My attention was caught recently by a big headline in Insurance Business UK magazine: “Will 2018 be the year of the insurance customer?” That’s a big question, but it’s exactly the kind of question I have been asking for several years. How are very traditional industries, such as insurance, embracing the need to be customer-centric in 2018?

Initially the article didn’t look promising. It talked about new certificates being launched this year by the Financial Conduct Authority (FCA). Clearly it helps the wider industry to ensure that managers are more knowledgeable and certified, but certificates will not dramatically change the customer experience of those buying insurance in the short term.

However, the article went on to talk about the impact of the Insurance Distribution Directive (IDD) – a European directive that member states need to apply into law immediately, but which will only be enforced by the EU from October 2018.

It sounds dry, but stay with me. This affects both traditional insurance companies and the new app-focused generation because it is focused on the ethical behaviour of companies that sell insurance. Most of the requirements in the IDD can be summarised with the requirements that ‘insurance distributors always act honestly, fairly and professionally in accordance with the best interests of their customers’ and that they ‘possess appropriate knowledge and ability in order to perform their duties adequately.’

That’s quite a sweeping requirement from the European regulator. Insurance companies need to guarantee that their employees have the knowledge needed to deliver an adequate service to customers and they must be fair and honest. It could be argued that competence and honesty should be expected in any industry without the need for a European regulator to go checking on company performance, but I think this is an interesting development for the wider insurance industry across all of Europe.

When exploring the development of the insurance industry there is a tendency to just focus on the Fintech angle – the startup companies launching new services that are customer-centric and often built around the smartphone interface. What the European regulator is doing with IDD is enforcing that in a regulated industry, such as insurance, all companies need to ensure both competence and honesty – regardless of how good your app looks.

At first glance, the IDD doesn’t sound like an industry game-changer, but I think it’s worth monitoring closely through 2018. How are individual insurance companies ensuring that their approach to certified competence and honesty creates a great customer experience? Leave a comment below or get in touch with me on LinkedIn.

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