A question of trust
According to recent research from multinational professional services network PricewaterhouseCoopers (PwC), insurers ‘still have a long way to go’ to rebuild consumer trust
PwC’s research suggests that only 27 per cent of people – based on an analysis that took in over 2,000 UK citizens – trust insurance providers, and a measly six per cent trust them more than they did one year ago, illustrating a serious disconnect between consumers’ perception of the industry and the way in which the industry would – presumably – like to be perceived. The majority of respondents to PwC’s report, How financial services lost its mojo – and how to regain it, state that they would either not take advice from insurance providers, or would not trust the advice that they received, and PwC says that greater transparency is required to rebuild trust between the industry and consumers, but that this ‘will require new levels of openness’.
“Many customer-focused insurance providers will feel that this perception is unfair,” commented Lee Clarke, insurance risk and regulatory partner at PwC. “Nonetheless, tackling this lack of trust must now be an overriding priority. Those who don’t change now, and those who don’t make the right changes, risk going further down the road where the people they are trying to reach have stopped listening and will only pay attention again when something genuinely different comes along.”
Almost one in two people (49 per cent) apparently believe that regulation of the financial services sector has been stronger since the onset of the financial crisis in 2008, but more (57 per cent) do not believe that the reforms are sufficient, and expect history to repeat itself. PwC’s study also suggests that this lack of trust is having an effect on the entire financial services sector, and that it is manifesting as a general sense of apathy on the part of consumers. George Stylianides, financial services risk and regulation leader at PwC, reiterated that tackling this apathy must be a top priority for the industry at large: “Having a customer base that is both unresponsive and potentially volatile is the worst possible state of affairs for existing financial services providers. However, with switching levels relatively low and relatively high trust in banks to hold customer data, there is an opportunity for banks to reconnect with their customers.”
As an illustration of quite how much trust has been eroded between consumers and the financial services sector, PwC’s report compares the number of customers who trust retail banks (32 per cent), investment banks (15 per cent), financial advisers (28 per cent), insurance providers (27 per cent) and fund managers (12 per cent) with those who trust the police (53 per cent), general practitioners (76 per cent) and National Health Service (NHS) nurses (79 per cent).
Focusing on insurance providers, PwC’s survey found that consumers’ personal experiences with providers is the most significant factor in determining the level of trust they hold. Further analysing this lack of trust, Lee Clarke said: “The lack of trust in insurance providers partly reflects a failure to articulate the value they are offering, leading to suspicions that their overwhelming priority is to make short-term profits. Providers must find new ways to explain the services they are providing, encourage consumers to voice their goals, priorities and expectations, and to respond to these. Insurers are starting to ask their customers to publically review and share their experience of the company, whether good or bad, online – much as the travel industry has been doing for years. This openness can substantially approve company approval ratings with customers. Taking genuine and conspicuous steps to satisfy customer goals, priorities and expectations, especially where there is no obvious short-term gain – or even a clear cost – to the provider, is a response we’re starting to see more of.”
PwC cited digital commerce as a ‘key battleground’ for financial services companies, with its figures suggesting that consumers trust insurance providers less than banks, savings providers and pension providers when it comes to securely holding data – 35 per cent trust insurers, compared with 52 per cent, 47 per cent and 39 per cent for banks, savings providers and pension providers respectively – and PwC sees this as an opportunity for insurance providers to build on the financial service industry’s existing reputation as ‘relatively trustworthy custodians of customer data in this particular battle’.
“Ultimately,” said Jonathan Howe, insurance leader at PwC, “this all translates to the quality and resilience of insurance provider brands, not in the sense of logos and colour schemes, but in the sense of the expectations that exist in the minds of customers and other stakeholders of consistent, superior service provision. With the traditional barriers to entry becoming eroded – or becoming harder and more costly to sustain – brand is becoming the critical strategic asset of the future, and companies must therefore rediscover their mojo with customers to stand out for the right reasons.”