Trust between insurers and consumers is at an all-time low
Quite a statement, but it’s indicative of a tumultuous industry that has reached a clear breaking point.
Yet for those insurance businesses that recognise the issues at hand, and are willing to implement the necessary changes, there are clear opportunities to create a growing base of loyal customers, while building additional revenues and profitability.
In our latest research report ‘Re-establishing trust in the insurance industry’ we questioned 2,000 consumers and 200 insurance professionals in two independent studies to understand the issues the industry is facing. A number of key themes are brought to the fore that deserve serious consideration.
The industry is all about price and it’s a race to the bottom
Consumers today are exposed to a multitude of brand messages through more channels than ever before. In the case of insurance, this bombardment has regressed to one simple factor, price. Consumers today are exposed to a whole multitude of brand messages through more channels than ever before.
In parallel, the insurance industry has regressed to one simple factor. Price. While this appears good for consumers in the short run, the reality is this has serious ramifications on levels of customer experience and reduced the value of well-established brands.
Clear brand identity and differentiation has been lost
As we see the proliferation of price comparison sites, and loud, brash yet highly effective advertising campaigns take effect, consumers have lost sight of the clear distinction of brands. A quarter (26%) of respondents now confuse price comparison sites for actual insurers, demonstrating an issue with brand awareness.
26% stated GoCompare as an insurance provider, 23% say the same of Compare the Market and 21% of MoneySupermarket. Less than one in ten people are aware that British Gas provides home insurance.
The opportunity to win back trust
Delving into customer apathy around insurance, the research showed that 53% would now describe the relationship they have with a provider as ‘unrewarding’. Over a third (38%) of the UK has never made a claim with their insurance provider of any kind and 31% admit they don’t know what to do in the event they need to make a claim.
The brands carrying the most trust among consumers are now household names such as Tesco (23%) and John Lewis (25%). Traditional providers including Admiral and Hastings Direct were only chosen by 12% and 6% of respondents respectively.
The popularity of department stores and grocers for insurance is a reflection of how damaging price competition has become for insurance providers. The opportunity to win back trust is by looking beyond price to factors such as service, reputation and transparency, which are growing priorities for nearly a third (29%) of the people we spoke to.
What matters to consumers is expert communication from the outset
Traditional insurance providers must change or face stagnation as consumers become more demanding and competition rises. Competition is rising with an influx of innovative challenger brands. Start-ups such as Lemonade have set about re-inventing the wheel, changing up brokers for AI and introducing a social good to the profits the company generates.
All important and powerful innovations for sure, however, what truly matters to the customer is expert communication, guidance, and transparency right from the very outset throughout the lifecycle of a customer.