to give the best customer service.

How can entrants stand out?I actually do my best to keep my head down. I work hard during office hours and at home for my studies and I am honest with clients, insurers, colleagues and peers alike. I am an open book, which may be a trait some see as a weakness, but in our profession honesty and integrity is everything – the relationships we build are key.

My tip would be to be yourself – make an effort to engage in the wider insurance industry and work hard. If you do that right, being noticed comes on its own.

What about those who are unsure about entering?I only applied as one of our Account Execs here suggested it. Not wanting to appear ungrateful for his confidence in me I completed the application form. I never expected to get past the first stage of entrants. Take a leap of faith and see where it gets you.

What are your longer term ambitions within broking ?There are a wealth of opportunities and a number of paths I could take. For now though I am completely committed to developing within my current role at Arthur J Gallagher.

Q&A with lois williams – 2014 winner

BIBA is inviting nominations for the 2015 Young Broker of the Year Award – a young broker can either enter themselves or be nominated by a manager.

This prestigious event has a cash prize and an industry training programme, courtesy of the Broker Academy. The award recognises young brokers for outstanding performances and encourages professionalism. Candidates can be aged up to 35. The award will be presented at the 2015 BIBA conference, held at Manchester Central on 13-14 May.

The judges will be looking for a rising star who has contributed to their company’s success. BIBA Chief Executive Steve White says: “We’re proud to recognise emerging broking talent and we actively encourage members to nominate their young achievers for this prestigious award. We’re exploring how BIBA can play a larger part in supporting the development of the next generation of broking leaders and this award is an integral part of that support.”

noMinAte youRself oR A colleAGue At www.BiBA.oRG.uk/younGBRokeR.AsPx

Lois Williams receives her award from Lord Digby Jones and host Jon Snow at BIBA 2014


BIBA’s South East regional committee has launched a pilot to see if business-oriented social network LinkedIn can help improve engagement with local members.

The South East LinkedIn Group is a sub-group of the main BIBA group and has been set up by Chairman Sarah Cracroft and committee member Alexandra Witham, both from Everard Insurance Brokers.

Sarah says: “We want to see how social media can help members to share regional issues, network and

connect with the BIBA South East Committee”. Alexandra has been managing the group and is

encouraging members in the South East to join. She comments: “We really want members to join this group to help make the most of their regional committee. We are even planning some LinkedIn training courses to help members learn about social media.”

Members can join the group and find out more about the committee’s activities at http://linkd.in/1rRMBWM

ComplianCe ForumsScotland 5 November

northern Ireland6 November

East Midlands11 November

Wolverhampton19 November

Birmingham 19 November

Gateshead26 November

Garforth27 November

regional Tournorthern Ireland5 November

Scotland6 November

Liverpool14 November

All Regions18 November

East Midlands20 November

sCoTTish ConFerenCe6 November

lloyd’s oF london TourAll Regions17 November

yorkshire & norThernknowledge Forum20 November

annual dinnerWest Midlands21 November

agmWest of England2 December

ReGionAl dAtes foR youR diARy

South East Region launches LinkedIn pilot

Delivering our Promise is the theme of the 2015 BIBA conference and exhibition, to be held at Manchester Central on 13 and 14 May.

BIBA’s Chief Executive Steve White, says: “BIBA 2015 will take place exactly one week after the General Election and if current polls are to be believed, we may be in for another hung parliament and in the middle of coalition discussions.

“Whatever happens the political background to our conference will be dominating our thoughts in the lead up to 2015. That’s why we decided that with so much periphery ‘noise’ distracting businesses, we’ll need to focus on our core beliefs.

“For us, as an association, it is our promise to members to represent their wishes as effectively as we possibly can. And for our members, it is their promise to their customers to act as their trusted adviser and to work in their best interests in times of difficulty and hardship.”

Once again, entry to the conference and exhibition will be FREE to all employees of BIBA member firms and all brokers and intermediaries are welcome to attend the exhibition at no charge. For the first time all attendees will receive complimentary lunches.

Lindsay Campbell, BIBA Conference Organiser, says: “This year we enjoyed an excellent conference and a packed exhibition hall. We welcomed a record 5,600 attendees, heard from a former Prime Minister, a Deputy Prime Minister, two Lords of the Realm and two senior members of the House of Commons, as well as senior figures from both sides of our industry.

“We’re currently working on the speaker line-up for next year and will be looking to ensure we have the very best keynote speakers and a packed seminar programme to deliver advice and best practice for our members to follow.”

Conference 2015: Delivering our Promise

BIBA visits members in Bristol as part of the regional tour to talk broker issues

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Teresa Fritz, a personal finance expert, has joined the main BIBA Board as a Non-Executive Director, where she will provide us with wide consumer insight and guidance.

She has more than 35 years’ experience in financial services, is currently a member of the Financial Services Consumer Panel, is also a consultant for the Money Advice Service and has worked for Which?

Teresa explains she was familiar with BIBA, in particular through her work with Which? “I was impressed by the association, as unlike some, they were not just talking the talk. I worked with them closely when we did an investigation into price comparison sites.

“Too many people were buying without knowledge and simply ticking boxes. To compare properly, you would probably need to check three price comparison sites and then phone direct insurers to get a full picture, but why not use a broker to check the market for you?”

She says BIBA will also be working more closely with the Government’s Money Advice Service (MAS). “I helped build a connection here, as previously, MAS was not fully aware of what BIBA offered. There are now plans to ensure calls to MAS

about problems finding insurance will be transferred to BIBA’s Find a Broker service.”

Teresa continues: “I was also impressed by BIBA’s recent Business Insurance for Dummies guide and know they are considering doing one on car, home and travel products. These products outwardly appear simple, but are not. People need to understand how the cover works.”

Consumer champion Teresa Fritz joins BIBA

BIBA is asking members to provide us with up-to-date data on their businesses to assist in improving our services.

If BIBA has contacted you with a request for up-to-date information, please assist us by supplying this. Through understanding our members better, we will be able to ensure you receive the most relevant information.

Currently, not all the data we hold on members is accurate. For example, we may not hold details on employees outside of senior management. Kirsty Wingrove, Head of Membership says: “In recent years, there has been a huge push to encourage involvement from younger members, whether that is through joining regional committees or attending conference. Perhaps a firm has also taken on an apprentice, or someone in a non-broking role has now taken on a technical position. We want to help but presently, not enough information is filtering down.”

She continues: “Better segmentation of the membership was a core part of our recent strategic review. We will be segmenting membership into four broad categories for a more tailored proposition. Too often, our communications are sent to everyone – we want to be far more targeted.”

In addition, knowing more about members also means we can campaign more effectively for the good of brokers. Kirsty explains: “We need accurate information for our lobbying work, so that we can show exactly how important the broking sector is and the scope of what our members do.”

Kirsty concludes: “We want to ensure that we are representing all members correctly. Please look out for our data collection requests and respond.”

