Insurance should help reduce stress, shouldn’t it? In reality much of what the industry does may have the opposite effect. It is no secret that the insurance market struggles with gaining trust from customers. Indeed, a survey of nearly 50,000 insurance customers earlier this year showed a drop in the total trust score. Commenting on the results in an article for Insurance Edge, Ian Hughes, Consumer Intelligence Chief Executive said: “There is a strong correlation between customer trust and customer loyalty, making this a key element to standing out in an industry where customer perceptions are traditionally low.” It seems a logical conclusion that low trust may well equal high stress.
Why should insurance help reduce stress?
Insurance should remove, or at the very least reduce stress because it offers peace of mind. This definition of insurance taken from the Money Advice Service website ably illustrates this point:
“Insurance helps you protect yourself against risks like a house fire, car accident or burglary. You can also get insurance that pays you money if you get too ill to work or to provide for your family if you die.”
In other words, insurance offers financial security against the worst things life can throw at you. What is not to like?
So why is insurance not the most loved product available?
I recently listened to a conversation with Daniel Schreiber, the cofounder and CEO of Lemonade. I was struck by the truth in his assertion: “At a fundamental level, insurance is a social good. It’s about a community of people pooling their resources to help the weakest members in their hour of need. That should be the most loved industry, but it’s 180 degrees away from that.” I wholeheartedly recommend that anyone involved in the insurance industry listens to this podcast. It certainly outlines why the insurance industry is currently unloved. It also explains how Lemonade plans to change the insurance paradigm in favour customer outcomes. But not every Insurer is able to start with a blank canvas and re-invent their business model overnight. So what steps can we take to win hearts?
How do we make insurance the most loved industry?
There is obviously no easy answer to this question, or we would be there already. Importantly, we need to make insurance accessible. Mr Schreiber has addressed this issue through affordability and an easy and efficient process for customers from application to claim. But this is only one solution for a massive market. We also covered the subject with our suggested solutions in a recent blog How can we increase access to insurance? Accessibility is just the start of the journey back to customer favour.
Equally important is the ‘comfort’ issue. In order for people to feel comfortable with insurance they must first feel comfortable with how they buy the product. Interestingly ING Group, the Dutch multinational banking and financial services corporation has recognised the need to make customers feel at home. In the article, ING will make you feel at home, Barbara Vanhauter who is leading the change, is quoted saying “The new concept is all about making customers feel at home. There’s a big table at the heart of every branch, where you can settle down, have a cup of coffee or do some work. There are separate booths to get personal advice. There’s also a kid’s corner and a fully equipped ‘digi-corner’ to do your online banking or learn how.”
ING has recognised not everyone is yet comfortable with digital solutions. In the same way, the insurance market must understand customers want a choice of distribution channels. Only by offering the customer a way to buy insurance that makes them feel comfortable will be have a chance of winning their hearts. But what about trust?
…and how do Insurers win back trust?
As we pointed out at the outset, insurance promises protection, so policy holders must believe that claims will be paid. But the work of the insurer to win trust should start well ahead of any potential claim. Insurers have a duty to make sure the terms and conditions of the policy are completely transparent. Insurers must ensure that policy holders understand what events the insurance policy protects against. Arguably it is even more important that they know what is not protected.
Further help to customers comes from a new direction. Many in the insurance market now also focus on ‘prevention’ ahead of the need to claim. For example, some insurance carriers offer discounts on ‘smart technology’ that can help protect homes from more extensive damage from fire, flood and theft. A recent article by Matt Poll, The CEO and founder of Neos, How connected tech is revolutionising the insurance industry, articulates the benefits of the smart technology revolution for insurance beautifully. Policy transparency alongside help with prevention as well as the expected protection from insurance is a great way to win back the trust of the public.
Looking at the current insurance market then, there are many positive signs we are moving in the right direction to win hearts, engender trust and so help to reduce stress for the customers it protects. The litmus test will be the result of the next ‘total trust score’.