Benefits of public information and education

Consumers continually appear to underestimate the importance of business of insurance to the community from an economic perspective, as well as in supporting the security of the community’s way of life.

The Australian and New Zealand Institute of Insurance and Finance recognizes that there are a number of strategies that will influence consumers‚ views about the business of insurance, its contribution to the community and the importance of its role in their lives – and their spending habits. The institute believes that professional associations can play a vital role along with the industry and regulators in all these sectors to improve the perception that consumers hold of our industry.

There must be a multi-faceted approach to enhancing consumer confidence in our industry throughout Australia and Southeast Asia by:

• Ensuring appropriate legislative controls, regulatory standards and good corporate governance are in place.

• Ensuring the long-term sustainability of the industry.

• Implementing strong education, training and high ethical standards for industry practitioners to ensure they, at all times, deliver the highest standard of products and services to the public.

• Having better data gathering about the insurance and finance sector, resulting in better communication to the general public about the contribution that insurance makes to our community/economy.

• Communicating to the public about the benefits of insurance, starting at an early age with improved financial literacy in schools.

•Working further on improving the language and terminology used when describing insurance products.

Working in partnership

Clearly, the industry, government and regulators need to work in partnership across several issues.

Regulatory, legislative change and corporate governance. While the major tasks of stabilizing the industry and making it financially strong again are being worked upon and much discussed, the institute is advocating that the industry not formally embraces full professionalization. That involves the full rehearsal of insurance theory and practice, adoption of a recognized body of knowledge together with legislated status and the industry working cooperatively to enhance the community’s understanding of insurance and of the importance of the insurance function to the community.

Return to sustainability. It has become apparent that the community needs to better understand the range of insurance products it buys as well as its rights, responsibilities and options in relation to insurance. Consumer education also needs to ensure that the public and industry understand the "mutual responsibility" of the relationship between insured and insurers, ultimately benefiting the long-term sustainability of the industry.

Australia’s insurers, distributors and connected industries have a crucial interest in the long-term viability of insurance as a product valued by the community. It will be an ongoing challenge for the industry to redress community concerns about the sustainability of the insurance industry and to highlight the importance of insurance to individuals.

Professionalism, skill development and ethical conduct. As an industry, we are recognizing the benefits of increased professionalism of our people not just in their technical skills but in their communications, their ethical stance and in ensuring that employees have a commitment to their ongoing professional development so they can provide the highest level of service to their clients. All of these factors directly impact upon the perception in which the industry is being held by the community.

There will be other long-term benefits to the industry in attracting the best possible people to the insurance sector if we can demonstrate the value of insurance to the community and also convince potential insurance-sector employees that they can have a financially, intellectually and emotionally rewarding career in our industry while making an important contribution to secure the economic well-being of our society.

(To be continued)

(Fitzpatrick is the chief executive officer of the Australian and New Zealand Institute of Insurance and Finance. This piece was reprinted from the Asia Insurance Review magazine.)