Better data for a better BIBA

BIBA continues its regional tour: Members in Manchester discuss broker issues with BIBA’s CEO and Executive Director

BIBA congratulates John Moore, Chairman of Thomas Carroll Group, who has been awarded an MBE for services to the financial services sector and charitable services


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MP GuIDE LAuNCHEDBIBA has launched a guide aimed at MPs to help their constituents who have problems with insurance – and to promote the use of brokers. Executive Director Graeme Trudgill says: “As part of their constituency caseload, MPs may well find there are situations such as people being unable to access appropriate cover. Our members can often help.” The guide has been sent to all MPs.

BIBA attended the three party political conferences this autumn, meeting with key ministers and MPs.

We covered a range of topics, which are relevant for members, and also held a dinner at the Conservative event (photo above). This was attended by our Chairman Lord David Hunt, Minister Esther McVey and MPs Anne Macintosh and Jonathan Evans plus Board members Stuart Reid, Kevin Hancock and Grant Scott, along with Nick Tamblin, CEO of Perkins Slade.

Our emphasis was on the burden and cost of regulation and the promotion of the benefits of brokers and careers in broking. We discussed European directives and in particular, IMD, while flood insurance was also on the agenda.

Among those we had detailed discussions with at the conferences were the Treasury Minister responsible for insurance and regulation, Andrea Leadsom; Chief Secretary to the Treasury, Danny Alexander; Business Secretary, Vince Cable; Labour Leader, Ed Miliband and Shadow Business Secretary Chuka Umunna.

Executive Director Graeme Trudgill comments: “With a general election coming round in May, there was a lot to talk about. We believe it is vital for BIBA to attend the conferences and to ensure we have a dialogue with those relevant to our sector. We had nearly 60 briefings based on our Manifesto.”

It’s party time

Ashley takes on fcA roleBIBA is delighted that Ashley Rogoff, Managing director at Ashley Page Insurance Brokers, has joined the FCA’s Smaller Business Practitioners’ Panel, replacing Ian dickinson of fellow BIBA Member Brunsdon LLP, who has completed his term of office there.

According to BIBA’s Head of Compliance david Sparkes: “Ashley is also a member of our Smaller Brokers’ Advisory Board and is sure to pick up the baton for small BIBA members, which was so ably carried by Ian.”

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BIBA has made a short animated video to promote the value of brokers, which was shown for the first time at the Labour and Conservative party conferences.

The video was broadcast throughout the events in key locations to promote the role that brokers play in helping MPs’ constituents find appropriate cover.

A version is now available for BIBA members to use on their websites and on social media. It can also be personalised for BIBA members who wish to add their own logos and voiceover.

Steve White said: “This helped give brokers a profile at the party conferences and is supporting the work we are doing to raise awareness.”

The video can be downloaded free of charge and we can provide personalisation at cost price – contact Andy Thornley for more details at [email protected]

BIBA video promotes brokers

Nicola Neill is stepping down following 23 years’ service as a BIBA committee member – including twice being regional chairman – for South Wales.

BIBA Chief Executive Steve White thanked Nicola in person for all she has done. “It’s fantastic she’s put in so much effort and we’re really going to miss her,” he said. “We certainly look forward to seeing her still at events though such as the BIBA conference.”

Nicola, an Account Broker with Thomas Carroll, joined the committee in 1991. “I had returned to work after maternity leave and no-one at the firm I worked for at that time was able to join BIBA, therefore I was asked to consider the role. At that time, I was the only female member, and everyone was very welcoming.”

She explains committee work proved both interesting and enjoyable and Nicola has been a passionate advocate for others to get involved. “I often speak out about the need for younger people to try committee work – it’s a great way to learn about the industry and

BIBA applauds Nicola Neill for 23 years’ service

Much appreciated: Steve thanks Nicola

attending events such as CII dinners provides so much insight into how insurance works.”

Nicola says someone else needs to take over the reins and she will now focus her time, both on work, but also on charitable activities. She

is a member of the Army Reserves as well as being a member of the Army Benevolent Fund – The Soldiers’ Charity Committee – as well as being Secretary to the Army Reserves’ Military Education Committee.

With the demise of the IRA threat some might suggest that terrorism is yesterday’s risk and the threat to property in the UK is largely extinct. It is true of course that the last major incident involving damage to property was the 7/7 attacks in 2005, and one must go back as far as Manchester in 1996 for an attack causing significant damage to property – in excess of £250m at the time.

However it is important that we do not mistake a change in the risk dynamics for a removal of the threat, as it seems very clear that the risk of property terrorism remains.

The MI5 chief commented in 2013 that the threat was no worse but that it was more diffuse, more complicated and more unpredictable. Indeed on 29 August 2014, the UK’s threat level for international terrorism was raised from ‘substantial’ to ‘severe’.

The definition of severe is that an attack is ‘highly likely’ although the Home Secretary said there was no intelligence to suggest an attack was imminent. The increased threat level reflects several months of concern around groups in Iraq and Syria planning attacks against the West.

Prime Minister David Cameron

described the current threat to the UK as the greatest and deepest terrorist threat in our history which given the IRA’s campaign, seems hard to justify.

Unfortunately when you consider the multifaceted nature of the threat, that of organisations that are seeking to establish a terrorist state, the numbers and capability of foreign fighters dispersing within our society and an ability to project technical sophistication, perhaps Mr Cameron’s statement is not so fanciful after all.

In the face of the clear and present – at the time – threat of the IRA it was a more straightforward judgement for clients to decide whether to buy terrorism cover or not. The fragmentation of the IRA, and subsequently Al Qaeda too, leaves us with a more dynamic and opaque risk that presents challenges for brokers and clients to decide whether cover is required and in what form.

Ultimately terrorism is just another property peril and the decision to buy must follow the same thought process as any other peril such as flood or subsidence. What is very clear is the decision whether or not to buy terrorism cover must never be left to chance and this must be a

conscious decision by a client in the light of an evaluation of the risks to their business.

These risks are diverse but sometimes very specific, occasionally related to the client but most frequently to what is around them. It might also not be a matter of damage to the client’s premises but damage affecting something in their locality that hinders their business without physically damaging it.

Finally there is sometimes a simplification of UK terrorism that suggests businesses in London are exposed to terrorism, but those outside might not be. The fact that the largest terrorist bomb to be detonated in the UK was in Manchester should start to dispel this notion.

But, a more modern perspective might be that the opposite could be true. Many of the foreign fighters returning to the UK will be from outside London and local terrorism for them might provide a better chance of success than the additional risk of taking their plot to London.

The risk of terrorism remains, in fact the threat level was recently raised to severe – and no one knows if any attack will occur in the capital or regions. steve CoAtes puts the case for terrorism insurance

Steve Coates ACII is Chief Underwriting Officer for Pool Reinsurance

Terrorism– A constAntly eVolVinG thReAt

Aftermath of the IRA bombing of Manchester in 1996

emergency crews respond to the terrorist attack on London in 2005


teCHnICAL neWs


CUstoMeR seRvICe

Ibelieve the UK has entered the era of the relationship economy, where an organisation’s success is

increasingly determined by the quality of their relationships – with customers, with partners, suppliers and stakeholders and indeed their own employees.

