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Inadequate Employee Competency Management for Insurers: Why It Is Not Worth The Risk

With insurers and financial enterprises facing increasing compliance and corporate risks due to Covid-19, employee competency management needs to be a primary area of focus.

With Covid-19 increasing the demand for employers to facilitate hybrid work from home (WFH) policies, a returning workforce to re-train, rising instances of people-based risk to mitigate, and a hyper-focused regulatory demand to improve corporate culture, financial firms should seriously consider how confident they are in their training if they are still reliant on deploying ‘default’ methodologies according to Adrian Harvey, CEO of Elephants Don’t Forget.

The firm, which conducted a pre-pandemic three-year study, analysing over 72 million employee competency interactions from some of the world’s best-known financial brands, recently concluded that the average level of tenured employee competency stood at just 52%.

Adrian Harvey, CEO of Elephants Don’t Forget, commented: “With increasing instances of people-based risk, it is essential that firms do not lose sight of the human element to their organisation. To compensate for a loss of vital office-centric governance and supervision controls, it is crucial to ensure that firms put a continual emphasis on viewing their employees’ individual competency levels as the first line of defence to help mitigate people-based risk and alleviate instances of inadvertent human error due to a lack of in-role knowledge.

In a highly competitive market, it is well known that financial organisations have been deploying Artificial Intelligence (AI) and machine learning for some time to help gain greater insight into recognising patterns and themes to anticipate areas for growth and risk from a consumer point of view.

And whilst four of the top 10 UK general insurers have already recognised the advantages that employee-centric AI can have on improving the bottom line and reducing operational risk by improving individual employee performance, many firms have yet to do so.”

Harvey asserts that ‘default’ Training & Competence (T&C) management programs – often delivered in the form of one-size-fits-all refresher training and self-selection module completion – does not realistically ensure that every individual employee has understood, retained, and can apply the information they have received.

New research from the firm has also found that there could be a concerning disparity between the differing confidence levels of senior managers and risk & compliance professionals when it comes to evidencing competency in a satisfactory way if required by regulators.

In February 2021, the firm polled a cross-section of risk and compliance professionals on a T&C focused webinar, asking participants to rate how confident they were that their senior managers could demonstrate a consistent approach and application to their T&C competency management programs within their respective firms.

66% of respondents stated they were ‘not confident at all’, ‘slightly confident’ or only ‘somewhat confident’, with just 10% of participants stating that they were ‘completely confident’.

Subsequently, in a recent Financial Conduct Authority (FCA) authorisations webinar conducted by the firm in April 2021, a cross-section of senior management individuals from firms that were either already authorised or planning on going through the authorisation process within the next 18 months were polled on a similar question.

When asked how confident they would feel in evidencing competency within their firms, 64% stated that they would be ‘fairly or completely confident’ in evidencing it to the FCA in the event of an audit.

Harvey assessed the disparity from the findings:

“Whilst the sentiment of our polls is not indicative of all financial firms, the conflicting results may provide cause for further examination for some firms, as there could well be a precarious misalignment about what evidencing ‘true’ employee competency really means.

It is one thing to deliver training and ‘assume’ employees are competent because of the training taking place, it is an entirely different proposition to ‘know and be certain’ they are competent – that is where true and objective confidence resides.

As we begin a transition to some sort of new normality in the workplace for firms, it is a good time for organisations to reflect and consider the potential detrimental impacts that inadequate employee training could be having on facilitating people-based risks and human processing errors.

After all, most firms operating in the market often quantify Return on Investment on the success or failure of their operational processes; efficiency in consumer request processing, cost avoidance, first call resolution, error reduction, penalties acquired through misconduct, CSAT, so surely it stands to reason that the most effective competency management methodologies should be deployed to improve the overall competence and compliance knowledge of their colleagues.

There is also an ever-growing number of concerning competency-based training elements that financial firms must keep at the forefront of their programs too.

Take cybercrime for example, whilst cyber claims are predominately the result of external attacks, recent analysis from one of our own clients – Allianz – reported that ‘human error incidents are the most frequent generator of claims’.

Cybercrime is often cited as the number one financial concern for firms because the attacks contain a human element to them, and it is this human element that often makes employees inadvertently complicit in facilitating incidents.

If the people inside your business are one of your biggest risks, firms should be hyper-focused on providing training that continually assesses employee understanding of critical subject matter that is crucial to understand and consistently apply day to day.

Whilst almost all firms run some form of cybersecurity awareness training, many deliver it in the lowest cost-to-serve format possible, usually in the way of an e-learning or presentation exercise that employees often resent but must complete to ‘tick the box’ for completion.

What we at Elephants Don’t Forget are asking is this: how can insurers and financial firms be realistically confident that a single point-in-time assessment conducted 12 months, six months, or even two weeks ago genuinely reflect what every single employee – within their individual role capacity – needs to know at this precise moment in time?

And crucially, how does that single point-in-time assessment data enable firms to evidence true competency levels and highlight people-based risk on an ongoing basis; especially if your training is being delivered on mass and not assessed at an individual employee level.

Spaced-learning, repetition and self-testing through micro-assessment delivery is scientifically proven to be one of the most effective ways to engrain mission-critical information and provide employees with the best possible support to learn, retain and apply complex and ever-changing product, policy, governance, and risk mitigation knowledge that they need to know.

It is also one of the most effective ways to critically review and evidence genuine, real-time, objective levels of competency if required.


  • Gina is a fintech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

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