Regulation of bancassurance: an opportunity to develop customer value
08/11/2011
Focus on consumer protection
The interventionism and stringency applied by regulators is particularly pronounced in consumer protection. The regulatory authorities have made a number of observations:
- some products are poorly understood by customers
- premium quotations for products and services are not always transparent
- the marketing of insurance is not sufficiently differentiated from that of the financial product (loan)
Fair and transparent treatment
In addition to consumer protection, regulators have also highlighted the need to adapt products to suit the situation and needs of customers. The new national regulatory frameworks may sometimes seem excessive and restrictive for the financial services industry, but nevertheless are designed to address a shared moral objective: customer value. A number of issues contribute to customer satisfaction, and therefore to customer trust:
- improving the information provided to end-user customers
- being more transparent in terms of premium quotations, eligibility and exclusion criteria, covers, etc.
- leaving the consumer free to choose the identity of the insurance distributor
- being more responsive in the handling of complaints and management of disputes
- making insurance distinctive as a voluntary/personal process and adapting mixed ranges to suit customers
- developing a closer relationship with consumers by communicating the intrinsic value of the product and the consumer benefit it delivers
The fair treatment of customers remains an essential building block in constructing a sustainable financial model. It is by analyzing their sales and marketing practices and adapting them to the new regulations introduced by regulators that financial services companies will create value for customers.
| How regulation contributes to meeting customer expectations: the example of Chile |
| The terrible earthquake of February 27, 2010 triggered more than 200,000 claims. However, the dissatisfaction of claimants with the service they received and the time taken to obtain payment raised governmental concerns over the margins made by banks, which were judged to be ‘not transferred' to consumers. The new regulation introduced with effect from 2011 controls not only the prices charged for insurance, but also prohibits banks from accessing commissions on certain insurance products, and specifically those related to loans. This example illustrates the fact that regulation has provoked responses to consumer expectations. Over and above improving the claims handling procedures highlighted as defective in 2010, the people of Chile wanted greater clarity in their policies and less paperwork, as well as information about commissions and conditions of sale in order to make up their own minds whether the insurance policy was really suitable for their needs. |
Laurence Hontarrède, Chief Marketing Officer, BNP Paribas Cardif
This new approach to our offer fundamentally changes the way we think about insurance.