Relationships have always been critically important for insurance intermediaries; however there is now a much greater need for collaboration and co-creation in a world where competition appears to be ever increasing.

This is no longer about just getting the basics right, it is about a greater knowledge and deeper personal understanding of the customers we serve and indeed working across different industry sectors.

Customers no longer accept a merely transactional relationship with the organisations they choose to interact with – they expect the company to understand, be available, responsive and adapt to their needs and preferences.

Insurance must be more than just transactional and there is work to be done in both satisfying customers and building their trust says Jo CAUson

As organisations we have less ‘control’ over our relationships with customers, often relying on third parties and increasingly involving customers and partners directly in the creation of products and services. Customers are more informed, interacting with organisations in a variety of ways at a time of their choosing, sharing their experiences publicly through social media.

They no longer rate their customer experience to the sector but relate it to their wider service experiences, comparing service levels as a whole – the experience they have from John Lewis, a utility company, a bank or an insurance broker.

In a complex and rapidly changing world, the virtues of trust, transparency and being easy to do business with have moved sharply into focus.

Decline of trustIn a sense, the relationship economy is not new for insurers and brokers, but with the recent financial scandals trust and transparency have been thrust into the spotlight. There has been a decline of trust in many of the major institutions in society, with the finance sector especially hard hit.

While the insurance sector may not have suffered the damage to reputation experienced by many banks, it is likely that insurers have been touched by a general sense of malaise and suspicion regarding financial services as a whole.

This is borne out in recent research by the CBI which showed that almost twice as many people felt that insurance companies were untrustworthy rather than trustworthy – 39% to 20%, while 37% were ambivalent.

Customers need to feel they can trust that they are receiving accurate, impartial and reliable information and advice appropriate to their needs, and that those organisations will deliver on their commitments.

While aspects of consumer insurance have become increasingly commoditised through aggregators and online comparison sites, the growth in demand for niche types of insurance and business’ need for specialist and expert advice means that brokers continue to be sought by a diverse set of customers. Price and customer service are both important for customers. Our research shows that in the consumer market a majority of customers (63%) want a balance of price and service; 15% are actively seeking the cheapest deals even if it means sacrificing service; and 22% place a high value on excellent service and are prepared to pay for it.

Jo Causon is Chief Executive of the Institute of Customer Service

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Welcome to the

relationshipeconomy

In a complex and rapidly changing world, the virtues of trust, transparency and being easy to do business with have moved sharply into focus.


CUstoMeR seRvICe

The UK Customer Satisfaction Index covers 213 organisations in 13 sectors, including insurance. It is based on over 40,000 responses from more than 9,000 customers and over 3,000 responses in the insurance sector. Customers are asked to rate the organisations they have dealt with on over 30 customer experience measures on a scale of one to 10.

The results are used to produce a customer satisfaction index (out of 100) for individual organisations, for each of the 13 sectors, and for the UK as a whole.

what is the ukcsi?

It is clear that trust, transparency and ease of doing business are highly valued by customers.

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improvement and a consistent area of focus for the UK regulator, the FCA.

Insurers generally score lower than the UK average for complaint handling. This is also the area where there is greatest differentiation between the highest and lowest scoring insurance companies. The issues most cited by customers are staff attitude, staff competence and costs.

The most common reactions experienced by customers when they made a complaint were “seemed uninterested” and “made excuses”.

This is significant for two reasons. First, there is a demonstrable link between high customer satisfaction and crucial measures of business performance including recommendation, retention and repurchase. Secondly, the engagement and attitude of employees dealing with customers matters.

Where complaints are concerned with an incorrect quote or policy change they can often be rectified fairly easily without lasting damage. But where complaints are concerned with people issues, such as staff attitude or competence, it is very difficult to turn them into positive customer experiences.

Our research also suggests that the way an employee responds when a customer raises a problem or issue has a huge bearing on their subsequent satisfaction – whatever the eventual outcome of the complaint.

Customers’ expectations over speed of response are evolving

too. 10% of customers who make a complaint use social media to do so and 6% of complainants say they have escalated an issue through social media.

So how should the insurance industry respond to the challenges of the relationship economy and falling customer satisfaction?

It is clear that trust, transparency and ease of doing business are highly valued by customers. Trust needs to be nurtured through an uncompromising focus on professional standards, clear and transparent information, which lend clarity to the role of the broker and remove the potential for conflict of interest between selling insurance and providing advice.

Brokers and insurers need to invest time and resource in understanding their customers’ evolving needs, both through dialogue and ongoing relationships as well as harnessing the insight potential of social intelligence.

Sharing dataCustomer data and insight offers unique opportunities to provide customers with additional relevant and valuable services, but customers will only share data with organisations and brokers they trust.

A consistent focus on the customer experience needs to be maintained, from the point a potential customer makes contact or researches online through every aspect of their relationship. Critically, when problems occur, the manner in which these are handled can be as important as the eventual outcome; there is a need for customer service skills and emotional intelligence alongside commercial acumen. In the relationship economy there will be winners and losers.

Those insurers and brokers who maintain consistent standards, continually monitor and respond to changing customer needs and focus relentlessly on the customer experience they offer will be well placed to achieve sustainable success in the relationship economy.

Broking opportunityI believe brokers have a significant opportunity to engage effectively with customers at all levels and maintain their position as the client’s trusted adviser.

Customer satisfaction in the insurance sector reflects the national picture. While overall satisfaction with insurers is higher than the average for all sectors, satisfaction fell more sharply in insurance than for the economy as a whole – a drop of 1.3 points. In fact, for the first time, the banking and building society sector recorded higher overall customer satisfaction than insurance.

There are some encouraging signs though – insurers perform better than most companies in the UK on most measures of satisfaction, especially ease of getting through to speak to someone and speed of response.

Organisations in the insurance sector exceeded service expectations for 19% of customers but failed to meet them for 11% – slightly better than the all-sector UK average. However, handling of problems and complaints is an area of potential weakness where there is room for


CoRPoRAte stRUCtURe

At the risk of sounding a little Confucius-like, a tree cannot stand firm without the support

of healthy roots; the stronger and more extensive the roots the more the organism thrives. Likewise, BIBA recognises the importance of members in regions around the UK to its strength and depth of understanding as a trade association, allowing it to keep its finger on the pulse of the issues affecting the general insurance broker sector.

The Regional Chairs’ Advisory Board (RCAB) provides a vital element in how BIBA interacts with members in all parts of the country.

Chaired by Grant Scott, Director of RA Cowen & Partners, with Ian Langley, Compliance and Special Projects Director at Hamilton Fraser Insurance, as its Deputy Chairman, the RCAB was one of five advisory boards established in response to recommendations in BIBA’s Strategic Review.

