Quick to ensure their employees are being trained in the day-to-day aspects of their job, many managers have not assessed training needs at their own level. Comprehensive and structured management training is as important as that provided to employees at other levels, as Diane Walker explains
Whenever irregularities are uncovered or a firm runs into trouble - leaving policyholders uncovered and claims unpaid - there is always the ensuing search for who is responsible and an examination of the checks in place to oversee those making the decisions.
The Financial Services Authority now has the task of making sure that the insurance industry and its higher management is kept under scrutiny.
Those in senior positions must be under no illusion that it will take its role seriously and that they will be held accountable for the decisions they make. Therefore, the relevant training for those at the top - and not just for their employees - is vital.
For those looking to develop and prove their competency, there is a huge amount of training available in the insurance broking sector and the majority of firms have been quick to grasp the importance of having staff that can do their jobs effectively and efficiently and help drive the business forward.
The bigger picture
The majority of firms are drawn towards training that focuses on the technicalities, logistics and delivery of product. There is nothing wrong with this and it is clearly important for staff to know their own specific job. However, there is also a need for those operating within a brokerage to have a wider view of what is happening and how what they are doing fits in to the bigger picture. This is particularly true as one ascends the managerial ladder, and looks to what is taking place at board level.
One of the guiding principles of regulation is that people have to be competent to do their job. The FSA has not set out to be prescriptive in what this means, but rather lets firms take it on board themselves and devise a programme that will meet the required competency levels.
While not having specific targets may make meeting competency requirements slightly more difficult, it is not a surprising approach from the regulator in an industry that is so diverse and populated with firms of differing sizes, cultures and operating models. Brokers should see this as an opportunity to review exactly how their business is operating, implement something that will create benefits for the years to come and differentiate themselves from their competitors.
Training and development
There is no use in simply taking a blanket approach to training and competency, and firms must look at how they operate, what is needed and what will work best for their own business. Training and development programmes need to be part of a wider plan and interwoven with the objectives of the brokerage if results are to materialise. If courses, training and exams are taken simply for the sake of it, and because there is a training budget to get through, then the money will be wasted.
As mentioned, this does not simply apply to those working for a broker in the engine room, but also for those on the bridge.
The FSA is going to want to know that those at director level are capable of performing the job they have and that they can do so to a competent level. Directors should not only have an excellent technical knowledge of the products they deal with, but also an excellent understanding of the economic and financial aspects of the business they are running, as well as being up to speed on market-wide issues. On a business level, directors should also be aware of business management principles, how they can best drive their firm forward and how they can create a solid footing to protect the needs of the clients with which they deal.
There is no doubt that, once the FSA begins to look at brokerages and how they operate, it will not only want to see the technical training and development programmes in place for staff, but also to get an idea of how well equipped the directors of that firm are to be guiding it through the market. Training and development at board level is not as readily available as it is in other areas. However, courses and training can easily be modified to suit individual needs.
For the larger brokerages with a number of senior management needing training, it is a case of getting them together and working with third-party skills providers to draw up what is needed. For smaller firms, it is going to be a question of working with like-sized brokers, bringing together senior staff that need similar development and then going to the third-party skills providers as a larger group. Either way, tailored training in the format required is available if brokers really want it, and it should be implemented from the most senior to junior levels.
It is often very difficult to see exactly where on the bottom line the return on investment appears for training and development. The reality is that it often lies hidden and, like a good insurance policy, sits in the background until needed. Its worth will only emerge as market conditions become more difficult and staff from top to bottom come under increasing pressure. Those best trained to react, develop and move forward in those more challenging conditions will be the ones who reap the return on their investment and succeed into the future.
- Diane Walker is head of faculty risk and insurance management at the Institute of Financial Services.
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