Consumer trust in the insurance sector has fallen under the spotlight in a massive way this year, and the market has had to ask itself some tough questions around how to gain back that valued customer trust in its services.
Commenting on the latest Financial Stability Report, Reserve Bank of New Zealand governor Adrian Orr said that its level of concern around the insurance industry is “multi-faceted,” and that questions around things like behaviours and incentive structures were “complex issues” that will be examined closely in the coming year. He stated that while some issues are global, others are New Zealand specific, and the industry will no doubt be working tirelessly to change public perception in a country that so heavily relies on its support.
According to Minister of Commerce and Consumer Affairs Kris Faafoi, who recently spoke at the Insurance Council of New Zealand’s annual conference, the industry needs to become more approachable to its customers in order to truly put them at the centre of each transaction.
“A large part of trust comes from insurers treating consumers fairly and transparently throughout all of its interactions,” Faafoi stated. “I’m conscious that individual consumers often lack the knowledge and ability to engage and ask questions, and this makes it important for insurers to act in a way that takes each consumer’s situation into account.
“Insurance should only be sold to customers who genuinely need it, can afford it, and are able to benefit from it,” he explained. “We have been looking at some of these issues in our review of insurance contract law, and there are some changes that definitely need to be made – for example, reforming duty of disclosure. We are conscious that some of these changes have been in the pipeline for over two decades and are well overdue, and this is something that we are determined to see through.”
The FMA and RBNZ released their report on bank conduct and culture earlier in November, and are currently working on a similar report into life insurers. Faafoi says the government will continue to engage with the industry in deciding what regulatory approach to take, and in “ensuring a system that works for both consumers and for the insurance industry.”
When it comes to evolving customer expectations and the implications for retaining their trust, Suncorp Group customer marketplace CEO Pip Marlow says that the process needs to start at the very foundations.
“Before working in insurance, I heard many people talk about it as a grudge purchase,” Marlow said. “But ultimately, it’s companies like ours that are truly there in moments of need. Nonetheless, things are changing – customer expectations are changing, and the trust and transparency that we are required to have with our customers is changing.
“The one thing that will never change is a customer’s expectation that their money is safe with us, that their claim is paid quickly and that we are financially supporting them at every moment, big and small. But trust in this new world has absolutely been challenged like never before, partly because social media today allows the smallest mistake to be exposed at any moment – but, more importantly, because the companies that we trusted the most have let us down.”
Marlow says that while consumers might historically have looked to big businesses to drive their behaviour, this is becoming less and less the case. With the advent of services like Trip Advisor or Google reviews, peer recommendations from ordinary consumers are becoming an increasingly important part of the equation – but that doesn’t mean that big businesses are absolved from creating and retaining customer trust.
“When you engage with a customer, you need to understand what it is that they really want to do,” Marlow said.
“One of the most important moments for a customer is at the moment of a claim. We sell them a promise when we sell them a policy, and we keep the promise when we help them through claim time. If you put yourself into the customer’s shoes – the moment they’re making that claim, we know that something bad has happened, and those are the moments when the customers are looking to us to make that whole experience easier for them.”
When it comes to measurable ways of improving the customer experience, Marlow pointed out some of the ways Suncorp gathers customer feedback and utilises it in improving customer interactions.
“I always say to my team – progress over perfection,” Marlow said. “Firstly, we spend as much time as possible on the front line – in our leadership team meeting we listen to a selection of customer calls, which gives the opportunity for some people who don’t naturally get to interact with the customer to really put themselves into their shoes. We have continuous improvement programmes and we also use NPS, which is a great indicator of what a customer is feeling.
“All of these things make a real difference, and at the end of the day, leaders cast a long shadow. We really have to own that role.”