As its name suggests, the advisory board brings together the chairmen of each regional committee in one place to provide focus and to ensure

BIBA puts enormous value on the work of its regions and our new Advisory Board will provide effective representation for them, reports vAnnessA YoUnG

Grant Scott (Chairman)RA Cowen & PartnersEast Midlands region

Ian Langley (Deputy Chairman)Hamilton Fraser, Central region

Dawn HarleyTowergate, Scotland

Trudy BrownHigos, West of England region

Sarah CracroftEverard Insurance, SE region

Sue DavidgePrescott Jones Insurance Solutions, South Wales

Paul Hatty J Hatty & Co, Northern Ireland region

John HughesTowergate, Yorkshire and Northern region

Neil BreslerCherish Insurance Brokers, Anglia region

Lauren ScheuermannJLT Group, West Midlands region

Alan DruryGriffiths and ArmourMerseyside, North Wales, West Cheshire & Isle of Man region

Should you have a query you would like to raise with the advisory board or there is an issue you want to take up with them please email: [email protected]

Regional chairs’ Advisory Board

that members in the regions have a simple route in to BIBA through which they can raise issues and concerns. Grant also takes a seat on the main BIBA Board because of his role as RCAB Chairman.

Working with the CIIGrant has been chairman of our East Midlands region since 2011 and has a long-standing relationship with BIBA. He said: “I am a broker just like our members. I work in the region and I travel throughout the UK, which gives me a real understanding of issues that affect each region and allows me to see if there are similar problems being experienced by many members. I also work with the Chartered Insurance Institute which will allow me to highlight brokers’ problems with our industry’s professional body.

Grant firmly believes that regional representation is still vital and relevant in today’s market. “While there have been many changes in the wider UK insurance world, members are still in the main regional brokers with their own interests, problems and views. Being able to voice their issues at the highest level is to most a

Vannessa Young, Compliance and AB Secretariat at BIBA

very valuable method of ensuring that they are represented,” he said.

Ian, who is also Chairman of BIBA’s Central region and is about to enter his 50th year in the insurance industry shortly, agrees: “While some of the RCAB’s interests will mirror those of the Larger and Smaller Brokers’ Advisory Boards, it will introduce the vital ‘regional’ dimension in a way that they will not, picking up regional trends and issues which the other Boards will not be aware of because their focus is more UK wide and generic.

“Insurers still tend to have

Recognising our regions


CoRPoRAte stRUCtURe

regional influence and bias. It is important to be aware of the regional differences that our members face and be able to bring a sense of balance by feeding back those regional variations that concern members to the insurers and other relevant parties such as Government and the European Commission.”

The advisory board provides a vital link between the Regional Committees and the BIBA Executive, which can filter, co-ordinate and monitor “noise” between both, according to Ian.

Recognising our regions Lobbying examplesIts presence helps BIBA co-ordinate regional activities in a more structured and efficient way and safeguard the interests of the members whom it supports and represents. For example, when the BIBA Executive asked for information to support a particular piece of lobbying work on Flood Re, individual advisory board members were able to encourage firms in their area to respond with examples about where they were experiencing difficulties finding cover for their customers, which was great for helping BIBA shape its arguments.

Grant continued: “Meeting as we do bi-monthly certainly allows us to canvass our regional members and give a direct route to the very top with these views and concerns. After all nobody knows the region and its problems and concerns better than those in that region.”

So what are the issues that the RCAB is looking at in its first year of activity? Unsurprisingly, regulation looms large on that agenda. Grant said: “Helping members find their way through the treacle of regulation that makes progress sticky is of key importance to us. Sadly, what we are seeing is that the treacle is getting thicker and heavier. Regulation is becoming a real burden on operating costs.”

Ian agrees: “I too am hearing great concern from members about the cost of regulation and the funding provision of compensation pools, the lack of a level playing field for all providers and a fear of what will come out of Europe.

“Developing appropriate and proportionate regulation of brokers and a general raising of standards, in respect of both knowledge and skills but also behaviour, will all be areas where the Regional Chairs’ Advisory Board will have vital input.”

Putting forward views on regional issues has never been easier, according to Grant: “Each region still has its own regional committee which is normally the first port of call.

However, as the Chair of the regional advisory board I want to ensure that I am available and will visit regions as and when required to ensure that they know that they have direct access to the main Board.”

Check out eventsMembers wanting to contact their local region and find out what events they are holding can look on the BIBA website for details at: http://www.biba.org.uk/RegionalCommittees.aspx. The regional committees are also always looking for new people from among the firms in their area to serve on them, so it is worth members getting in contact with their local committee to find out how they can get involved if they are interested.

Members are also encouraged to participate in the regional tour of the UK which Steve White, BIBA’s CEO, and Graeme Trudgill, BIBA’s Executive Director, are currently undertaking. “Touring the regions provides an important opportunity for Steve and Graeme to meet face-to-face with members and find out what their issues are, but to also explain to members about the progress they are making on their behalf,” according to Grant. Information gathered from members on the regional tour will be fed into BIBA’s strategy and Manifesto.

Backing the ManifestoIan is a keen advocate of BIBA’s Manifesto. “It is a great calling card and I find it very useful when talking to potential members reminding them that all these broker issues are being pursued on behalf of the sector whether they help to fund the effort or not, but if everyone behaved as they do it would not be happening.”

He added: “Members will be able to see clearly in the Manifesto that what they are telling BIBA is listened to and taken into account. I would urge all members to get involved in the consultation whether it’s through their regional committee or the advisory board, or whatever route is easiest for them, to make sure that their voices are heard and to help shape a healthy and effective association which provides root and branch support to members about the issues affecting their business wherever they may be in the country.”

Members will be able to see clearly in the Manifesto that what they are telling BIBA is listened to and taken into account.

Grant scott and steve White are focused on regional affairs


MeDIA

BIBA produced a guide on the key things to consider when using an aggregator site including looking hard at the excess on offer, suitability and the benefits of using a broker.Auto Express, 13 August 2014

Covering the gap yearStudents who take time off before starting university must make sure they have the right insurance should they choose to travel the world.

Australia, Thailand, the US or New Zealand are the most popular destinations according to travel association ABTA. The article also advised on the need for good quality travel insurance. It emphasised that cheapest is unlikely to be best and

may not cover lost luggage or extreme sports like bungee jumping.The Mail on Sunday, 18 August 2014

Tailoring holiday cover Finding the best cover for a range of holiday needs was the focus of this survey piece, which also focused on pre-existing medical conditions, with BIBA suggested as a useful port of call to find a specialist broker.Which? 1 September 2014

Opening the door to travel A man in his mid 70s said he was struggling to find a travel insurer willing to provide him with a policy as

he had numerous health conditions. He contacted The Times’s Troubleshooter section, where BIBA recommended its Find a Broker service. This has specialists such as AllClear which can cover any condition, any age and any destination in more than 95% of cases.The Times, 16 August 2014

Student survival guidance A light-hearted lesson in financial management and protection for students emphasised the need for adequate cover for personal possessions, such as clothes, books and gadgets. Help with the small print could well prove useful and BIBA was recommended as the right place to find a broker.The Mail on Sunday, 7 September 2014

Whether commenting on personal or commercial or the wider picture which impacts on insurance, BIBA will always look to promote the value of brokers, says LeIGHAnn FoRsYtH

The most recent BIBA and Acturis Insurance Price Index has shown the cost of home and motor insurance fell in real terms by 6.8% in the last year.

