Paul Evans closing remarks
ABI Motor Conference
2 December 2014
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Good afternoon everyone.
It seems to be my eternal lot to take the last session of the day, or I suppose really yours to have to listen to me, but rest assured that I will keep this brief.
Firstly, I would like to say a few words of thanks before bringing our day to a close. Thank you all for coming today and for engaging in the break out sessions - I hope you've found the day useful. It certainly seems there has been lots of interesting discussions.
I would also like to thank everyone who has helped make today happen – the team at the ABI, our guest speakers and to our generous sponsor, DAC Beachcroft.
Of course this year I speak with the wider brief as the chairman of the ABI. But in this new capacity, my personal priorities are exactly as they were before - to support our members to help make our markets work more effectively for our customers, so that they get a great deal from us, and so that we earn the trust of a society that we work so hard to protect.
Motor insurance has always been at the heart of this for me - the battle ground on which there is so much to fight for.
As I sat down to consider my speech for today, I thought back to the topics that we discussed at the last two motor conferences – topics such as whiplash, the compensation culture and the industry that formed to exploit it - both outside, and embarrassingly within our own industry - that so drove up our premiums - topics such as young drivers and the role of telematics to make premiums more affordable.
I think we would reflect that we've made good progress - but there is always more to be done, in particular to drive out the fraudsters, and those who would promote false claims at the expense of innocent drivers.
The Government is part way through a set of reform proposals which will certainly help - independent medical panels, the banning of incentives to would-be claimants and a new ability to dismiss fundamentally dishonest claims - are all to be welcomed, but I am sure I am not the only person in the room that feels we could all go further still to make life even more difficult for the determined fraudster.
The Government should seriously look at proposals to provide a workable and assessable definition of whiplash. Further, judging by the automated call I receive on my mobile every single week, there is clearly much more to be done to ensure good behaviour in regard to claims management company communications or telemarketing strategies.
Looking now to the future, our theme for this year’s conference has been 2015-2020. Allowing us all to fast forward and imagine where we might be at the very same conference in 2020. Personally, I believe we will have witnessed the beginning of an enormous shift in the motor insurance market.
Nowhere is that shift more obvious than in the area of autonomy. Next month will see the beginning of three trials in designated regions of the UK designed to lay the groundwork for bringing semi-autonomous vehicles to our roads.
Each trial has formed a consortium of interested partners which have pooled talent and resources and worked together for the benefit not only of the individual businesses involved but also for a wider social and environmental benefit.
It will be fascinating to see where this technology takes us and how quickly. Insurers must act as enablers and not throw up road blocks to the initiative - if you'll pardon the pun. Already we can assume that there will be different insurance needs to cover personal, product and perhaps even infrastructure liability. As cars become connected and autonomous, cyber risk will take on a whole new dimension!
There will inevitably be a period of time when highly automated vehicles and non-automated vehicles are operating on the same roads at the same time within two distinct regulatory environments.
Why distinct? Distinct because the very concept of driving will need to be reconsidered. What will “driving” mean? What about “monitoring”? We will need legal definitions of “intervention” and “ceding control”, for example, because the very behaviour associated with driving will alter over time as the human driver is eventually replaced by intelligent robotics.
There is clearly an opportunity for our own industry to develop products that will accommodate such change and manage the risks that come with it. That is our business interest, our area of expertise and what we are good at it. And by doing so, we will be contributing to the expected fall in the number of accidents, the reduction of congestion, and the benefits in future town and city planning.
I do not think for one minute that autonomy represents a silver bullet - but over time it has the potential to reframe the debate. Similarly, I don't think we can expect our roads to become swamped with autonomous cars tomorrow, or maybe even by 2020, but we do need to begin to develop our thinking.
We play a significant role in society by allowing people to manage the risk in their lives and mitigate the damage if something goes wrong. As innovation impacts their lives and the risks they face, so must we innovate too.
In an ideal world nothing would ever go wrong. But we do not live in an ideal world and right now too many customers who buy our products do so with a hope – rather than an expectation – that in their hour of need, their policy will deliver the goods. This can’t be right. We are judged, understandably by our customers, on the trust that we can instil and every one of us must work harder to earn the trust of our customers.
Take the subject of customer data. Collectively, we are spending millions to harness the insights we can glean from customer data, and over the next five years we will inevitably be faced with many sensitive issues that will flow from the use of that personal data. Better connectivity and an ever increasing reliance on technology means that companies who hold, collate and manage large amounts of customer data will be put under the microscope. We must do more to anticipate and manage those challenges so that our customers know how we'll gather, protect and use their data for their advantage - not the advantage of others.
It is crucial that consumers truly believe that we will always use their personal data responsibly. The temptation will be to exploit the information, for better or for worse, delivering short term bottom line results for our businesses; but we must resist that. We simply will not retain trust if that is how we behave. Rather, we must explore and, in all probability, deliver an industry wide code of conduct. The regulator will, quite rightly in my opinion, be looking at this area closely and so will legislators, and we cannot simply wait for them to act. The ABI has a crucial role to play in this debate.
Of course there are many features of our market which secure our customers' trust. In the vast majority of cases, we are there when our customers need us, and simply do a great job with their claim. But there are still features - which have evolved over time and in response to market forces, and even past regulation - which undermine trust. Our terms and conditions are indeed often too complicated, and it can be too difficult to understand what is covered and when. And we work in an industry which offers lower prices to new customers we know little about, than loyal customers we understand well.
The FCA are currently investigating bank teaser rates - we are already seeing some banks abandon this practice - and it seems plain to me that we should expect the FCA to quickly apply the same thinking to our products.
We should not be afraid of these reforms, nor should we be dragged kicking and screaming by the regulator to make them. Of course competition laws prevent us acting in concert, and a fear of competitive forces often prevent any of us from going alone. But we should use the ABI to develop proposals which seize the agenda for the benefit of our customers. It won't be easy - there will be lots of conflicting agendas amongst us - just as there were with the debacle of credit hire where our failure to put up a United front has left a dysfunctional component of our markets unreformed. We must learn from that - because I have absolute conviction that we must grab control of our destiny - and we should not wait until the last possible moment – it does us no favour in the long term.
To close I believe that my message is a relatively simple one. The next five years will present the motor insurance market with challenges, but also, crucially, with opportunities. By identifying them now, preparing for them and, eventually, delivering them in a responsible manner we can be in a very different place in 2020. In that sense, the future is well and truly upon us. Failure is not an option – because we should not doubt that our role in society can be taken for granted.
Thank you once again for coming today. My final “thank you” is for Sian - who has been such a superb host - to whom I will hand back over to now. Thank you.