The Upside of Risk Management

No. 55 , February 2015 The Upside of Risk Management: Delivering Fair and Appropriate Outcomes for Our Customers Interview with Marco Vet+ How do you compare the insurance industry with other industries, in terms of customer satisfaction of products and services? Generally speaking , I believe most of the customers of insurance companies are quite happy about their insurer. We see increased customer satisfaction due to more transparent products, better and more meaningful information provision on the purchase , and straightforward claims- handling processes. In that regard , I do not see a big difference between the insurance industry and other industries when it comes to customer satisfaction. OK, there has been some room for improvement. Basically , customers expect the same from an insurance product as they would expect from any other product they buy like , for example , food and cons umer electronics. They want to have a decent product that meets their expectations at a reasonable price, and that need has not always been met by the industry. Transparency is , for all the decisions that consumers take , absolutely key. They need to be in the position to assess both the quality and the price with relatively low effort. What makes insurance products a bit different from other products is the fact that the risks covered by the insurance policy can sometimes be complex and the time that passes between the purchase of the policy and the claim moment can be quite long. This especially counts for life policies. As a result , it is for a consumer not always easy to predict the quality of the product over the total lifetime. Furthermore , for some insurance product s, these characteristics make it difficult to assess upfront whether the policy indeed serves their true needs and whether it is reasonably priced. At the same time , we should not exaggerate the difference. Not all the products are that complex , and there is a tendency towards more and more standard ised products. Especially in the area of P&C insurance , we nowadays see products that are fairly easy to compare , and this makes the choice for customers easier. I definitely encourage this developm ent and I do believe that , in the near future , insurance products will be further standard ised. At the same time , there will always remain products that are more complex , given the nature of the risks they are supposed to cover. For these products , Insurers have the task to make sure the customer truly understands the risks that are covered via the policy. If a product is not suitable for the client , the insurer should give honest advice and direct h er/him to other and better ways to cover their risks. The goal for an insurer should always be to deliver fair and appropriate outcomes for its customers! As we say within Achmea: the customer’s voice needs to be a permanent factor in our business operations. Can you give some examples of market misconducts that hurt the reputation of insurers? Striking examples of misconduct are the private pensions scandal and , more recently , the PPI mis -selling in the U.K. market. A more nearby example for me is the life investments policies that were sold in the 80s and 90s in the Netherlands. Driven by advantageous fiscal treatment and booming stock markets, these policies were extreme ly popular. It looked as if nobody wanted to see the risks attached to these policies and there would be only winners in this game: the customers, the advisors and the insurance companies. Too good to be true and indeed , it was not true. It taught us as insurers some hard but necessary lessons on , for example , product development, cost loadings , + Director of Risk and Compliance , Achmea.