Our research showed that premiums fell by 4.9% in Q2 2014

compared to Q2 in 2013. This combined with the current

inflation rate of 1.9% (consumer price

index) provides customer savings of nearly 7%.

The index covers nearly £5 billion of premiums a year

and revealed that motor premiums fell by 5.6% in Q2 2014 compared to Q2 2013, while home insurance premiums fell by 4.2% in Q2 2014 compared to Q2 2013. SME cover

was flat, however, commercial vehicle policies have seen a small increase of 0.2% for the first time since Q3 2012.

Executive Director Graeme Trudgill comments: “We are pleased that the index’s data has proved so popular with journalists. It helps both consumers, and those such as MPs and civil servants get a better understanding of the market. There is a perception that insurance is expensive across the board combined with a lack of understanding about how risk and pricing structures operate.

“Our aim with this quarterly index is to show not only what the costs are but also to provide an explanation as to what the underlying reasons are, and the benefits of using a broker.

As a result, BIBA and members received the following media coverage:l BBC Breakfast and BBC Newsl Sky Newsl BBC Radio Five Livel ITV Newsl BBC Radio Scotland and Cornwalll BBC app and websitel The Timesl The Scotsmanl The Telegraphl The Independent

savingsPremium

PRess wAtch

providenewswelcome

Leighann Forsyth is BIBA’s Head of Communications

ITV News interviews Graeme Trudgill


GoveRnAnCe

Green light for voluntary code

Steve White is BIBA’s Chief Executive

BIBA has been given a clear mandate to go ahead with drafting a voluntary code of conduct for its members. steve WHIte explains the next steps to this important decision

BIBA’s members have responded in unprecedented numbers to the three month consultation on its A Pathway to Raised Standards paper which sought to explore the role, if any, the trade association should have in the developing debate around professional standards in our sector. The record response to the consultation, which saw around 55% of the membership respond with their views, means that we will now start work on developing a code of conduct for the benefit of our members and their customers.

The consultation was a big talking point at BIBA’s conference in May and at meetings held by all five of its advisory boards. We publicised the consultation as widely as possible, writing to the CEOs of all member firms encouraging them to participate in discussions. We also made outbound calls to members to ensure this process involved input from brokers of all sizes and from across the UK.

What members told us they wantNow the results are in from the consultation, they have showed us that some 75% of those who responded felt that standards did need to improve and were in favour of a code, of which 95% said that there was a role for BIBA to play in leading that work.

The broad consensus from the members who responded to the consultation was that they wanted a voluntary code with supporting guidance. What also emerged was the importance of not placing any additional obligations on members and we are keen to emphasise that any new code will not further increase the administrative burden

on members. We will instead concentrate on trying to codify standards that already exist.

A new code would interpret the Financial Conduct Authority’s 11 Principles for Businesses which are built around integrity, acting with due skill and care as well as treating customers fairly, among others. It will also take account of the Chartered Insurance Institute’s (CII) Code of Ethics. This requires CII members to act with the highest ethical standards, to act in the best interests of each client and to provide a high standard of service.

Next stepsIn light of the clear mandate given by members in response to the consultation paper, we have re-convened our working group to develop a draft code. As work progresses, BIBA will provide members with regular updates. Once approved by the main Board, members will be given the chance to comment before the code of conduct is signed off and published.

In the meantime, if you have any comment on this, please do not hesitate to contact me at [email protected]

ReGULAtIon neWs

Credit where credit is due

david Sparkes is Head of Compliance & Training at BIBA

DAvID sPARkes is keeping a watchful eye on the FCA’s work and briefs managers on the key developments that may affect themFinance arrangements provide brokers with an important tool to help give customers choice in meeting their premium obligations. Following a review in 2013, the FCA published Factsheet 003 and BIBA is recommending that members refresh themselves on the content of this document, so that they understand what the FCA is looking to see in place, should their firm be selected for the FCA follow-up review in this area, this year.

BIBA’s viewIt is important when recommending finance to a client, that the pros and cons

(to the client) have been weighed up against the alternatives, as you would for the insurance product you will be recommending to the client.

Our overall advice to members is to treat premium finance as they would any other insurance product – explain how it works, what the significant terms of the arrangements are, such as any right of the lender to ask for the insurance policy to be cancelled and have any return premium directed to them and be clear on the costs – especially where there are cheaper alternatives, such as insurer instalment facilities, available.

While some plans cost a little more, they may come with better service than available alternatives.

With consumer credit now part of the FCA’s regulatory regime and having its own rulebook (CONC), the regulator has even stronger powers in this area. To quote directly from the factsheet:

“We will take seriously any evidence of non-compliance with regulatory standards by brokers when arranging premium finance and will take action against

individual firms not acting in accordance with the requirements of our Handbook.”

FCA consults on social mediaThe FCA has launched a consultation on its guidance on the use of social media as an advertising medium and BIBA is asking members for their views as part of our response.

The regulator said the guidance is intended to clarify its expectations on the use of financial promotions in social media, because many firms either use or want to use this to communicate with their customers.

Social media covers blogs, microblogs (Twitter), social networks (Facebook, LinkedIn and Google+), forums and image and video-sharing platforms such as YouTube, Instagram, Vine and Pinterest.

BIBA’s viewThis consultation is to be expected, given use of social media is so prevalent. The

regulator wants compliance but also emphasises it does not want to prevent use of these channels.

As ever, the over-arching principle is any communications – no matter what the medium – must be fair, clear and not misleading.

Members are looking to incorporate social media more into their market, so BIBA would like members to let us have their thoughts on the FCA guidance.

It would appear that the investment sector may face more constraints, given the extent of the risk warnings that have to be shown when some social media vehicles have character limitations, but it is important brokers that are using social media are compliant.

Consultation paper GC14/6

Social media and customer communications is on the FCA’s website and there is also #smfca for those wishing to discuss the publication on Twitter.

Price comparison sites told to toe the lineBIBA would like members to help us keep a watchful eye on price comparison websites (PCWs) to see how they are complying with the findings of the FCA’s thematic review.

This review showed that some were not always allowing consumers to make informed buying decisions. Problems revealed a lack of understanding around what features were included for the price shown, a lack of access to further information to permit a customer to make an informed decision and that the excess amount entered by the client may not have been used to produce the premium shown.

BIBA’s viewThe activities of PCWs was a specific issue raised in BIBA’s 2014 Manifesto

launched in January 2014 and the FCA’s report – which was published some six months later – in effect, validated our concerns.

