THE KNOWLEDGE REGULATION: MOTOR INSURANCE

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1 THE KNOWLEDGE Follow BROUGHT TO YOU BY REGULATION: MOTOR INSURANCE Whiplash claims, rising premiums and the huge infl uence of the aggregators have shaped the motor insurance sector like no other. A raft of reforms have appeared to tackle the UK s compensation culture, get control of claims and lower prices for consumers. But is government resource targeting the right areas? By Helen Yates THE BIG STORY p24 Our guide to recent industry reforms and regulation THE BUY p26 Will telematics solve the issues with young drivers? InsuranceTimes 19/02/

2 THE KNOWLEDGE: REGULATION MOTOR INSURANCE NEWS ROUND-UP Government measures start to cut claims The Laspo Act has begun to make itself felt on the motor insurance industry as claims decrease and premiums follow suit. False whiplash claims are also being addressed by the measures, while solicitors adopt a range of strategies to claw back lost referral fees 1 Life after Laspo: claims and the cost of motor insurance are down, signalling the initiative is working Since April last year, motor insurers have experienced a drop in claims. At the same time the cost of motor insurance is coming down, suggesting insurers are passing on these savings to customers. It has been 10 months since the Legal Aid, Sentencing and Punishment of Offenders (Laspo) Act (2012) was brought in, and just seven months since the Ministry of Justice fasttrack claims portal was extended, but there has already been a reduction in claims coming through the portal. The number of claims has fallen month on month since April, bar July when the portal was extended to include claims up to 25,000. Zurich UK motor technical claims manager Derek Barnes says: Laspo came in on 1 April. If you look at the whole of 2013 versus the whole of 2012 there was only a 2% reduction in claims notifications. But if you look from April 2012 to the end of 2012 and April 2013 to the end of 2013 it s about 10%. While part of the reforms included a 10% uplift on general damages, the cost of claims has reduced thanks to a reduction in solicitors fees. This means that insurers are paying out less overall A WELCOME DROP PREMIUMS HAVE FALLEN SINCE THE INTRODUCTION OF LASPO Source: ABI Annual average Hill Dickinson claims unit technical manager Phil Oultram says: There has been a noticeable reduction in casualty EL/PL [employers liability/ professional liability] costs, because they ve been used to standard hourly rate costs for years. Whereas, for motor, the Woolf reforms were introduced in 1999 with predictive costs, which keep the costs down. The Laspo Act is one part of a series of government and industry-led initiatives to address the whiplash epidemic. The UK is the so-called Change (year-on-year) Quarterly average Datagraphic: -8.8% -8.0% -8.9% -9.7% -8.9% Q1 Q2 Q3 Q4 whiplash capital of Europe with 78% of low-value motor personal injury claims being for whiplash, compared with an average of 48% in the rest of Europe. This costs the insurance industry more than 2bn a year, according to the ABI. One of the key drivers behind the claims culture was the no win, no fee civil compensation model, allowing for recovery of success fees from the losing party. Laspo incorporated Lord Justice Jackson s civil litigation reforms, banning referral fees in personal injury cases, lawyers success fees and After The Event insurance. The recent drop in motor premiums suggests the reforms are working. Biba head of corporate affairs Graeme Trudgill says: This is what the government wanted: their changes to manifest themselves into real reductions in premium and that s what is coming through. insurancetimes.co.uk/ analysis MoJ portal: how is it performing post-laspo? [30/01/14] 22 19/02/2014 InsuranceTimes

