The insurance industry did not fair very well in the recent 2014 Edelman Trust Barometer, which is an annual survey that measures trust across various sectors. Overall, the industry performs very well in that good financial advice is provided, the products are solid, the claims are processed and paid timeously and customer service is excellent.
If the insurance industry is receiving high scores, why are consumer trust levels so low? Is it a case of a bad reputation for the whole insurance sector?
Financial crisis damage
The Edelman study shows that trust in the whole financial services industry is at a low because of the 2008 financial crisis. Although the insurance sector remained intact during the crisis, consumers do not distinguish between banks and insurers.
Fifteen sectors were surveyed and the financial sector was placed last, behind poor performers like banks, pharmaceuticals and the media. The technology industry scored the highest on the trust barometer increasing to 79% in 2014. A breakdown shows that insurance scored at 47% and financial advisory and asset management scored at 46%.
Consumers were more likely to trust financial services information depending on where the information came from:
o A technical expert within the company got trust levels of 74%.
o An academic expert or an expert of that industry got trust levels of 73%.
o The CEO of the company only got trust levels of 57%.
o A blogger got trust levels of 29%.
Silencing regulation complaints
It was pleasing to note that 64% of South African consumers were satisfied that there was sufficient regulation in the financial service industry. We scored very well in this area compared to the rest of the world where the survey results showed that consumers were clamoring for more legislation.
Unethical business practices and failure to keep customer data secure were the top two negative behaviours a company could display, which influenced consumers’ views on trust. Predictably, 85% of consumers thought that if a company protected their customer data, it will positively influence their views on the integrity of the company.
Articulating value proposition
Dr Patrick Dixon, who is a notable Futurist, believes that the insurance industry needs to articulate their value proposition clearly and build trust within the communities. He advised that the simple message that needs to be communicated is that the insurance industry is a cooperative community of people who have chosen to carry out each other’s risks through the good and the bad times and the insurance companies exist to pay out in times of trouble. He believes that the industry should change the language in which it communicates and that topics like the bottom line and profit margins do not engender trust.
The industry has many good stories to tell and he uses the example of how insurance pay-outs make such a difference in people’s lives in times of disaster and tragedy. Some companies like Tracker are using this method, and their adverts are filled with positive stories in which they show that they have added significant value. This type of advertising raises the profile of the industry and builds consumer confidence and trust.
Influence on perception
Sandra Dunn, CEO of the Insurance Sector Education and Training Authority (INSETA), believes that the consumer perception of the insurance industry has a direct correlation with how graduates perceive the industry.
Information about the careers and the career paths, especially scarce and critical skills, is communicated to school learners as well as graduates by INSETA in order to attract them into the industry. INSETA also funds top performing unemployed learners into sector specific careers which will result in a long term secure talent pipeline for the industry. A graduate who has been trained for the insurance industry will automatically seek opportunities in the sector.