INSIGHT & HORIZON SCANNING

UPDATE - JULY 2024

At Covéa, we are committed to strengthening our partnerships with brokers. To accomplish this, we have introduced a monthly industry insight and horizon scanning newsletter. In this update, you will receive a variety of product-specific, regulatory, and risk-related insights aimed at providing value to you and your team.

KEY INDUSTRY INSIGHTS

Follow the links for the original article

The New Government Needs to Tackle PL Claims Backlog, Make System More Accessible

The Association of Consumer Support Organisations (ACSO) has called on the new Labour Government to follow through on a pre-election promise to investigate the private motor insurance market after latest quarterly figures from the Compensation Recovery Unit (CRU), showed the lowest overall personal injury claims and RTA claims on record. It has been said that the figures contradicted insurers claims that soaring premiums are being driven by claims costs.

Key Points

• 🚨 Claims Backlog: The backlog in personal injury (PI) claims is causing significant distress.
• ⚖️ System Accessibility: There's a need for the system to be more accessible and easier to navigate for claimants.
• ⏳ Speeding Up Process: Reforms should focus on speeding up the PI claims process.
• 🔍 Transparency: Enhancing transparency in the claims process is crucial.
• 💼 Government Action: The new government must prioritise addressing these issues for the well-being of affected individuals.

For more details, read the full Insurance Edge article here.

Employee Living Costs: Almost Nine in 10 Worried About Bills

Furthermore, four in 10 ‘live payday to payday’, according to new research carried out by WTW. There was an increase in employees who felt worse off financially today compared to a year ago, rising from 24% in 2019 to 40%. Main cost concerns were food, housing, transportation and interest charges. Around 60% of people said the worry about costs was negatively affecting their mental wellbeing.

Key Points

• 💸 Financial Worries: Almost 90% of employees are concerned about basic living costs.
• 📉 Worse Off: 40% of employees feel financially worse off compared to last year.
• 🏠 Cost Concerns: Main worries include food (77%), housing (71%), and transportation (71%).
• 🧠 Mental Well-being: Financial stress negatively affects mental health for nearly 60% of employees.
• 🔄 Retirement Plans: 39% of employees over 50 expect to work past 70.
• 💼 Employer Support: Only 24% of employers prioritise financial well-being programs.

For more details, visit the full Personnel Today article here.

Signed, Sealed, Delivered – The Demise of Customer Experience

Customer experience over the last few years has diminished by 57% (Customer Contact Week Digital) with one of the biggest challenges with companies not handling complaints well - The Customer Satisfaction Index (UKCSI) stated 17.3% of UK customers are experiencing a product or service problem, the highest overall level since records began in 2008, costing British business £9.24bn a month in staff hours. Customer complaints are seen as the answer to improving products and services, by listening to what you are doing wrong, you can correct it; 70% of the customers’ journey is dictated by how the customer feels they are being treated, so you have to exceed expectations to demonstrate you value them.

Key Points

• 📉 Customer Experience Decline: A 57% drop in customer experience levels.
• 🚫 Complaint Handling: Poor management of complaints leads to customer dissatisfaction.
• 🔍 Listening to Complaints: Essential for improving products and services.
• 🏢 Customer-Centric Culture: Integrating this culture is vital for better service.
• 📊 Data Analytics: Important for understanding and improving customer interactions.
• 🛠️ Strategic Use of Technology: Planning and executing tech solutions carefully to enhance the customer journey.

For more details, read the full Insurance Edge article here.

Underinsurance is a Pressing Concern: New Survey

Underinsurance is now a pressing concern with 25% of high net worth (HNW) clients having reduced their coverage during the past year – this represents a 10% increase on the number recorded in 2022, new Ecclesiastical research has revealed. Almost a quarter of brokers believe all HNW clients are underinsured with buildings, jewellery, contents and watches being the areas in which clients are most underinsured.

Key Points

• 📉 Customer Experience Decline: A 57% drop in customer experience levels.
• 🚫 Complaint Handling: Poor management of complaints leads to customer dissatisfaction.
• 🔍 Listening to Complaints: Essential for improving products and services.
• 🏢 Customer-Centric Culture: Integrating this culture is vital for better service.
• 📊 Data Analytics: Important for understanding and improving customer interactions.
• 🛠️ Strategic Use of Technology: Planning and executing tech solutions carefully to enhance the customer journey.

For more details, read the full Insurance Business Mag article here.

Burrowing badgers, falling TV aerials and oil leakages have led to millions of pounds' worth of home insurance claims being paid out to customers

Oil leakages have caused £68m to be claimed by households in the last five years. More than 200 claims have been made due to damage caused by falling TV aerials, leading to £725k in payouts. One of the more surprising claims found one badger burrowing a hole under their home, which caused the ground beneath the house to sink.