3 2 3 MoJ to set up medical whiplash panels The Ministry of Justice (MoJ) will create independent medical panels to assess whiplash injury claims in an effort to clamp down on fraud. The aim is to reach an agreement on the process by the end of June, which will include developing a scheme for accrediting medical experts who can assess whiplash injuries. Biba head of corporate affairs Graeme Trudgill says: You ve got to be able to identify what s a genuine whiplash claim and to have an independent panel so they can identify potential fraud. A lot of that is encouraged by claims management companies that send out text messages to people and buy data from price comparison sites and might only have a 1% or 2% success rate, but that adds up to 2bn a year. Obviously some of those claims are genuine and we want those people to be looked after, but a lot of them obviously are not, and are encouraged by these situations where you get claims farmers, doctors and lawyers who are making a full-time business out of it. For the panels to be effective, the medical experts reporting on whiplash claims must be in no way connected with the parties and should see both sides of the story, says Hill Dickinson head of costs Paul Edwards. A robust process would deter those who will try it on. insurancetimes.co.uk/ news Insurers to pay for whiplash panels [16/01/14] Solicitors exploit portal as whiplash culture persists Solicitors are adopting a variety of strategies post-laspo in a desperate effort to claw back some of their lost revenue under the new system. This includes using delaying tactics and pushing for higher general damages in an effort to get claims through the Ministry of Justice s process to stage three (where the claimant will make an application to the court to determine quantum), or to push them out of the portal altogether. Many are also understood to be offering incentives to would-be claimants. Hill Dickinson head of costs Paul Edwards says: Suddenly, with referral fees not sloshing around the system, there s far less money to play with, which has cut out the claims management companies, but claims are still out there. Referral fees linger While a fall in lower level whiplash claims suggests business is tough for claims management companies, there is a suspicion that pre-laspo referral fees have not completely gone. Hill Dickinson technical claims manager Phil Oultram reveals: They re rebranding it as post-jackson reform solutions and not calling it a referral fee anymore. But these practices are still going. Hugh James head of motor claims Paul Spiteri says: In general, we are seeing increasing consolidation of the marketplace. Many claimant firms have already formed ABS [alternative business structure] arrangements with insurers to legitimately get around the ban. I ve also heard of increasing numbers of firms looking to abandon PI [personal injury] work altogether, as the costs of reforms make this no longer commercially sustainable. Referral fees have been banned under Laspo, but there EFFICACY OF LASPO BROKERS SPLIT OVER EFFECTS How confident are you Laspo will reduce the cost of road traffic accident claims? Source: The Knowledge survey We are seeing increasing consolidation of the marketplace Paul Spiteri, Hugh James is nothing under the reforms that prevents claimant solicitors from offering their clients incentives. Claims are now driven by claimants solicitors, rather than accident management companies, Oultram says. Oultram also notes significant inflation in general damage requests, far higher than the 10% uplift in general damages under Laspo would suggest. Under damage-based agreements solicitors can collect up to 25% of the claimant s award, giving them an obvious incentive to push for higher values. Higher claim requests are also more likely to progress to stage three or go to trial. Quite a few of the big names have come to us and been fairly aggressive with portal claims, Oultram says. They will put 8% Very confi dent 19% Confi dent 33% Fairly confi dent 29% Not very confi dent 6% Pessimistic 5% No answer Datagraphic: forward some quite high value offers, sometimes they ll mention the 10% increase and sometimes they won t, and sometimes they will not enter into the 35-day negotiation process until right at the end. Then they will repeat the initial offer. If they get to stage three, very few of those cases reach a hearing they simply issue stage three proceedings to get a nominal increase in their fees. Zurich UK motor technical claims manager Derek Barnes says the insurer has seen a rise in the claims that progress to stage three in the portal. For insurers, it pays to keep claims in the portal, regardless of a solicitor s tactics. The fees will be 500 plus VAT if you keep it in the portal, and as soon as it comes out it jumps to a minimum of 1,300 for costs and slowly increases depending on the litigation, Barnes says. The emphasis is making sure we keep the right ones in the portal if we can. insurancetimes.co.uk/ news Solicitors are abusing the RTA portal [26/11/13] InsuranceTimes 19/02/

4 THE KNOWLEDGE: REGULATION MOTOR INSURANCE THE BIG STORY The regulatory pipeline: Now and next From Laspo and referral fees to the Competition Commission and repair/rental costs, to the FCA and aggregator pricing: the past year has seen a slew of reforms in the motor insurance sector and there is more on the horizon. Many of the new rules are a reaction to spiralling claims and high motor premiums. This timeline of reform is a reminder of what has happened and what is yet to come It is estimated that about one in 25 drivers on Britain s roads is uninsured, costing the honest motorist an average of 30 on their premium to fund payments made by the Motor Insurance Bureau to victims of uninsured drivers EU gender directive uninsured The Continuous Insurance Enforcement scheme was introduced in 2011 to identify registered keepers of vehicles that appear to have no insurance. Through the scheme the registered keeper receives a letter reminding them that insurance is a legal requirement and failure to act will result in a penalty Continuous Insurance Enforcement Fixed penalties for those caught rose from 200 to 300 in August 2013, with no change to the six penalty points awarded. 300 in fixed penalties Known as the European ruling on gender, it means insurers cannot use gender as a rating factor when determining premium rates and any benefi ts. Insurers predicted annual car insurance premiums could increase by 24% (Confused.com), with the impact felt most keenly by young females. 24% increase on annual car insurance premiums Although the number of uninsured drivers has fallen owing to the introduction of Continuous Insurance Enforcement in 2011, the chances of being hit by an uninsured driver in Britain are still greater than almost anywhere else in Europe. AA Insurance director Simon Douglas But a year on it appears premiums have fallen overall and only increased marginally for women aged Many insurers are instead overtly targeting their marketing at women /02/2014 InsuranceTimes

