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Are we the villains? How insurers can – and must – change their brands

Just like the bankers of 2008, insurance companies risk going down like the villains in the COVID-19 pandemic.

When thousands of small British companies – facing empty city centers, absent staff and mandate closures – turned to them for support, insurers fell back on their pandemic exclusions. In response, the FCA finally took a Business Interruption (BI) test case to the Supreme Court and won a ruling with the potential to affect 370,000 policyholders for the better.

What matters here is not the technical benefits of insurers' cases – and these are really real, because it's hard to imagine exactly how insurers could pay the bill for an event like COVID-1

9. The simple truth is that the BI controversy has further damaged the industry's image, an image that was hardly in a good place to begin with.

Consumers' hostility to the sector is well documented. Insurers are perceived to make money by denying claims and punishing loyal customers with higher renewal rates — recently the subject of another FCA intervention, following a super-complaint from Citizens' Advice Bureau. Add to this the endemic problem of data privacy, and you have a good picture of the low-income insurance companies that currently enjoy a lot of the public.

In earlier times, this type of trademark damage could have been removed. After all, the insurance industry has not survived for three centuries by having thin skin. But bad reputation really hurts insurance companies. Even when we go into what some have known as the "post-brand era" – an era of total commoditization – the brand is more important than ever.

Why branding is the fulcrum of digital change

We actually hear and say! – a lot about the insurance companies' need to transform digitally: to offer customers a personal service on their chosen device, via their chosen channel, around the clock. But all this is driven by customer data, which represents a potential source of friction.

Insurance companies are of course getting closer to customers' data – for example via APIs and open insurance – but that does not really give them all

Although data sharing is as simple as a click, customers still have to agree, they still have to trust on the safety of the process and they must be sure that they will receive in exchange for the personal service promised. Brand will always be the last mile on the last mile – like a deal closer if nothing else.

When customers lack confidence in a supplier, they are less likely to share their data. This in turn limits the provider's ability to develop and launch the next generation of personal services — because these services live through data, customer engagement, and rapid iteration. . And the amount of confined demand for data-driven services in insurance will only increase, with consumers 'appetites increasing while consumers' confidence in sharing data decreases:

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Source: Reinventing UK Insurance for Today & # 39 ;s Consumer, 2021

Our latest consumer study, Reinventing UK Insurance for Today & # 39 ;s Consumer, shows a 16 ppt increase from 2018 to 2020 in UK consumers as " would share significant data on health, exercise and driving habits in exchange for lower insurance prices. "At the same time, the proportion of consumers who" trusted insurers a lot from a data protection perspective "fell by 11 points. We are left with a ballooning" confidence gap ".

Digital transformation , as always, goes on digital technology.But it is through a brand that insurers will get maximum leverage from their digital investments – closing the trust gap and unlocking customer data to power the next generation of digital services.

So, what makes a strong insurance brand in the computer age – run everything? Two things: purpose and delivery.

The purpose of insurance labels

Once upon a time, consumers expected products to do what they said on the plate, and insurance companies existed to provide one thing: insurance coverage. Nowadays, when they shop, customers buy more than just one product, they buy in a set of values ​​- a social, environmental or lifestyle purpose. By reflecting these values, through actions rather than words, insurers can gain the trust of future generations of buyers.

Insurance companies are no strangers to lifestyle values, as these directly affect the risk, especially in health insurance. Social and environmental values, on the other hand, are less linked to risks, but this does not prevent them from weighing heavily on customers' purchasing decisions.

By being socially and environmentally responsible organizations, insurance companies can avoid negative publicity and the accompanying consumer penalties. In addition, they can actively draw the attention of ESG-oriented customers through targeted products, both on the insurance and investment side.

To begin with, insurers can use their investment pool to, for example, finance sustainable properties, or offer green investment products directly to customers. They can also take out the green economy – things like solar and wind farms – or provide social insurance, including systems to protect the financially disadvantaged. We even find appetite among consumers – especially younger generations – for advice on sustainable living:

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Source: Reinventing UK Insurance for Today & # 39 ;s Consumer, 2021

Some of these ESG-focused opportunities may seem small in themselves, but this must be understood in a larger business context 2021: a context in which companies propose and customers have at their disposal, and a little brand increase can go a long way.

Bad brands promise, good brands deliver

Purpose-driven brands win consumers' attention and approval – but is it the same as winning their trust and thus the chance to offer a more data-driven, personal service?

Basically, trust is supported by experience. You trust a lock that has never failed, just as you trust a friend who has never let you down. As long as customers get bad value from sharing their data — or worse, poorly maladapted experiences — insurance companies will fail to grow trust, no matter how well their broader values ​​match.

The mismatch between promise and delivery in the insurance goes even deeper. Policies are complex and customers are rarely insurance experts. Often the cover is that they think they do not have the cover they actually get. This means that even when insurers have legitimate reasons to refuse a claim, many claims feel cheated and distrustful – just as we saw during the recent BI controversy.

To combat this, insurers need to promote greater awareness of what policies cover and what they do not. A multi-level communication strategy – with easy-to-digest web content, chatbots and customer service agents – can lead to better customer training, fewer denied claims and higher trust.

New FCA rules banning double pricing are further wind in the brand's sail-conscious insurers.

By its very nature, double pricing is a misdirection of promises and delivery – and therefore kryptonite to customers' trust. They woke up from the dream of onboarding discounts – too good to be true, you could say – to the bitter reality of renewal rates. And insurers have only been given incentives to maintain this sad misdirection, as these harsh price increases for loyal customers are precisely what are financing the fierce competition for new business.

In that sense, the insurance market has become a machine of mistrust among insurers effectively selling long-term reputation for short-term benefits. The FCA's ruling hits that dynamic on the head: rather than competing for how much toxicity they can endure, companies will instead be rewarded for actively cultivating a good reputation. And it is those who have taken care of their brands who now have a head start.

So maybe insurance companies are not the crooks after all. At least it does not have to be that way. As is so often claimed, the industry has a chance to radically change the role it plays in consumers' lives. But this does not come primarily through technology. First and foremost, it's about doing the basics well: building purpose and fulfilling promises. In a world fixated on digital innovation and digital innovators, good old-fashioned brand strength can still win the day for the established.

For the latest consumer trends in UK insurance and how suppliers can get every component of their business to serve the customer Download our new report, Re-inventing UK Insurance for Today's Consumers, via a "business experience" method. If you want to contact or discuss any of these ideas further, contact me on LinkedIn.

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