With the media spotlight focusing on the more controversial practices within the insurance industry, Nick Starling tells Johanna Gornitzki of his plans to steer it in the right direction
Still wearing some of the make-up from his GMTV interview that took place earlier in the day, Nick Starling arrives at the Association of British Insurers (ABI) foyer with a smile and a firm handshake. "The interview this morning was really difficult as they put me in the sofa next to a person who had had their critical illness (CI) insurance claim declined. That was really tough," he admits, but adds that he still does not "for a nano second" regret taking on the job at the ABI.
Like so many people in the insurance industry, Starling did not deliberately set out to specialise in insurance but it "just happened". He started his career as an academic in archaeology but quickly realised that it was not for him, joined the civil service and ended up working in the Department of Transport for 14 years – mainly in the field of aviation.
Working in the area of air transport, Starling managed to accumulate a wealth of knowledge on risk assessment, something that he believes was one of the reasons why he was eventually approached by the ABI just over two years ago.
He first joined the association as director of general insurance, but, at the beginning of this year, he took over the responsibility for the health and protection portfolio after the ABI had a small internal restructuring. A huge part of his current job is to raise the profile of the protection sector. "I think I have been quite successful in raising the profile of the general insurance industry, so I am hoping I will manage to do the same thing for the protection industry," Starling says.
He thinks getting the new CI definitions right is crucial in order to increase consumers' confidence in the sector. "We have to get this right. Cracking that so that people know it's a great product they can trust would be that one big thing that is needed. There is currently a mismatch between what the product offers and what people think it provides. CI is still a fantastic product but the real challenge is how do you get the idea across to people that these products are worth having?"
One of the big challenges is how the industry can explain this in a clear and concise manner, Starling admits. Referring back to an interview he had with the BBC programme Watchdog in April this year about CI, he says: "The first question on Watchdog was 'how can people understand these policies without a medical dictionary?' I think I said something along the lines of 'CI is a very valuable insurance product to have'. The big challenge is how to say to people that this is what we cover and this is what we don't?"
Starling believes the next few months are going to be crucial when it comes to finding out whether the new CI definitions will have a big impact or not.
While the majority of industry experts seem to be positive about the changes, there seem to be concerns that the majority of advisers are still unaware of the new definitions. This has prompted the question of who exactly should be responsible for making sure IFAs are up to date. Starling believes the onus lies on all active players in the market but admits that the ABI should be doing more than it has done so far. "One of the things the ABI needs to do is when we try to tell intermediaries about these things we have to tell them again and then repeat it again and again. You just have to repeat and repeat because, unless you say it again and again, it won't get there," he says.
The Watchdog programme Starling appeared on in April featured two customers and their declined CI claims. One, in particular, caused heated debate in the industry. The case involved policyholder Jan Lillywhite, whose claim was declined after it was found the disease she was claiming for was not recognised as a critical illness at the time she took out the policy – despite it now being covered by the provider. This sparked a debate about whether positive changes to CI should be applied retrospectively. Commenting on the debacle, Starling points out that the ABI "can't tell its members what to do" but adds "the industry has to do something to address this".
"We can't avoid taking another real look at this. The ABI doesn't tend to urge companies to move in a certain direction but, by and large, my experience with the general insurance industry and the health and protection sectors is that they are good at reacting to the market." So as the market develops, will companies have to move in this direction? "They can't avoid it," he argues.
Another debate that has been grabbing the personal finance headlines in recent weeks is whether both fees and commission should have a place in the market, with some experts going as far as saying offering fees only when selling protection could be discriminatory due to the underwriting complexities connected to such policy.
Starling refuses to be drawn on the current debacle, but hints that he believes consumers are clever enough to know what to go for. "By and large people are grown ups and they can look after themselves. They're not going to worry about fees or commission as long as they are roughly the same amount," he says. Starling adds that excluding one or the other could potentially be bad for the market, saying: "What you don't want to end up with is a situation where you impose constraints".
Apart from the ABI's new Statement of Best Practice for CI, the other thing that will bring huge opportunities this year is the change within the Government, Starling says. "At the moment, the Government is sitting down and doing its sums and whatever happens there will be cutbacks in public spending, which will present huge opportunities for the industry, but it's a huge challenge for us to make the Government realise that the industry could play a role in covering this protection gap."
But how much influence does the ABI have over the Government? "The ABI is often perceived as the Rolls Royce of the insurance sector so it is highly regarded. All the members are in it together, covering 94% of the insurance industry premium income so the Government knows that when the ABI speaks it speaks with the authority of the industry behind it," Starling says.
Looking ahead, promoting private medical insurance and protection is at the core of the ABI's plans as well as taking a closer look at the Law Commission's proposals. Starling is slightly dubious about the latter, hinting that introducing a non-contestability clause is like putting a plaster on top of the wound. "The key thing is making sure there is proper disclosure at the time of application and that is the real thing we are working on. If you have a non-contestability period it's simply an invitation to people not to disclose," he argues.
With so much going on, it must be difficult for Starling to keep his feet firmly on the ground, but he simply replies that that will never be too difficult when having two teenage daughters. "When there was the tornado in North London, my youngest daughter texted me and said 'dad I hear there's been a hurricane in North London' and I sent one back and said 'it's not a hurricane, it's a tornado but you can watch me on News 24 at 5.40pm'. She then texted me back and said that is the same time as Neighbours. That kind of puts you in your place," he muses.
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