How Consumer Duty has changed the industry – for better or for worse – and what comes next?

It’s been two years since the implementation of Consumer Duty. This industry-disrupting regulation was introduced by the FCA to boost standards across the industry – pushing providers to prioritise and evidence positive outcomes for customers.

Consumer Duty was developed to deliver good customer outcomes in products and services, price and value, consumer understanding and consumer support.

With varying degrees of enthusiasm to outright cynicism, Consumer Duty was greeted with mixed reactions by those charged with implementing it.

Some saw it as a game changing opportunity to create a customer-centric culture, while others felt it was ‘lip-service’ that got in the way of doing their day job – a series of very expensive tick boxes that would blow over in time.

It didn’t. And it won’t.

Two years later, it’s here to stay and continue the party of putting customers first.

The good, the bad and the ugly

As with several regulatory resets over the years, implementing Consumer Duty put pressure on management time and resource – and undeniably squeezed profit margins.

But for other firms, Consumer Duty has enabled them to genuinely glow-up their client strategies with greater focus on fair pricing, clear and transparent communications and better support for vulnerable clients.

Two years on, the duty remains the regulation holy grail for insurers who stand by the mantra of doing right by customers.

Businesses thriving under Consumer Duty have gone beyond just treating customers ‘fairly’ – they place them at the centre of their business model!

Putting our clients first

At Irwell, we have embraced the opportunities presented by Consume Duty.  We have implemented several measures to align our client relationships with the duty’s best practice guidance.

Firstly, we have improved the clarity around our terms and conditions in policy wordings. For example, our LEI policy wording has been updated to emphasise that customers should seek and follow advice. We have also provided practical examples within the wording where the customer may need advice which gives added reassurance and makes the wording more relatable.

In line with the regulator’s focus on improving MI to help identify, evidence and monitor the delivery of good outcomes, we have introduced a comms monitoring and training programme and updated our processes to provide quicker claims determination – a critical element of improving the customer experience.

Consumer Duty puts greater responsibility on the whole distribution chain to share client information to ensure that products and services meet the required standards. At Irwell, our business is built on mutually beneficial and respectful partnerships, so we welcome this initiative with open underwriting and product development arms. We collaborate closely with our partners to help identify gaps in the market and policy provision to ensure that niche markets are better represented and protected.

Investing in Consumer Duty compliant procedures will continue to be a business priority as we expand our client base and product portfolio. We believe there is no better way to do business that putting clients first, last and foremost.

Can AI deliver CD fit for the future?

Love it or loathe it, Consumer Duty is here to stay – the only question is how will it evolve? The proliferation of AI appears to be taking over our industry.

The FCA has indicated it will make greater use of data analytics to drive decision making on business behaviour and monitoring compliance.  Digital solutions will also undoubtedly play a vital role in helping businesses comply with the evolving demands of Consumer Duty.

From automated compliance tools to digital platforms that enhance the customer journey, how can tech adoption help humans improve client engagement and experience?

How can insurers adopt a consumer-first approach when the de-humanised tech takeover seems unstoppable?

Can non-humans truly put humans first? Can AI really deliver consumer understanding? How can tech genuinely support vulnerable customers?

We believe it’s about striking a balance between tech and the human touch.

In the liability sector, when it comes to complex risks within a niche, non-standard or hazardous business you still need human relationships. You need the reassurance that a person with years of underwriting experience in mitigating business risk has meticulously reviewed your unique circumstances. You need common sense and pragmatic judgement that no standardised AI-driven data entry can offer.

But we recognise that AI and MI can offer invaluable insights and ongoing monitoring to support all compliance considerations and underwriting decisions.

Humans and robots need to work together to achieve the best outcomes. Let’s see what they bring to the next Consumer Duty party.