Key Points

• 🦡 Unusual Claims: Claims include damage from burrowing badgers and oil leaks.
• 📺 TV Aerials: Over 200 claims made due to falling TV aerials, totalling around £725,000.
• 🚰 Oil Leaks: £68 million claimed for oil leak damages in the past five years.
• 🧊 Common Issues: Accidental damage, water escape, and broken fridge freezers are prevalent.
• 💵 High Payouts: Water damage claims exceed £1.7 billion since 2019.
• 📈 Rising Premiums: Home insurance premiums have increased by 19% in the past year.

For more details, read the full Your Money article here.

Professional brokers are outperforming price comparison sites, banks, building societies, and insurers in building consumer loyalty and confidence

The Chartered Insurance Institute’s (CII) shows a growing gap between consumer expectations and their actual experiences with insurers, marking the widest disparity since the survey’s inception. CII’s group policy and public affairs director, Dr Matt Connell noted that consumers rated brokers’ performance as better than any other for buying insurance. The results underlined the importance of interactive advice to consumer understanding.

Key Points

• 📉 Consumer Loyalty: Professional brokers outperform other insurance channels in building consumer loyalty.
• 📊 Public Trust Index: Shows growing gap between consumer expectations and actual experiences with insurers, the widest since 2019.
• 🚫 Complaint Handling: Insurers need to improve in handling claims professionally and efficiently.
• 🔍 Opportunity Gap: Increased to +10.59, the highest since May 2020.
• 👥 Consumer Confidence: Similar trend in confidence, with an opportunity gap equaling the previous peak of +8.44.
• 📈 Satisfaction Rates: Overall consumer satisfaction dropped to 85%, with notable declines among younger respondents.

For more details, read the full Insurance Business Mag article here.

Brokers are having to pay higher salaries with vacancies taking longer to fill

The scale of the recruitment challenge for the broking industry has been laid bare, as Aviva’s Broker Barometer data shows that compared to last year, more brokers are recruiting, vacancies are taking longer to fill, and more brokers are paying more than expected for new hires.

Key Points

• 📈 Increased Recruitment: 94% of brokers are recruiting, up from 71% in 2023.
• 🕒 Longer Vacancies: 40% of vacancies have been open for four months or more, compared to 23% last year.
• 💵 Higher Salaries: 72% of brokers are paying more than expected for new recruits, up from 58%.
• 🚪 Brain Drain: One in three vacancies is due to staff leaving for other sectors.
• 🏫 Training Programs: Aviva supports brokers with apprenticeship programs and leadership development.

For more details, read the full YouTalk article here.

Most renters would take out income protection if it contributed to their credit rating

This is according to research from Canopy and LifeSearch conducted with 594 Canopy customers which saw more than half say that it would be very useful for it to support their financial track record. The survey also found 74% of renters lacked the safety net of income protection, while just 8% said they had a protection insurance policy designed to replace their income.

Key Points

• 📊 Significant Interest: Most renters are interested in income protection insurance if it benefits their credit rating.
• 💡 Dual Benefits: Renters favour financial products that offer both income protection and credit score improvement.
• 📈 Policy Design Potential: Insurers can tap into this interest by creating policies that address renters' financial priorities.

For more details, read the full Health and Protection article here.

Nearly half of UK adults now living in financially vulnerable circumstances

The latest customer segmentation research revealed almost three million people have fallen into financial difficulties over the last year.  Without credit, insurance or savings, everyday events and unexpected expenses could force many to tip into problem debt. Consequently, people face paying more for being poor or being excluded from financial services altogether.

• 📊 Financial Vulnerability: Nearly half (49%) of UK adults, equivalent to 26.6 million people, are living in financially vulnerable situations.
• 💸 Cost of Living Impact: Rising costs for essentials like food and energy have increased financial strain, pushing more people into financial difficulty.
• 🏦 Debt Challenges: A growing number of individuals struggle to keep up with essential bills and debt repayments, exacerbating their financial vulnerability.
• 📈 Financial Literacy Growth: There is a positive trend in financial literacy, with more people becoming aware of financial products and services.
• 🔍 Demographic Disparities: Young people, low-income households, and those with health issues are more likely to experience financial vulnerability.
• 🏥 Health Consequences: Financial difficulties are linked to negative mental and physical health outcomes, impacting overall well-being.
• 🤝 Policy Interventions Needed: The article highlights the need for targeted policies and support systems to assist financially vulnerable individuals.

For more details, read the full Fair4All Finance article here.

Thank you for taking the time to read our newsletter. We hope you found it insightful. Please look out for our next issue next month. If you'd like to see more from us in the meantime, please follow us on LinkedIn and subscribe to our podcast on Spotify.