Trust in insurance worries the sector's senior executives. PwC surveys find that a quarter of UK insurance CEOs are “extremely concerned” about trust. And nearly three quarters of those same CEOs see trust becoming more difficult to secure in a digital market. This matters, for they draw a direct line from trust and growth.
The result? Calls for there to be a rebuilding of trust in insurance. Yet something’s not quite right, for trust is given by other people, and you can’t rebuild what other people give you. What you do is rebuild the basis upon which they give you that trust.
This means rebuilding trustworthiness. It’s a subtle but important difference. Trustworthiness relates to the qualities upon which customers base their judgement: trust is their response. So the key question becomes: what qualities do people base those judgements upon?
Academics see trustworthiness as judged on three things. Are these people competent? Are they honest? And are they reliable?
The public understands this. An Ipsos-Mori survey into how customers of finance service firms judged what good customer service looked like, found that two of the top three responses were ‘honesty’ and ‘doing what they said they would do’. So it’s clear that customers are tuned into those three ingredients to trustworthiness. It would make sense for firms to follow their example.
So what can an insurance firm offer as evidence for its honesty, competency and reliability? Clearly, it won’t be starting from scratch. The problem is that most of the evidence is too inwardly focussed and hidden from customer view. Are customers being starved of the evidence upon which to judge the trustworthiness of insurers? I think it’s a factor.
Being more open and more customer orientated will certainly help insurers become more trusted. Yet only to an extent. Throw too much information at customers and they’ll switch off. Instead, why not ask them what they think honesty, competency and reliability look like - you could well be surprised.
I was once in charge of Europe’s biggest motor insurance contract, for which senior directors had previously arranged just one measure of customer service. When we then asked customers about the services that mattered most to them (in other words, the services they most relied on), that single measure of customer service was ranked 22nd. Their top two measures hadn’t been used in insurance before, but made perfect sense when viewed from those customers’ perspective.
What this tells you is that when looking for evidence of reliability, don’t just focus on what you think reliability means: ask the customer. They will tell you, if you ask them a decent question. Some firms may be tempted to turn to net promoter scores (NPS) that measure how willing your customers are to recommend your firm to others. Yet NPS is a pretty blunt measure, disguising as much as it reveals. On that aforementioned motor contract, we were finding incredibly high NPS, yet when we peeled away at the layers of sentiment surrounding it, a much more complex and varied story emerged across different touch points. The same is sure to be the case with insurance in general.
Competency would seem to be much more straightforward. After all, insurance has a long history of professionalism. Yet for many years, the focus of that professionalism was on technical competency, with, until recently, little attention to how competent insurance people needed to be at ethics and decision making. Insurance may be full of good people, but that technical competency hasn’t stopped some good people making some poor business decisions.
So the question becomes: what sort of competencies will help build trust in insurance? Of course, technical competencies count, but they aren’t enough. Insurance people need to know how to bring ethics into their decisions, how to deal with ethical dilemmas, and how to show leadership on ethics. When it comes to trustworthiness, being competent is about both what you know and about how you apply that knowledge.
This brings us to honesty. It has been defined in a great many ways, but in general, it is associated with the presence of truthfulness and integrity, and the absence of lying and deceit. It is on the face of it, both the most simple of the three ingredients of trustworthiness, and the most complex. And to pay it the attention it deserves, I’ll be looking at it in more depth in a later post.
There is occasionally a tendency to see the solution to trust in insurance resting with the public gaining a greater understanding of insurance. This implies that the problem with trust is not so much in how the sector acts, but in how much the public understands what insurance firms do. And there may be something in that, but not much. It looks like the sector is blaming the public for not trusting them, shifting the responsibility for trust over to the people giving it, and away from the firms who should be earning it. So there is communications challenge here, to change the narrative around trust so that the public feels their views are being respected.
Two further points are worth noting. Firstly, there is actually a fourth ingredient to trustworthiness. It’s goodwill. What goodwill does is differentiate the firms who pay attention to honesty, reliability and competence because it’s just the right thing to do, from the firms who do those things because they hoping that trust will grow their business. Intention matters, and is often recognised by customers. And goodwill comes not from a metric here or process there, but from a ‘way of seeing things’ within a firm. Some call it a mindset, but it’s more like a shared story: “it’s who we are”.
And secondly, beware of a ‘trustworthiness trap’ that insurers could fall into. This digital era of ours is not just transforming how insurers see their business; it is also transforming how customers see those businesses. Customers are becoming less interested in what firms are ‘doing’ to build their trustworthiness; they’re now more interested in the evidence for the outcomes being achieved. It’s outcomes that count now.
We need to think differently about trust in insurance, and digitisation makes this more important, not less. Firms need to organise their thinking, and not just leave trust to chance. If there’s a new ‘trust story’ to be told, it’s insurers who need to write it. And they need to get on with this, before someone else writes it for them.
Duncan is the founder of the Ethics and Insurance blog and the author of its many posts. He's a Chartered Insurance Practitioner, having worked 18 years in the UK market. As an adviser to many firms on ethics issues, as well as a regular conference speaker, he is one of the leading voices on ethics and insurance.