5 The Legal Aid, Sentencing and Punishment of Offenders (Laspo) Act, introduced in April 2013, incorporated Lord Justice Jackson s civil litigation reforms. It bans: referral fees in personal injury cases; lawyers success fees; and After The Event insurance. The Ministry of Justice (MoJ) fast-track claims portal was extended up to 25,000 in July 2013 and fi xed fees for lawyers were reduced. Laspo reforms (April 2013) Since Laspo was introduced: 11% drop in number of RTA claims registered with the MoJ portal 12% Increase in average awards in damages over 2013 There is also concern solicitors are using tactics to increase their fees and push through claims. The question is whether, in the absence of further reform, the premium reductions that consumers have enjoyed this year are sustainable over the medium term. ABI head of motor and liability James Dalton 2014 My Licence project The My Licence project will see all driving licence records go online in June. The searchable database will allow insurers and brokers to check speeding endorsements and other details, instead of purely relying on honesty. 15 With the new system, annual premiums are expected to drop by Competition Commission probe (December 2013) In May 2012 the Offi ce of Fair Trading (OFT) announced it was to refer the dysfunctional private motor market to the Competition Commission (CC) after a review found insurers of at-fault drivers have little control over repairs and vehicle replacements. The OFT claimed that brokers, repairers, credit hire organisations and not-at-fault insurers infl ate those costs. Our concern [with removing third-party liability for repair and replacement vehicles] is there are confl icts of interest and acceptance of liability. We re really pleased they want to ban the MFN [most favoured nation] clauses from comparison sites. Biba head of corporate affairs Graeme Trudgill In December 2013 the CC published its provisional fi ndings and possible measures. These include offering at-fault insurers greater control over car hire and repair, with caps on overall costs. The CC also wants a prohibition on most favoured nation clauses on price comparison websites. FCA REVIEW OF PRICE COMPARISON WEBSITES IN 2014 In November 2013 the FCA launched a review of 14 price comparison websites (representing 90% of the market) to assess whether they make it easy for consumers to make an informed and balanced decision about buying general insurance. We want to get to a place where consumers who use these sites buy with the confi dence knowing that they have all the relevant facts. FCA director of supervision Clive Adamson Do aggregators place too much emphasis on headline price? Source: The Knowledge survey 25% No 75% Yes InsuranceTimes 19/02/

6 THE KNOWLEDGE: REGULATION MOTOR INSURANCE THE BUY A solution for young drivers? Government plans to improve young driver safety have been delayed, much to the industry s ire, while it studies whether telematics is the answer THE UK S DRIVING T WOULD TELEMATICS AND OTHER MEASURE SAFETY AND YOUNG DRIVERS The government originally promised a green paper in spring Now postponed indefi nitely, the paper was expected to analyse options on: a minimum learning period for new drivers; improving driving lessons to include experience of driving in adverse conditions; changing the probationary period from two to three years; incentivising additional training after the initial driving test; a graduated driving licence scheme; restrictions for young drivers, such as a night-time curfew. In December the government delayed its proposed Green Paper on young driver reforms. ABI head of motor James Dalton said he was disappointed and that action is urgently needed to ensure young driver motor insurance becomes affordable and, more importantly, to ensure fewer young people are killed and injured on our roads. It is understood the transport minister Robert Goodwill is keen to carry out more research into how telematics can improve young drivers behaviour before the project can get back on track. Biba spokesman Graeme Trudgill was at a Westminster Hall debate hosted by Goodwill in January, also attended by the ABI and several telematics providers. Trudgill said: Telematics is a big part of the discussion and they [the government] are very interested in that. They want to understand how having a black box in your car or a smartphone app that monitors g-force in your acceleration speed can moderate a young driver s behaviour. We know when young people have an accident it costs three times that of a 30-yearold s accident, he adds. And a 17-year-old male is three times more likely to have an accident than a 30-year-old, so it is something we want to look at because often their premiums are very high. One area of contention in the proposed safety reforms is the imposition of night-time curfews and other restrictions. Telematics insurer Insurethebox argued against it after its survey showed that just 22% of respondents agreed with a curfew. At the debate Goodwill said the Department for Transport must strike a difficult balance between road safety and the freedom of young people. While still in its infancy, telematics is developing rapidly. Boston Consulting Group (BCG) predicts it will account for 15% of the motor market by of Its Frontline business unit managing director Mark Townsend says: The future is extremely bright for telematics. BCG doesn t currently have a telematics proposition, but we will enter that market in the next 18 months. The current products are very exciting but largely fledgling. Research by Biba shows that behaviour-based motor insurance sales have grown by 61% since June It s only going to increase more, says Trudgill. For a young driver a telematics policy saves about 80 a month, so it really can make a big difference. Number of live telematics policies since 2009 Source: Biba 300, , , , ,000 50,000 Proportion of catastrophic injury-related claims by Source: ABI Frequency Age 26 19/02/2014 InsuranceTimes