PCWs have also been on the European regulatory structure’s radar with [the European Supervisory Authority] EIOPA, having conducted a review of PCWs across Europe (into which BIBA fed our opinion) and the European legislators (the European Commission, Parliament and Council of Ministers) looking to bring PCWs firmly within the regulatory regime for intermediaries, via the text of a recast Insurance Mediation Directive.


BIBA’s motor panel is working hard on a number of ongoing initiatives as we look to capitalise on improving stability in the market.

We support government moves to introduce independent medical panels to bring down the cost of whiplash claims, which was also included in our 2014 Manifesto. This should help tackle the cost of motor insurance, along with the existing measure of continuous insurance enforcement and the recently introduced MyLicence to check driver

details.We

contributed extensively to the Competition and Markets Authority’s investigation into motor

insurance and are broadly supportive of the remedies put forward in this.

The panel is advising on a number of other areas, including:

l Guidance on driverless car risksBIBA’s motor panel has responded to a Department for Transport review on driverless cars.

Mercedes Benz, Nissan and Google have all revealed prototypes that

have created a buzz in the media, yet uncertainty remains as to the insurance implications.

Business Secretary, Vince Cable, recently launched a £10m competition for up to three cities to bid as locations for trials and announced a review of road regulations.

The trials are expected to start in January 2015 and last between 18 and 36 months.

We expect that the take up of driverless cars will take time but should the vehicles take off, it may fundamentally change the nature of the motor insurance market. Most accidents – as many as 95% – are caused by human error. Short term, the key issue is who is liable in the event of a crash.

l Checking out AEB at ThatchamThe motor panel recently travelled to Berkshire where they could see at first-hand the autonomous emergency breaking systems (AEB), which are being tested and accredited by Thatcham.

AEB automatically applies the brakes if the driver fails to respond in time and uses technologies such as radar, lasers and optical sensors to identify other vehicles and/or pedestrians. It reduces low speed accidents by around 20%.

l Black boxes move into the mainstreamBIBA’s motor panel recently met with the Department for Transport to discuss the telematics market, which is boosting affordability for young drivers. With growing availability and wider take-up, we also see considerable opportunity for members to provide guidance to their clients on the product.

l Backing young driver safetyBIBA had a further meeting with Robert Goodwill MP, the Parliamentary Under Secretary of State for Transport.

We covered a number of issues including views on improving young driver safety. It was announced in December 2013 that there would a delay to the proposed Green Paper on young driver reforms.

We are still working closely with the DFT on young drivers safety, including potential for classroom training, similar to speed awareness courses which when surveyed by Northumbria Police showed that 91% learnt something new and 94% felt their driving was still being influenced long after having taken the course.

Further, we are promoting our signposting service, which can also be extended to help young drivers.

Motor panel has its finger on the pulse

Thatcham’s CEO Peter Shaw welcomes BIBA’s motor committee

MotoR


A driverless car undergoes trial

Graeme Trudgill is BIBA’s Executive director

sCHeMes FoCUs

Mike Hallam is BIBA’s Head of Technical Services

GAP insurance, cleaning businesses and the private motor management facility offer valuable diversity and earnings potential for members as MIke HALLAM reports

GAP insuRAnce – the oPPoRtunity is nowIn August 2014, 72,163 new cars were registered, a 9.4% rise on August 2013 and the 30th consecutive month of growth, according to figures from the Society of Motor Manufacturers & Traders.

Innovative vehicle finance options mean more consumers are moving to leasing or financing a new car as opposed to purchasing it outright. The question for insurance brokers is does the motor insurance policy afford sufficient enough protection to the customer in the unfortunate event of a total loss?

A comprehensive motor insurance policy may offer a new car replacement if in the first 12 months of registration the vehicle is declared a total loss.

This is not a standard term with all insurers and after the first year the policyholder’s claim is settled based on the insurer’s definition of market value – the cost of a similar vehicle make, age and mileage.

This may not provide sufficient enough funds to cover the outstanding finance or assist the customer in replacing the vehicle.

Insurance brokers should consider Guaranteed Asset Protection Insurance (GAP insurance).

GAP is designed to cover the difference between the motor insurers’ total loss offer and either the outstanding finance or lease

customerWiden your

customers when they are notified of an impending substitution of vehicle.

GAP insurance when sold via an insurance broker attracts an Insurance Premium Tax (IPT) rate of 6% as opposed to the dealer IPT rate of 20% and will be between 35 – 50% cheaper than the dealer alternative.

The regulatory changes should be in place by January 2015 and now is an ideal time for insurance brokers to consider this product and the protection it affords their customers.

BIBA’s GAP scheme is operated by Jackson Lee Underwriting which provides a wide range of GAP insurance solutions including insurance broker exclusive products.

For more information, visit www.jacksonleeunderwriting/BIBAGAP.co.uk or call 0330 111 3093 (local rate).

tiMe to cleAn uPBy the end of 2015 there will be approximately 200,000 cleaning businesses trading in the UK with sales in the industry expected to hit £5.5 billion for the first time.

However, less than 20% of these businesses have adequate insurance


termination charge or pay back to the net invoice price for the vehicle. As with all insurance policies there are terms and conditions and key points are:l Market value – some GAP policies

pay the difference between the motor insurer’s settlement or market value by reference to Glass’s Guide Retail Transacted Price. The issue here is the motor insurance settlement may be less than Glass’s Guide Retail Transacted Price and could result in a GAP payment still being less than the outstanding finance or lease agreement.

l Purchase price – this is the amount paid for the vehicle and will vary in definition between GAP insurers. It should include all factory-fitted accessories, delivery costs and an amount for dealer-fitted accessories. It will exclude refundable or transferable items such as road fund licence and one-off charges such as new vehicle registration fees or arrears.

The FCA’s thematic review on add-ons addressed the sale of GAP insurance, which is deemed to be an add-on when sold with the motor vehicle.

The regulator wishes to see more competition in the GAP insurance market and is intent on imposing a deferment period as to when a motor dealer can conclude the sale of a GAP insurance policy.

There remains a significant opportunity for insurance brokers to offer GAP insurance to their

choices

covers in place to protect them from the risks they face. Unfortunately many cleaning contractors, whether they be sole traders or larger companies, do not have cover in place for any damage they cause to the property being worked on, treatment risks or the loss of customer’s keys. Who is at fault for this?

With the emergence of online aggregators the client has more choice of insurers all competing for their business and more often than not they will opt for the cheapest quote, without understanding the cover being offered to them. They are often too busy to compare the differences in cover between the quotes on offer or to consider

the consequences of buying the cheapest policy.

As a broker, do you have time to read the wordings of every insurer for every type of trade? The answer is probably not.

When a cleaning contractor damages the property they are working on or loses a set of customer’s keys it is only then that they realise their mistake.

Not only will they not have cover, but they will not have the benefit of the insurer’s help in defending the claim should they feel they have not caused any damage in the first place. Legal costs can soon mount up and only then will the true value of specialist cover be clear.

We have seen claims in excess of £10,000 for damage to curtains and carpets that have been caused by using the wrong cleaning product.

