You survived when Direct Line (in the 1980’s) started selling cheap insurance to consumers. Then there was the growth of the internet and price comparison sites, where we saw more people buying their personal and small business insurance based on headline information, checklists, and cost.
And how have you survived?
By adapting to the needs of the market. By making sure you provide cover that meets the needs of your customers and sourcing products for your customers who don’t fit into the standard customer/risk profile and so cannot easily get cover on-line. Many of you operate binders allowing you to provide additional services to your customers on behalf of insurers.
It’s ironic that the Financial Conduct Authority keeps reminding you to focus on meeting customers’ needs. You wouldn’t last long if you didn’t do that.
Now you have been hit again.
Were you ready for the impact of the pandemic? I bet most of your planning is about business development with a bit of business continuity thrown in. We all remember those business continuity tests where for one day we had to pretend our office was closed (a bomb scare was the worst we could imagine) and go to an office somewhere else. How much has changed in the last year. In March 2020 most of us went straight to homeworking, with equipment being delivered and online access to work systems allowing us to get working remotely fairly quickly.
The Financial Conduct Authority been talking about operational resilience for some time now. Making sure you not only meet the needs of customers but can also cope with whatever is thrown at you and, where that isn’t possible, can close down your business with minimal impact on customers (or the market).
So, you need to step up our game.
Let’s look at what the Financial Conduct Authority expects you to consider.
• You have to understand where you are vulnerable. Start with a blank sheet of paper (and maybe a group of colleagues) and start to brainstorm your services. Use this to create a list of services you provide customers and identify which could adversely affect your customers if they were interrupted. These are your key services.
- Then work out what resources (people, technology, facilities, tools, and information) are needed to provide your key services. Create a map of each process and resources used. Working with colleagues, start with a blank sheet of paper and draw a flowchart. This is also be a good time to check what people are doing matches the process guide, maybe that needs updating?
- Set impact tolerances for each key service. You need to work out what level (and duration) of interruption/disruption your customers and business, would tolerate.
Once you know and understand your key services the next stage is to get thinking about what could happen to affect your key services – these are your scenarios. I suggest another brainstorm. Keep an open mind about what can happen, we all know now that scenarios we thought would only happen in a Hollywood film can happen in real life.
Go through each key service, looking at the impact of each scenario and test whether they will remain within the tolerances you have set. If not, you need to create a Plan B (and maybe C and D). Once these are in place, they need to be tested – regularly - and by different teams. Use the testing to identify gaps and make improvements to your Plan B etc.
Lastly, don’t forget to develop an internal and external communications plans for when key services are impacted. Both staff, business partners and customers need to know what is happening.
Don’t be like the local travel agent (through which I booked a holiday last year) that (during this pandemic) has provided no information about refunds. It continues to consistently post on social media about new holidays you can buy. It’s not a good look.
Don’t be disheartened if you have struggled in the last year. It has been difficult for many of us. Things can go wrong; this is not a perfect world. The Financial Conduct Authority and your customers will be forgiving if you learn from your operational disruptions. I believe the most important thing you can do in recovering from an interruption, and specifically the impact of the Covid-19 pandemic, is to reach out to your customers in a genuine way. Let them see the face behind the business and what you are doing to make things work for them.
I believe this last year has shown the public the importance of getting good cover and advice when they buy insurance. It will be interesting to see if we will move on from the “cheapest is best” attitude of many customers, once the impact of the pandemic is just a memory and those businesses currently fighting for their lives are either back to thriving or no more.