7 RENDS S KEEP YOUNG DRIVERS SAFE? Follow Datagraphic: EXPERT VIEW SOPHIE SPINK HEAD OF GOVERNMENT AND INDUSTRY AFFAIRS AND CORPORATE RESPONSIBILITY, ZURICH AN HOLISTIC VIEW OF THE CUSTOMER S WORLD age UK S BEST AND WORST DRIVERS Drivers in Yorkshire and Humber have the best driving skills in the UK, while motorists in the northeast have the worst, according to MotorMate, a driving app created by Confused.com. The app gives drivers a score of based on acceleration, braking and cornering after they have driven 200 miles. Source: Confused.com 11 1 Yorkshire and the Humber 7 2 South West England 8 3 North West England 9 4 East Midlands 10 5 London 11 6 East of England 12 7 Best to worst by region Scotland West Midlands Wales South East England Northern Ireland North East England InsuranceTimes 19/02/ The UK financial services industry is no stranger to scrutiny, and well-documented scandals and regulation of the sector have both evolved over the past decade. FCA regulation appears to becoming more prescriptive in the (potentially) Utopian aim of creating a zero failure financial services system. Despite history telling us how difficult that aim is, it remains true that principled businesses in the sector welcome regulation on conduct; nobody wants to see rogue operations getting away with malpractice. Initiatives such as the Competition Commission s review into the motor insurance market are also important. They ensure transparency in how the market operates, are sensitive to customer issues, give the industry the chance to reflect on its way of working and drive improvement where necessary. But in the insurance sector good corporate responsibility has always been a guiding light: insurers consider the implications of long-term risk as our businesses are designed for longevity. Therefore, top-down regulation in insurance is not the only compulsion to do the right thing. Selfregulating, voluntary activities demonstrating a more ethically responsible approach that combines social with economic benefits are becoming the new normal. Corporate responsibility is a growing phenomenon and companies are becoming more alive to their effect on society. Equally, corporate responsibility strategy is now integral to the business strategy. So, it s not solely about generating revenue, but taking a more holistic view of the customer s world and their challenges and acting as more than just an insurance provider. This attitude reflects the fact that consumers have become more discerning and are more inclined to buy from companies that are ethical. Simultaneously, the growth of digital communications means that unethical behaviour will be exposed very quickly. But to instil corporate responsibility into large organisations requires every employee to have performance objectives that relate to communities, customers and stakeholders. Zurich s global code of conduct runs through every employee s objectives, and regular fit and proper training and testing ensures that people are living the code. This is the minimum standard we expect from employees around the world. In practice, this creates initiatives such as mapping future risks for small and medium-sized business, taking steps to improve board diversity and the creation of the Dementia- Friendly Financial Services Charter to improve the experience of vulnerable people dealing with the industry. Corporate responsibility, reputation and treating all customers fairly are issues that brokers should be getting to grips with. Being more ethical, reliable and sustainable is investing in your business for the long term; going above and beyond what the regulator demands is another way of placing your business ahead of the competition.

