Expertise in Action: Professionalism: Testing, testing

The insurance industry has made great strides in recent years to promote professionalism. A large number of brokers have embraced the Aldermanbury Declaration, pioneered by the Chartered Insurance Institute in 2010, while many intermediaries are turning to chartered status to underline their commitment to providing professional advice.

However, there is no requirement for industry staff to hold professional qualifications. With other advisory professions – such as lawyers, surveyors and accountants – requiring qualifications to practice, the issue of mandatory examinations in the insurance industry has been a divisive topic.

“There will always be a debate about the need or level of mandatory requirements for professional qualifications in all parts of the financial serves sector including insurance,” says Steve Jenkins, director of financial services and insurance markets at the Chartered Insurance Institute. “This is exemplified by the very live debate occurring in the banking sector at the moment and the increased level of mandatory qualifications that were brought in for regulated financial advisers by the then Financial Services Authority. The current European levels for training and competence under the Insurance Mediation Directive is also under review.”

With rival financial services sectors leading the way on professionalism, should the insurance industry consider mandatory qualifications to bridge the gap?

“No, not mandatory,” says Steve White, chief executive of the British Insurance Brokers’ Association. “There is clearly a place for them but not on a mandatory basis. How would the regulator apply that? There are 13 500 firms in the UK that have regulatory permission to sell insurance, 3 500 are brokers. Insurance broker is not a legally defined term. There is no way the regulators will be able to force staff down an examination route.”

Time for timetables
However, Anne Hughes, operations director of Willis Networks, believes that a structure of compulsory qualifications should be given serious consideration. “If the industry wishes to be called a ‘profession’ rather than an industry, then yes,” she says. “There is certainly a case for all businesses to look at the level of qualifications within their business and seek to enhance and encourage their client facing teams to excel professionally.”

Bluefin executive chairman Stuart Reid acknowledges trust in the insurance sector is low but believes the industry’s current efforts with professionalism should be recognised. “The imperative is to make sure we as an industry are best prepared to serve the interests of our customers,” he says. “Training of our staff is, therefore, crucially important so that we can give the right advice, supply the right products and make certain that our customers know what they’re buying.”

He adds: “We’ve seen the impact of getting this wrong and it’s bad for customers and it’s bad for the industry. The insurance industry is getting better at encouraging professional qualifications, which now form a meaningful part of many companies’ training programmes.”

Tim Larke, director at Ryan Group, agrees. “Our industry has a very good system of continuous professional development ensuring we are always learning and developing ourselves,” he says. “Professional qualifications are important and we make a very strong pitch to our staff that they should pursue their qualifications, but they are not the be all and end all of our learning. It is as important that we regularly review people’s product and market awareness, their people skills and their sales ability. These aren’t taught from a handbook.”

With such soft skills important when dealing with the public, and as a tool for generating and maintaining revenue, it could be argued that the focus on technical ability is overshadowing the importance of other talents.

“Competence is about knowledge and its application,” White says. “Examinations test knowledge but they do not test its application. Soft skills are all about communication and team building and with the best will in the world professional qualifications do not test that. There is a role for examinations but they are not a panacea.”

Jenkins believes it is important to strike a balance between technical ability and soft skills, especially in the current environment. “You need both,” he explains. “Different sectors and roles will need to get the balance right but parts of the insurance sector are in danger of de-skilling in important technical areas so it is important the profession as a whole continues to get the balance right.”

Reid adds: “There are technical parts of our business where qualifications are vital and this must not be lost but there will always remain skills that are more difficult to quantify.”

While soft skills are desirable, they have done little to improve faith in the insurance industry. Trust in the sector is currently at its lowest ebb, with the cost of motor cover, the approach to claims and the mis-selling of payment protection insurance all taking its toll on public confidence. Could now be the time to introduce mandatory qualifications?

Reid responds: “Trust is generally earned through behaviour. However, well-trained and better-qualified professionals are more likely to behave in a way that generates that trust than less trained and less qualified people. So there’s a connection between the two and as part of Bluefin’s chartered status, there’s a commitment from us to be, and to be seen to be, at the highest end of professionalism in the market.”

More required
Jenkins says mandatory qualifications have the ability to engender faith but examinations alone will not repair the industry’s reputation. “It is possible that it might, although the trust and confidence of the public is impacted by a wider set of signals than technical and professional qualifications. For example, how customers are treated and the development of appropriate products are other important trust factors.

“Also increasingly important for both the public and the new regulator is how professionals behave – so levels of integrity and conduct are as important as levels of qualifications,” he adds. “Professional standards as a whole, including qualifications, ongoing training and high professional standards of behaviour, should all be priorities for insurance firms small or large.”

According to Paul Maynard, chief placement officer for Willis UK, mandatory qualifications are a must to regain the confidence of policyholders. “We have to recognise that changing the attitude of the public, business and most importantly the media is a long slow grind. However, even with these headwinds, it’s my firm view that a well-qualified and educated workforce is the only way forward. This is the way to reduce errors and improve efficiency and ultimately, the quality of our service to all of our clients.”

While the advent of greater education, even if it could be agreed by the industry, is likely to be sometime away, brokers could develop skills that will allow them to provide the correct advice to policyholders and also ensure that the reputation of the industry is not harmed.

Maynard continues: “Obviously, the basic technical skills are crucial so that the relevant detail can be explained and correct advice can be given, but also listening and relationship skills are important so the needs of clients can be clearly understood.”

Knowledge is power
Hughes says a sound understanding of the customer, as well as the market, is important for ensuring that clients are well advised. “Insurance is all about the transfer of risk and what risks are important to the client,” she explains.
“Understanding the client’s business and their risk appetite is the first step to assessing what an appropriate solution could be. The skills needed, therefore, are good ‘open questioning’ techniques, listening skills and the ability to back this up with technical competence.”

Reid agrees: “They need to be strong communicators and demonstrate excellent product and market knowledge. We would not get a member of staff advising our customers on the strength of their CII qualifications alone, but it would be based on them demonstrating sound product and market judgement. However, I recognise the importance of our staff having professional qualifications and it illustrates to me a commitment to the industry and to learning.”

However, despite this commitment to learning, mandatory qualifications do not seem likely in the insurance industry, although they have been seriously considered in the past.

“For students of history, the Insurance Brokers Registration Act of 1976 did contain a clause requiring mandatory qualifications,” Maynard says. “However, it was never activated mainly because nobody could agree on the grandfathering of senior people with no qualifications plus the obvious resistance of this group to sitting exams.

“Personally, I would like the profession to set a sensible deadline for the introduction of mandatory qualifications. This could be as long as ten years with realistic ‘grandfathering’. Just think, if the brokers had led the way in 1976, we would not be having this discussion now.”

He concludes: “Unfortunately, I don’t think the profession is ready for mandatory qualifications yet, even with a long lead in.”