Because of the risk inherent in purchasing financial service products like insurance, customers need to trust the companies, brands and institutions they do business with – from believing in an insurer’s ability to pay out a claim, to having confidence in the privacy of their customer data. But trust is a two-way street, and institutions must continually find ways to demonstrate to their customers that they can be trusted to protect their assets and interests, just as they must also trust their policyholders to minimize personal risk and make honest claims. Yet even while fundamental to the success of the industry, trust remains complex and hard to measure, leaving many incumbents wondering: how can we improve and foster trust in insurance?
Start with transparency
Too often industry jargon and legal language can confuse consumers to a point where they may genuinely not understand what products or coverages they are buying. And for many customers, evaluating products or product performance can feel overly complex. To address these issues, insurers must do a better job providing transparent guidance about the terms and conditions of any products or services they offer. This can happen in a number of ways – from providing easier access to policy documents, disclosures and other relevant information (digital and mobile formats) to eliminating overuse of industry jargon and/or misleading marketing language, to creating quicker, more streamlined, more accessible customer experiences.
Prioritize data privacy & security
Safeguarding a customer’s data and personal information, particularly in the digital age, is central to building trust between financial institutions and customers. Large scale hacking events and data breaches can do great damage to an institution and its reputation. While new digital experiences have made everything from quotes to payments and claims faster and more convenient, they have also raised important questions about consumer payment data security. Insurers must be clear about the ways in which sensitive customer payment data is protected.
Think about personalization & customization
Many insurers are finding that a more flexible, personalized approach to products and services appeals to today’s savvy and demanding consumer. Instead of one-size-fits-all plans, customers appreciate coverages (and pricing) which can be adjusted to meet their specific requirements. Over the last several years, an explosion in tech-driven personalization (thanks in large part to AI and machine learning) have allowed insurers to create more of these kinds of experiences, which deliver relevant and targeted products and services and build trust along the way.
Are insurtechs better at building trust than incumbents?
Though insurtech startups lack the brand recognition many incumbents enjoy, their digital first status may give them a leg up on incumbents when it comes to addressing trust issues with customers. Insurtechs are more likely to explain their terms and conditions clearly (using less legal language and less jargon); they are more transparent about their pricing strategies (offering features like risk calculators or scores to explain how they arrived at a quote); they emphasize data security and the measures they're taking behind the scenes with customer info (encryption, data sharing, blockchain and more); they prioritize streamlined, frictionless customer experiences and platforms (quick quotes; no paperwork); and, finally, some are working to pay out claims much faster than their incumbent counterparts – a very effective trust builder.
So, where does this leave incumbents? Ultimately, trust between customers and insurers will remain in a state of perpetual evolution. Because of that, insurers should be doing whatever they can to prioritize trust-building strategies throughout the value chain, emphasizing investments in digital transformation and innovations that put the customer at the center.