8 THE KNOWLEDGE: REGULATION MOTOR INSURANCE THE SURVEY Motor woes continue In our recent survey of the motor insurance market most respondents said that fraud is not being tackled adequately, and that the current level of pricing is unsustainable for insurers in the long term 1 Has enough been done to tackle fraud in the motor insurance sector? 2 Are consumers paying too much for motor insurance? 3 Is the current level of pricing sustainable for motor insurers? 4 Are insurers doing enough to pass on claims savings to customers? 23% Yes 77% No 47% Yes 53% No 31% Yes 69% No 56% Yes 44% No 5 Which of the following would do most to lower the cost of motor insurance? 6 Which of the following reforms do you think has had/will have the biggest impact on motor insurance? 63% 50% 13% 16% 13% 13% 18% 2% 6% 6% Signposting people to a relevant broker where they can fi nd competitive cover Providing access to driving licence records Regulating price comparison sites Natural forces of competition Tackling fraudulent claims My Licence Project (Movement of all DVLA licence records online) Gender Directive Competition Commission reforms FCA review into price comparison websites Laspo (Jackson) reforms 28 19/02/2014 InsuranceTimes

9 More reforms needed to tackle claims fraud VIEWS FROM THE BROKERS To what extent does the fall in motor premiums reflect recent reforms? Source: Insurance Times survey While recent initiatives have had some success in reducing the high frequency and cost of whiplash claims, more needs to be done, according to respondents to this month s survey. Out of a slew of ongoing initiatives, nearly half said the Legal Aid Sentencing and punishment of Offenders Act (Laspo) reforms have had the biggest impact on motor insurance, with 60% being fairly confident to very confident that Laspo would reduce the cost of road traffic accident (RTA) claims. But respondents overwhelmingly felt that more needs to be done to tackle motor claims fraud (77%). A further 63% of those surveyed said that tackling fraudulent claims would do more to lower the cost of motor insurance than any other factor, including natural competition. Pricing unsustainable There has been a reported 11% reduction in RTA claims since the Laspo Act was brought in and the Ministry of Justice portal extended for claims up to 25,000. But more than two-thirds of respondents said the current level of pricing remains unsustainable for insurers, even given the fall in claims. At the same time, 47% argued that consumers are paying too much for motor insurance, despite a 9% fall in premiums during Consumers are paying too much, but, at the same time, the net premiums retained by insurers are too low, said one (re)insurance broker. Too much disappears to other parties. The unsustainable pricing is borne out by the number of insurers leaving the market, said one broker. While motor reform initiatives are necessary particularly in combating fraud many felt the 1.3m that has so far been spent on the Competition Commission s probe is unjustified. A freedom of information request by Insurance Times found that 1m of this had been spent on staffing. The cost to date was excessive inefficient and of little value to consumers, said our respondents. Competition is already fierce out here at the coal face. It doesn t need any more government intervention, said one. I doubt the fall has been the result of the reforms and owes more to insurers seeking market share at the expense of sound underwriting practice The fall is certainly a response to PI reforms, but probably an over-reaction, with some upward correction necessary The Jackson reforms have reduced the ambulance chasers. The market should stop reducing prices and instead try for once to make some money out of motor insurance Some of this decrease is due to the reforms, but lawyers are still gaming the system and not following the protocol It is simply down to the cyclical nature of the business. I do not believe insurers will pass on these savings to consumers InsuranceTimes 19/02/

