9 August 2017
Five ways insurers can increase consumer trust
There's no doubt that consumer trust in insurance has been badly hit by distrust of financial services following the banking crisis and a number of high-profile mis-selling scandals. Companies are looking for ways to win back customers, a large number of whom would rather be uninsured than to buy a promise from a industry they don't trust. Consumer polling is a good way of measuring trust, but how do you increase it? Here are five ways to boost customer trust:
1. Be human
Robo-advice, AI, insurtech, wearables, Big Data - it's impossible to go to a conference these days without hearing these phrases bandied about. But technology alone is not going to increase consumer confidence. What about the human touch? Companies like Lemonade, Trov and Jetty are offering innovative digital platforms to buy insurance, but if you look at their websites, all of them also speak in a human voice, using simple language and a natural, conversational tone. They barely even mention insurance, focusing more on the benefits and the ease of payment. These new entrants have found a gap in the market and have created a much more inviting proposition than is currently available. Companies that don't adapt are going to struggle.
2. Cut the small print
No one reads policy documents, right? But if consumers read and understood what they were buying, everyone would be better off. So how can companies make their documents more engaging? Start with cutting the small print, and make the documents easier to read. Use larger fonts, not smaller. Use headings, colour and even pictures in the text, why not? Check the readability score. 16% of the UK adult population have a reading age of 11 or less. If your policy document reads like War and Peace, full of long unpronounceable words and jargon, no one is going to read it. Cut the sentence length and cut the word count of the document. Make the document digital instead of PDF so it's searchable. Encourage customers to review it as part of the purchase process and make it fun. Insurance doesn't have to be boring.
3. Act in customers' best interests
Although we are set to leave the European Union, that doesn't mean the FCA isn't going to implement the latest European insurance regulation, the Insurance Distribution Directive, so insurers are going to need to get up to speed with it. One of the key provisions in it is about the duty of companies to act in their customers' best interests. This arguably goes beyond Treating Customers Fairly and represents a higher standard for companies to meet. But companies that can demonstrate that they have customers at the heart of their business model need not worry.
4. Win awards
There's a plethora of awards for providers to earn, and ones connected with good consumer outcomes are particularly worth striving for. Achieving recognition for consumer-friendly products and services is a clear signal to customers of good value and fairness. It emphasises the real benefits of insurance rather than just the cheapest price.
5. Get chartered
The insurance industry has a professional body, the Chartered Insurance Institute, that recognises excellence with the designation, "Chartered". Yet only a minority of insurance providers and practitioners can boast chartered status, unlike other professions where qualifications are mandatory. Being chartered means adhering to a higher standard of professional ethics and behaviours rather than the minimum standards laid down by the regulator. It should be the obvious choice for any business or practitioner who wants to demonstrate commitment to fair treatment of customers.
Melissa Collett is a Director at Fairer Finance and a committee member of the British Insurance Law Associated (BILA).
This article was originally published in Insurance Post on 8 August.