Chartered status: Raising standards

Amid an industry-wide drive for improved standards, how will the CII’s consultation on changes to its corporate chartered status criteria affect firms seeking to stand out from the crowd?

Last November, the Chartered Insurance Institute opened its consultation on proposed changes to its corporate chartered status standards. Now, three months on, it seems as though everyone wants a piece of the standards pie.

One manifestation of this appetite for standards came in the form of this month’s establishment of the Insurance Brokers’ Standards Council, which targets brokers working for firms of all sizes and specialisms and aims to set industry standards as determined by its individual members.

Introducing the group to the industry, chairman Paul Anscombe said he hoped the council would work alongside the CII – but added that the group addresses a gap in the market left by existing standards organisations.

Meanwhile, the British Insurance Brokers’ Association reminded the sector it would be consulting on a code of conduct for industry standards this year.

The government has been getting in on the act too. Last year it emphasised the importance of professional standards in its Insurance Growth Action Plan, saying it supported voluntary initiatives such as the CII’s Aldermanbury Declaration.

The spotlight on standards should come as no surprise to brokers (or insurers), which are well aware of the increased regulatory scrutiny impacting the insurance sector – including at least eight ongoing Financial Conduct Authority thematic reviews – and a public demanding heightened professionalism and ethics from insurance professionals.

Indeed, public involvement has been central to the CII’s consultation, which carried out preliminary research on the expectations of customers and SMEs when purchasing commercial insurance.

Steve Jenkins, CII financial services and insurance markets director, says: “In light of the feedback, [we found out] chartered really means something to people these days because they relate to other chartered professions and expect people to be at the pinnacle of their profession. That feedback has shown now is a good time to review what the criteria are and to make sure they are meeting public expectations.”

That is not to say corporate chartered status has been around forever. It is actually a young scheme, considering the CII was granted its Royal Charter in 1912. The first brokers achieved corporate chartered status in 2007 and insurers followed soon after. The number of firms achieving chartered status has grown relatively quickly, with 150 chartered brokers and 24 chartered insurers recorded by the CII as of 31 December 2013.

 

 

Chartered changes
This large number of chartered firms has meant the CII is seeking guidance from various sources on the direction chartered status should take. The consultation paper was sent to all chartered firms and other stakeholders including the FCA, HM Treasury, and the CII’s consumer panel – with more than 30 responses received so far.

Jenkins says this is the first formal consultation of corporate chartered status the organisation has undertaken, and Axa Commercial Lines and personal intermediary chief executive and former CII president Amanda Blanc welcomes the move, believing the consultation “has to be a good thing” for insurers.

Blanc continues: “We know the professionalism initiative has to grow and evolve, and [chartered status] was never intended to be a tick-box exercise.
Professionalism is not just a guideline and a framework – it is a way of doing business. It ties in with the [sentiment of the] CII code of ethics that people are always doing the right thing and recognising what the right thing is.”

UK General group CEO Peter Hubbard, meanwhile, believes the CII’s role in cementing the industry’s reputation is the most relevant aspect of the exercise. “Increasingly over time we will see that customers or consumers will be looking for competency, and [chartered status] is a great way to deliver competency,” the former CII board member says.

Hiscox group development head Des Bishop says his company had the opportunity to respond to the first iteration of the consultation in July last year – and suggests there may be more work to be done.

“Our sense is that most of the [CII’s suggested] changes are helpful, but to make it valuable the CII has to do a lot more work on selling the message on what chartered status is to the public,” he says.

“There needs to be more of an education piece – not just by the CII, but also by the companies that have achieved chartered status. I have seen adverts in the CII press but I haven’t seen promotion of chartered insurer and chartered broker in the broader piece.”

Blanc agrees the industry needs to think more about what it looks like from the outside. “If we think we are in a good place then we are kidding ourselves,” she says. “The number of FCA thematic reviews suggests there are too many issues.”

Blanc sees the new standards as  potentially contributing to increasing public awareness of chartered status in the insurance industry: “We could do a lot more to promote it, but if you think about how much money is spent on advertising, we would never do it that way alone. It would also be through behaviour and constantly talking about professionalism within our own businesses.”