10 THE KNOWLEDGE: REGULATION MOTOR INSURANCE THE PEOPLE THE BIG BROKER Mark Townsend, managing director, Frontline THE BIBA PERSPECTIVE Graeme Trudgill, head of corporate affairs, Biba THE LEGAL VIEW Paul Spiteri, head of motor claims, Hugh James THE SMALL BROKER Ray Johnson, proprietor, Independent Insurance Services and Insure Green Because the customer is genuinely central to the way we work and the decisions we make, we look at these regulatory developments as a great opportunity. We do embrace these changes, whether it s Laspo or the emerging topics coming out of the Competition Commission reviews or FCA reviews. They are topics we do feel represent good opportunities for us. Over the past three or four years, whether it s through technology or regulatory reforms, the amount that customers are paying for their insurance has reduced significantly. The figures in the market vary but it s about 12% over the past 12 months. I m quite encouraged things are moving in the right direction for UK insurance consumers. Within Frontline (the BGL business responsible for our in-house brands), our insurers loss ratios are 17 points better in 2013 than in 2012, so although prices are falling, we can see the improvements in the customer journey, the claims savings and improvements in the data quality that we offer insurers. We ve made great progress and we re really pleased to see so many different government departments have been involved in all of this. Projects like My Licence are a great demonstration of how industry and government can work closely together for the common good and actually make a difference. We believe [the DVLA database] is going to save about 15 per motorist. The success of this approach has already been demonstrated with the work we did on continuous insurance enforcement, whereby uninsured driving has decreased by more than 40%. The lobbying we did for the electronic delivery of motor insurance certificates was important for our members as it saved them a lot of money and made it much more convenient for customers. A lot of progress has been made and the cost of motor insurance has been reduced because of the changes. Hopefully, even more progress can be made in the future with further changes coming through. Whether there will be a long-term reduction in claims as a result of the reforms remains to be seen. I m not currently seeing this, though largely because I m dealing with a great deal of legacy claims, many of which were brought just before 1 April 2013 so that the old funding rules still apply. While car insurance premiums are apparently being reduced, cynics might argue that this is just a contrivance on the part of the insurance industry, with a view to achieving further reform, not least the increase of the small claim limit for personal injury claims. Ultimately, the claims culture is here to stay, having become increasingly entrenched over the past 20 years or so. We now live in a society where saying sorry is not sufficient and many people want redress for wrongs, perceived or actual. This, coupled with the economic hardship that many are still feeling, only serves to strengthen a claimant s resolve. I m hopeful that the creation of independent medical panels to assess whiplash injuries will have a meaningful impact. The recent Laspo reforms were brought in with the aim of restricting the increase in compensation culture seen in the UK in recent years and the number of fraudulent claims that have been costing UK insurers millions of pounds each year, and we agree with this stance in an effort to combat these issues. Following the reforms we have seen an overall levellingout of motor insurance premiums, together with a reduction in overall percentage premium increases on policy renewals. Claims have a knock-on effect in increasing motor insurance premiums across the board. However, the reforms do appear to be making an impact, which is encouraging, although there is a strong emphasis on brokers to advise clients of the protocols. We have for many years recommended before-the-event cover, which has in turn served clients well. WE SAY WE SAY WE SAY WE SAY Premiums are softening but insurers loss ratios are improving. A public-private approach works best. The reforms have not erased the UK s compensation culture. Brokers can steer motorists through the reform changes /02/2014 InsuranceTimes

11 Further information To access the latest statistics on road traffi c accident claims going through the Ministry of Justice portal visit: On 27 January the ABI launched its new average comprehensive motor insurance premium tracker. The tracker has so far shown a downward trend in the average premium paid over the past eight quarters. Visit: Industry-data-updates To keep up to date with progress in the Competition Commission s probe into the motor insurance market and read its provisional fi ndings visit: uk/our-work/directory-of-allinquiries/private-motor-insurancemarket-investigation The Insurance Fraud Bureau is a not-forprofi t company tasked with detecting and preventing organised and cross-industry insurance fraud. To fi nd out more about recent convictions and to read its Crash for Cash Report visit: Motor insurance is one of the best value purchases a consumer will ever make Q&A Gareth McChesney, Zurich Zurich s director, personal lines pricing and underwriting, says customer service and innovation are key to broker growth What does the Competition Commission s report into the private motor insurance market mean for insurers and motorists? Zurich welcomes the Competition Commission s investigation into the private motor insurance market. It promises to improve several areas for the industry and consumers, including claimants understanding of their legal entitlement, control of claims costs and restrictions on referral fees and better transparency in buying add-ons. What are the most sensible and workable remedies for the current problems in the market? The ban on referral fees and artificial inflation of repair costs addresses market issues very much in the consumer s interest. However, solutions proposed to deal with credit hire and costs of replacement vehicles present some complexities. With add-on products, the industry must achieve clarity about product benefits so customers can make informed choices. However, it s important that any standardisation doesn t lead to a reduction in innovation and competition. More difficult to implement is the proposed disclosure of no claims discount (NCD) scales. The Insurers need to work together to build consumer confi dence in the industry Gareth McChesney, Zurich commission has underestimated the complexity of NCD calculation in today s rating structures and providing this information to customers would lead to confusion rather than clarity. Where is more work needed to achieve fairness for consumers and the industry? Insurers need to work together to build consumer confidence in the industry and the products it provides. The commission s proposals are moving the industry in that direction but we must also return to basic principles of providing peace of mind and financial protection. Putting the customer at the heart of everything we do will rebuild confidence in the industry and reward those companies that accomplish that. The drive towards commoditisation of motor insurance has arguably led to the industry being differentiated largely only on price it s time to refocus our attention on what the customer really needs. What needs to happen for pricing to be more acceptable to the public and sustainable for the industry? Motor insurance is one of the best value purchases a consumer will ever make. In return for a relatively small premium, a private motorist can be covered against a multi-million pound claim. However, the market must return to profitability to be sustainable. Removing the costs highlighted by the commission will help redress the balance while we focus on designing innovative products at a fair price. InsuranceTimes 19/02/