Operating Review
Corporate Responsibility
During 2005 we have made good progress and been active in ensuring that we are delivering on our stakeholder commitments.
At Royal & SunAlliance (R&SA), Corporate Responsibility is about how we interact with our stakeholders. During 2005 we have further clarified what this means for us in terms of our Business Principles and how they translate into commitments that relate to our key stakeholder groups: customers, employees, business partners, regulators, shareholders, community and the environment.
Our Principles were revised and updated during the year and provide guidance for employees on general business practice in terms of each stakeholder group. They link to our Group policies, embedding them into business behaviour, and form part of our broader risk and governance framework. Further details on these Principles and a detailed report on our Corporate Responsibility (CR) performance can be found on our website.
Employees
Employees are encouraged to take accountability and responsibility for their own actions in an environment where we promote teamwork and strong leadership. We expect a lot from the people we employ and in return we offer them structured personal development opportunities and reward and recognition linked to performance. Over 80% of employees now have a significant proportion of their pay directly related to their personal performance, up from 15% in 2003. Our target is 90% by the end of 2006.
We seek regular feedback from staff, including an annual global survey which provides an important insight into working at R&SA. Overall satisfaction improved by 2% in 2005. The results from across the Group show that employees feel we are making strong improvements, particularly in areas such as delivery on business results. Employees also registered a strong improvement in how we deliver for our customers, demonstrating that our focus on putting the customer at the centre of everything we do is becoming embedded.
TopCustomers
Our commitments include communicating openly with customers and providing reliable levels of service, whether it is a new business enquiry, renewal, claim or complaint. We regularly benchmark our customer management performance using an external model. Our main operations are assessed against a cross industry database that contains 260 aspects of best practice in relation to customer management. This process provides opportunities to share best practice across the Group and gives us a better understanding of how we are responding to our customers, enabling us to improve retention of valued customers as well as attracting new ones. During the year our focus on retention has seen Groupwide improvements. Responding efficiently to claims is critical to providing a high level of customer service, particularly in times of emergency. 2005 provided some challenging opportunities for us to demonstrate how well we can deliver, including the European windstorm in January that led to flooding in the UK and Scandinavia. Our claims excellence extends across the Group. In Scandinavia we have invested in technology to improve the efficiency and transparency of our claims handling. We have introduced an innovative online system that sends automatic updates on progress of claims and allows customers to track their claim at any time, day or night. This keeps customers regularly informed at what can be a stressful time for them, while reducing administration costs for the business.
Ensuring complaints are resolved promptly is also key. In the UK, we participate in the annual benchmarking survey on complaints handling conducted by the Association of British Insurers. In 2005 our performance was assessed as upper quartile across all categories. We make use of customer feedback on our processes and products to maintain and improve this performance.
Environment
We are also investing in technology that will help customers to better manage their own risks. A web based service, co funded by R&SA, was launched in December. The tool, EuroTempest, improves our ability to predict windstorms and provide pre-emptive advice to customers. It provides local damage forecasts from windstorms down to postcode level for seven European countries, including the UK, up to five days in advance (http://et.mssl.ucl.ac.uk). It complements another tool that we have supported for a number of years, Tropical Storm Risk, which predicts tropical storm activity worldwide.
In the UK, through our Geographical Risk Analysis tool we also have a detailed understanding of flood risk mapping at an individual property level which enables us to set premiums based on the true risk that each home represents. It has also enabled us to take a lead in the broader policy debate on flood issues. In November, we issued a Flood report highlighting our concerns regarding future flood risk in the UK, calling for appropriate spending on flood defences and underlining the need for flood risk to be factored into new build schemes.
In addition to being actively involved in environmental issues through our products and services, we monitor our own direct environmental impacts and seek to improve our performance. Details of our performance and further discussion on environmental issues can be found in our CR report.
Community
In addition to flood risk we are active in a number of other areas. In relation to road safety a new product, Drive for Life, was launched in Canada which provides reduced premiums for young drivers that have undergone safety training in a driving simulator. The training improves their skills and results in fewer accidents.
We are also actively involved in addressing the issue of social exclusion. Insurance offers security and peace of mind and access to affordable insurance is a key issue. In the UK, we have been at the forefront of providing affordable social housing insurance for over 15 years and in 2005 we commissioned a report, ‘Widening the Safety Net’ to stimulate debate in this area. The report calls for greater access to insurance for socially excluded groups and provides recommendations on how insurers and local partners can work together to widen access. More details on this and other CR initiatives can be found on our website.
We have active community engagement programmes in operation across the Group. Examples include, road safety in Canada, water safety in Sweden, working with the Samaritans in the UK, the Red Cross in Ireland and the provision of tailored products for rural customers in India.
Responsible investment
Our responsibility to stakeholders extends beyond managing day to day business activities and covers management of Company assets. Our UK assets are managed by F&C Asset Management who apply their proprietary ‘reo®’ methodology (responsible engagement overlay) across our portfolios to encourage companies to manage social, ethical and environmental (SEE) risks. We receive regular feedback on which companies they have engaged with.
We have made progress against our CR objectives but recognise that there is more to do. For a more detailed review of our CR performance and details of our approach going forward, please refer to the separate CR report.
Only five months after floods in Boscastle, a fierce windstorm hit Europe in January. By monitoring the weather we were able to anticipate the worst hit areas and in Carlisle we were the first insurer to have our in house loss adjusters on the ground, proactively contacting customers to provide assistance where needed. In Sweden and Denmark, additional claims personnel were made available to enable us to handle the rise in call volumes which increased by over 1000% at their peak.
Photo used by kind permission of the Maritime & Coastguard Agency
