Insurance could be facing a consumer ‘tech-lash’

The Chartered Insurance Institute has published a report about how the increased use of technology and data in the insurance sector could be impacting consumer confidence.

The author, Shân Millie, said that technology and data pose fresh challenges for insurance’s longstanding trust issues that will require the attention of firms of all shapes and sizes.

She said the insurance sector has built enthusiastically on the use of Robotic Process Automation and artificial intelligence, but worries that the ‘lived experience of AI is demonstrably not always enhancing trust.’

This could then lead to what she dubbed a consumer ‘tech-lash’ consistent with the experiences of other sectors, resulting from problems such as wrongful arrests, sexist recruitment and erroneous qualification grading.

IT leaders in financial services already have their doubts about further technological adoption, with significant proportions of professionals wary of potential bias or being held responsible for decisions automatically triggered by tech. A lack of data literacy in firms is seen to be one major impediment to building consumer trust, alongside a failure to develop standards, structures and regulations at the same pace as technological adoption, according to Millie.

She added that previous research has already shown some pricing activities to be perpetuating and worsening social inequalities among insurance customers, including the ‘uneven (unfair) impacts on those on low incomes.’

Looking to the future, Millie is concerned ‘that the notion that Fintech is in and of itself the key to financial resilience for customers is not substantiated by the data’ and that post-Brexit there are ‘signs of a direction of travel of both deregulation, and light touch regulation, with little in the way of increased protection for consumers.’

Finally, Millie stated that ‘trust-competitiveness’ is the key battleground for many sectors, including the insurance industry, in the 2020s: “If it cannot be explained, or if the customer does not approve, then what might be good for business, will be devastating for trust,” she concluded.

Poor digital experiences have negatively impacted UK insurance customers in the past, which this report is highlighting.