Wake up call needed for consumer awareness

In recent years, major progress has been made in educating brokers on the specifics of liability cover. But often the underwriters leave the consumer education part to the intermediary.

However, the Financial Services Board’s (FSB) Treating Customers Fairly (TCF) roadmap suggests that it is a collective responsibility of the underwriter and broker to educate the end consumer. As a result, the use of innovative tools can make it easier to align cover with exposures as these can be shared with the client via the broker.

Failure to comply with this will mean that companies run the risk of infringing the outcomes set out in the TCF document. The FSB has indicated that it is going to take a no nonsense approach with these companies and will impose heavy punitive measures onto them.

Ignoring the issue

One of the main obstacles in the consumer education process is the fear of ignorance on the side of the broker. In many instances, the intermediaries are not comfortable discussing the specialist covers for fear of having to answer questions they are not prepared for.

Given that most of the commercial insurers rely on intermediaries to market their products, this presents a significant challenge.

This situation is exacerbated by complex policy documents, which have evolved from years of experience in handling claims in the specialist liability arena. Naturally, many underwriters are reluctant to let go of these tried and tested contracts even though the modern consumers demand more simplified policies. This makes it a difficult process for underwriters and brokers to align contract certainty with consumer expectations.

Carrying out a difficult task

Most intermediaries would also point out that it is especially difficult to educate the end consumer on liability insurance, because unlike property insurance where the value of the asset is known and the perils that may cause damage or loss are finite, liability insurance really delves into the intangible risks.

The losses that may be incurred by third parties in a variety of different scenarios can be difficult to comprehend. This is why it is very important for intermediaries to avail themselves of the experience of professional underwriters.

Investing in technology to assist brokers in explaining the exposures to their clients is vital. In our 29 years of liability underwriting experience, we have learnt that it is very difficult to talk insurance with a broker, and their client, if they do not yet understand what they are exposed to. Once you know what could go wrong, it is an easier process to find the right insurance product.

Go internal with legal

The ideal would be for insurers to have access to in-house legal experts who are able to share claims scenarios with brokers. It is one thing to discuss coverage, but it is much more important to share real, practical examples.

Many companies have a number of legal professionals on their team. This is backed up with some experienced liability minds, who are available anytime to speak to intermediaries.

Commenting on topical issues in the general media is another way of educating the public on the different angles of liability and liability cover. A case in point would be the recent mall robberies where awareness was raised around the possible liabilities for property owners.

The absence of liability cover or an inadequate liability policy can definitely result from poorly educated brokers and consumers. Clients often remain in a state of what we call optimistic ignorance thinking that the bad stuff will not happen to them. This means insurance professionals are sometimes accused of being fear-mongers – which is a harsh label. The reality is that a good insurance practitioner is able to raise awareness of the scary stuff whilst being informed enough to suggest the most appropriate solution.