Martin Wheatley, the new CEO of the UK’s Financial Conduct Authority, has been described as “shooting first and asking questions later”. One thing he has firmly in his sights is making sure that another Payment Protection Insurance (PPI) mis-selling fiasco does not occur.
On the whole, such situations arise due to the combination of a specific set of circumstances. Firstly, sales people being encouraged to sell in inappropriate circumstances to the wrong customers, secondly lack of oversight by their management to stop it happening, and thirdly a complete lack of audit trail to determine what was actually said when making the sale. Faced with that, most financial services organisations have no option but to just roll over and pay up. That is exactly what happened with PPI to the tune of billions of pounds. So how can insurers stop it happening again?
The integration of next-best-action (NBA) marketing technology applies predictive analytics in a sales interaction to work out what the best offer is to make to a customer. This is based on everything you know about that customer from all your available data. Or, alternatively, it prompts you to ask the crucial question if you don’t already know it, e.g. are you self-employed? On that basis, your sales team will be much more likely to make offers to people who are genuine targets for your products.
By having rules-based systems which control not just the data involved in any customer interaction, but also the intent and process, insurers can gather management information about how their operators are performing from a quality and regulatory perspective too. It won’t manage your staff for you but it gives a decent manager the information they need to do their job effectively.
Finally, a full audit trail which records exactly what happened during an alleged mis-sale, logged down to the level of every operator’s keystroke and the fraction of a second, gives the insurer a good basis on which to evaluate the inevitable claim. If the insurer is smart, this can significantly reduce the attention of the regulator, referrals to the Ombudsman and the magnitude of pay-outs.
So, which insurers are going to make the smart investment now? Which ones will be left behind, playing catch-up and losing customers in droves? After a long time in the industry, I could probably write you the list of both right now – but that would just be too contentious!
There’s one thing we can all probably agree on, however: the organizations that change now will be far better equipped for tomorrow’s challenges. Whether that means grappling with new regulations, expanding operations, hiking revenue, or becoming more risk averse, the advantages couldn’t be more significant.