A recent claim involving a cleaning contractor who lost the keys for a student accommodation block in which there were 80 rooms will be settled for around £20,000. These specialist covers are vital to protect a cleaning business.

If your clients are not insured under a specialist cleaning contractor’s wording then you need to get in touch.

The BIBA Cleaning Scheme is provided by Gleaming Wholesale and is underwritten by Hiscox.

For more information, visit www.bibacleaningscheme.co.uk or call 0845 474 0068.

Put MotoR Business in sAfe hAndsEquity Insurance Partnerships, provider of the BIBA approved Private Motor Management facility, has changed ownership and now trades as iGO4 Partners Ltd.

Over almost 50 years from the days of Boncaster through to today’s iGO4 Partners, we have formed over 2,000 broker partnerships from sole traders to major nationals.

The majority of these broker partners are commercial brokers who decided to step away from private motor, unable to compete with the direct writers and aggregator sites but still wanting to retain contact with their clients. Some retained VIP cases, others passed over their entire book to us to administer.

Private motor business, unlike many other classes of insurance, can incur high administration costs such as staff, IT, telephone and postage. These costs can be prohibitive and almost force some brokers to avoid private motor altogether. Some grasp the nettle and offer the service potentially at a loss, while others are geared to handle volume motor and do so successfully.

The Private Motor Management facility has proved over the years that there is a proven solution offering the best of both worlds.

The mechanics of the transfer could not be simpler and a similar package is available for household business too.

In return, the broker will receive enhanced commission payable for the lifetime of each policy transferred, a guarantee that the scheme provider will not cross-sell to customers and provision of a dedicated ‘transfer’ management team based in Colchester.

For more information contact Steve Young, Broker Development Manager for iGO4 Partners on 01206 777403 or [email protected]


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MoneY ADvICe seRvICe


The Money Advice Service is here to help people manage their money better. Sometimes it only

takes small changes to make a big difference – not just to people’s bank balances but to their whole outlook on life. We help them take control of their finances and cope with life’s ups and downs.

The main way we do this is by providing free, impartial information and guidance directly to the public to help people make better financial decisions.

In 2013/14 we had more than 16.5 million customer contacts, mainly through our website www.moneyadviceservice.org.uk. Customers can also contact us by phone, email and web-chat, or book a face-to-face appointment with our national network of money advisers.

Working with othersTo reach the largest number of people we can, and to have the most impact, we know we need to work with and

through others. In many cases, other organisations will have direct relationships with the customers we need to reach, and will be in contact with them at those crucial times in their lives when they are making important financial decisions.

It is an important part of our strategy to develop effective partnerships with these organisations so we can give people the help they need, when and where they need it.

As a free and impartial service, backed by government, we do not make specific product recommendations. Often, however, customers will need this service in order to prompt them to take action, and to make sure they get the right product for their needs.

Where this is the case, we aim to give our customers a smooth ‘hand off’ to organisations which can help them – including BIBA’s excellent ‘Find a Broker’ service. We are now signposting our customers to this service where it is relevant to their needs, and our content encourages

Caroline Rookes is Chief Executive for the Money Advice Service

Building the UK’s financial resilience

With more than 16.5 million customer contacts, it is clear many people need guidance – and building partnerships, including with BIBA is a key way to do more, explains CARoLIne Rookes

customers to consider contacting a broker instead of – or as well as – using online price-comparison tools.

Debt adviceAs well as providing money advice directly, we are also the largest single funders of specialist debt advice in the UK. In the current financial year (2014/15), we have allocated £38 million to debt advice. More than £9 in every £10 goes straight to frontline delivery by our partners, such as Citizens Advice, so that the people who need our help the most get the full benefit of this important service.

We know this service works – our research suggests that around 88% of clients of the projects we fund act on the advice they receive, and more than three-quarters have reduced their debt within six months. We have a range of projects in place to increase availability, awareness and take-up of free debt advice, as well as driving further improvements to quality and consistency.

In addition to helping clients deal


MoneY ADvICe seRvICe

with their creditors and reduce their debt, our partners also seek to equip them with the money management skills they need to budget and plan for the future so they can avoid getting back into difficulties.

Financial Capability Strategy A financially capable person is one who keeps track of their money, plans ahead, and makes informed decisions based on a clear understanding of the risks and benefits of different options.

As well as the advice we provide directly or fund, we also have an important role in co-ordinating efforts to build the nation’s financial capability. In this capacity, we have been working alongside a wide range of organisations who share this goal to develop a new Financial Capability Strategy for the UK.

Following an initial call for evidence last year, and a number of in-depth meetings since, the new strategy was published for consultation in September. We hope that BIBA and its members will get involved in the further development of this work.

Financial shocksBuilding financial resilience is at the heart of the proposed new strategy, and of the Money Advice Service’s plans. Helping people

deal with the financial shocks that life throws at them – preparing for them where possible and managing them when they occur – is one of the most important ways to keep them from experiencing serious financial difficulties, and of improving their financial well-being.

Making sure people have the right insurance cover for their needs – at the right price – is clearly a major part of this. We know that too many people do not have savings or insurance to cover themselves against the impact of unexpected events – the boiler packing up just as a cold snap bites; the car they rely on to get to work breaking down; flood damage requiring costly repairs and possibly relocation for months at a time. All too often, such unexpected expenses can result in people borrowing more than they can afford and entering a downward spiral into unmanageable debt.

Few people can have failed to notice the increase in the cost of motor insurance in recent years. As successive generations of older people look to enjoy a more active retirement, and in particular to travel more widely, there have also been issues around the affordability of insurance for older people. As the economy begins to pick up, more and more people are also becoming self-employed or setting up small

businesses; this, too, can give rise to specialist insurance needs.

To try and make insurance more affordable, insurers have sometimes cut back on the cover they provide as standard, while many of the issues against which people need to protect themselves are not ‘standard’ risks.

It can be difficult for people to know where to turn to get the right level of cover at a price they can afford. This can result in customers who thought they were covered by an insurance policy, discovering too late that this was not so. In other cases, it can mean customers failing to get cover – either because they do not think they can afford it, or because it just all seems too complicated.

Our generic information and guidance can help them down the right path but often they will need specialist advice and someone to act on their behalf in getting a better deal or talking to insurers to put together a package which meets their specific needs.

Working with brokersAs a result we are very keen to work with insurance brokers to ensure our customers get as seamless a service as possible. The ‘Find a Broker’ service is an extremely useful and impressive facility, and we are currently exploring with BIBA how we can strengthen the links between the Money Advice Service and insurance brokers.

For example, we have set up the ‘warm’ phone link between our call centre and the ‘Find a Broker’ service so that customers can be put straight through without having to make a separate call, something which can sometimes prove a stumbling block to taking action.

As well as being valued partners in delivering a service to our customers, we are also eager for BIBA and its members to make a strong contribution to the ongoing work around the new UK financial capability strategy.