The consultation is part of the CII’s wider work on gaining insight into industry perceptions of chartered status. It regularly conducts surveys of existing chartered firms, with a 2011 review of brokers holding corporate chartered status showing staff perceptions of standards had improved since 2009.

Indeed, 82% of respondents said chartered status had enhanced perceptions of their business in the eyes of potential new staff – compared with 69% in 2009. The same percentage said the standard had also improved perceptions of their business in the eyes of existing staff, up from 66% two years before.

Jenkins is clear chartered status remains highly regarded. “It is increasingly being viewed as a differentiator, which is why it is the right time to make sure [chartered status] continues to meet the needs of customers and the industry,” he says.

However, ICB Group CEO Neil Campling disagrees with Jenkins, arguing chartered status has some way to go before it is seen as a differentiator – particularly by insurers. “I would like to see insurers [use chartered status to] differentiate which brokers they deal with and how they deal with them, but I am not seeing that materialising at the moment,” he explains. “Unfortunately there are a number of brokers that do not see [chartered status] as worthwhile.”

Campling also queries whether some brokers regard chartered status as value for money. For a firm to achieve corporate chartered status, all customer-facing staff must be members of the CII, and the company is required to pay a separate corporate fee based on its number of staff.

Regardless of these fees, Jenkins says escalating cost should not be of concern if the proposed changes to corporate chartered status are implemented: “There is not an automatic presumption that [these changes] will cost more. This is not about costs, and that kind of link should not automatically be assumed.”

Blanc also doubts costs would directly increase if the criteria for corporate chartered status changed. “There is always a cost of being more professional – [for example] having more training and development in the organisation,” she says. “There is a cost to acting ethically as well, because sometimes you have to make a profit judgement where you could make a lot of money from something – but is it the right thing for the customer?”

Internally at ICB Group, Campling says being chartered contributes to staff morale: “It is good for our staff to know they are working for a chartered broker. It gives them a sense of pride and shows we demonstrate a commitment to professionalism.”

Blanc says Axa staff are also proud to work at a chartered firm, adding: “When I was president of the CII and I was going around and talking to people all over the country, there were many people who worked for unchartered firms who wanted them to be chartered.”

Bishop adds that the passion for chartered status within the industry should lead to increased awareness among the public, which in turn could help with attracting talent to the industry – also an objective of the Treasury’s Insurance Growth Action Plan. “If you bring the quality of the sector up, you start to attract more talent. We will get a more diverse talent pool than we have currently,” he says.

Boosting public trust
Closely linked with public awareness is consumer trust in the industry, and commentators remain hopeful improved chartered status criteria will contribute to boosting the industry’s reputation. “Relative to other parts of the financial services marketplace, the general insurance market has made enormous strides and has taken ownership for driving its reputation much better than other sectors,” Jenkins says.

“The challenge we have got is that the man in the street does not draw a great distinction between different parts of the market. It is really important that all parts of the market take as many opportunities as they can to shape their own destiny, and the momentum behind chartered status is a positive contributor towards that.”

Bishop agrees the insurance sector is “guilty by association” and has been affected by the publicly denounced bad behaviour of bankers. “[The public] will only gain more trust in the industry if they really understand what chartered status means and what the benefit of being chartered means for them,” he adds.

With the CII consultation closing at the end of this month, the spotlight on standards in 2014 is unlikely to dim. Jenkins predicts any changes to corporate chartered status will be implemented this year, including a transition period for firms already qualified. He is wholeheartedly sure a refresh of the scheme is what the industry needs: “We are interested in whether this is the right thing to do, whether it will drive consumer trust and confidence, whether it will attract new staff and whether it will get government support. The answer to all of those things is yes.”

 

This article was published in the 16 January 2014 edition of Post magazine

• Tweet  
• Facebook  
• LinkedIn  
• Save this article
• Send to  
• Print this page  

• Topics
• Aldermanbury Declaration
• Amanda Blanc
• Axa
• British Insurance Brokers' Association (Biba)
• Chartered Insurance Institute (CII)
• Financial Conduct Authority (FCA)
• Hiscox
• HM Treasury
• Politics
• Professionalism
• SME
• UK General
• Commercial
• Regulation
• Broker
• Insurer