It is important that in the delivery of the strategy, as well as in its development, this should be a genuinely collaborative project, bringing together as wide a range of stakeholders as possible. We would urge you to contribute your views to the consultation on the draft strategy.

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97041598.indd 1 19/08/14 12:41 pm

In this issue of the Broker magazine we are enclosing our new insurance guide for the fast growing ‘sharing economy’.

Stuart Reid, BIBA’s Deputy Chairman, chaired a discussion at 10 Downing Street with a group of sharing economy firms along with representatives from the insurance industry and government to help develop insurance solutions for the sector.

Stuart says: “I am delighted that we have been able to engage with the emerging industry to look to provide insurance cover

for businesses which have found it difficult to date. It is obvious that this industry will grow and grow, based upon the model of sharing rather than ownership, and it is heartening to see the insurance industry developing new and innovative products to meet their needs.”

Insurance representatives, apart from BIBA, include the ABI, Bluefin, AXA, Towers Watson and Canopius.

The aim is to help their emerging businesses obtain appropriate insurance and understand the

common risks faced. The guide will be the first publication from the new working group.

The sharing economy has already attracted some controversy. For example, some have claimed that businesses hiring out short-term car rides are nothing more than unregulated taxi firms.

We are seeing a shift in the economy from ownership to usage, and this is not a natural fit with current insurance policies or the market. We are pleased that some members have come forward to help.

sharing economy


Finding solutions for the

Shared economy projects are showing that ownership is not always a must – but at the same time, this creates insurance issues. GRAeMe tRUDGILL reports on potential opportunities for brokers

Graeme Trudgill is BIBA’s Executive director

RePResentAtIon


The sharing economy describes businesses built on the sharing of resources, allowing customers to access goods when needed, rather than owning them outright.

It can sometimes be called the peer-to-peer economy, the access economy or collaborative economy.

One of the best known is AirBnB which helps people ‘share’ their homes to holidaymakers, while uber and Lyft allow drivers to ‘share’ their cars with passengers.

Meanwhile one British company experiencing success is JustPark, which helps drivers find parking spaces and earns money for those renting out their driveways or other space.

To date, some 20,000 people have put their parking space on the site and around half a million drivers use the service. Most demand is for spaces near sports stadiums, airports and railway stations. One church in London’s King’s Cross station has made some £200,000 so far from Eurostar passengers looking for somewhere safe to park their vehicle.

According to PWC, there are four reasons why the shared economy is growing:l Technological breakthroughs –

online sharing economy platforms are more accessible and reduce transaction costs. They provide precise measurement of spare capacity and for connections to be made easily between buyers and sellers.

l Climate change and resource scarcity – ‘accessing’ products rather than ‘owning’ them may make more economic – and environmental – sense.

l Rapid urbanisation – creates the critical mass needed for some shared economy services such as car sharing and parking space rental.

l demographic and social change – peer review systems help to regulate quality. Consumers are more comfortable in trusting this mechanism, including providing loans to ‘strangers’ in the case of peer-to-peer lending.

whAt is the shARinG econoMy?

The early signs are that the sharing economy is taking off rapidly – it now contributes more than £500 million to the uK economy and according to consultants PWC, the value of the sharing economy could grow to £9 billion by 2015.

Because of the lack of underwriting experience and the fact ‘sharing’ poses a non-standard and relatively untested risk means obtaining insurance poses a challenge. We believe BIBA members will be able to provide solutions, in partnership with informed underwriters.

These new ‘shared’ risks cover a range of areas, from car sharing to renting out a bedroom to lending tools. The key issues include separating out the ownership of the asset from the use of the asset and if the insurance is in the name of the sharer or the sharing company.

If there are members who would be interested to find out more or who believe they can already cover certain classes of business, then we would invite you to contact us at BIBA. We are planning to populate the Find a Broker directory of our website with shared services specialist brokers.

To get in contact, email Nicola Avery on [email protected]

oPPoRtunities foR MeMBeRs


Most specialist Professional Indemnity (PI) brokers and insurers are reporting an increased incidence of negligence claims against brokers. ALAn DRURY looks at the causes and ways to stem the tide

In a litigious world, where financially disadvantaged clients frequently look for someone to blame for their misfortune, brokers are increasingly finding their services subject to scrutiny, often fuelled by lawyers seeking to develop and enhance income streams.

In 2013, in addition to insurers commenting on increasing claims frequency involving brokers, two major brokers were obliged to set

PRoFessIonAL InDeMnItY

climate blameaside substantial sums in their accounts to offset claims against them by their clients.

There are a variety of factors influencing the increased level of complaints. One major driver is the publicity created by a succession of high profile claims such as Environcom and Café De Lecq.

In contrast there has recently been a ray of hope for brokers and the profession, in the Eurokey Recycling v Giles case where the court accepted that clients have a key responsibility in the renewal process to ensure the broker is aware of the correct values at risk.

However, in an economy where profit margins remain tight for many, businesses are less able to absorb financial surprises and are more likely to seek financial redress from advisers who are perceived to have failed them.

In many cases, a dissatisfied client at claims stage will now actively consider whether they could benefit from an action against their advisers, often funded by the proceeds of an ex gratia payment from the insurer.

Many will remember a world where mainstream insurers would often agree to settle claims where cover fell into grey areas – such decisions being influenced by factors such as client profitability and/or client loyalty or the value of the wider intermediary relationship.

That occurs less these days as insurers take a harder line, driven by the need to improve their own underwriting margins. Several insurers now take a view that the absolute requirement to “treat customers fairly” prevents them from considering requests for “ex gratia” settlements – although this does not prevent them agreeing a compromise payment as part of any dispute process.

Genuine claims for broker error still predominate our claims notifications and also provide a useful source of advice for brokers seeking to reduce their professional risk.

Common causes often revolve around inadequate communication to clients around the issue of changing policy terms and conditions at renewal.

These can often be missed by tightly resourced, time-pressurised brokers, with small print buried in insurers’ renewal ‘bundles’. The late discovery of an increased excess, a policy warranty or an exclusion only after a significant claim has already been notified leaves a broker’s reputation and their PI heavily exposed and with a case that can be extremely difficult, if not impossible, to defend.

One respected PI underwriter expects any client or prospective client that we present to them should have procedures which make it possible to establish a robust defence against any potential claim for negligence.

That means, in addition to well-governed firms with good processes and well-trained and qualified people, that underwriters’ positive focus is on businesses that accurately record all client meetings and communications. You need a well-maintained client file to prove that you are a good broker.

Our firm view is that it is not enough for a broker to rely on written warnings about disclosure to their clients and a presumption about the policyholder’s understanding of warranties.

We would advise brokers to ensure clients fully understand their duties and to provide sufficient explanation to enable clients to make the right decisions. Most importantly, brokers should take the right steps to ensure that they fully understand the business and insurance needs of their clients.

ofThe changing

LONDON

Court case

November 3

Legal 7 day forecast

BIBA accredited PI broker Alan drury is a director with Griffiths & Armour

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