Are policyholders stuck in ‘unrewarding’ relationships with their insurers?

It seems customer frustration is growing – but what can you do about it?

Are policyholders stuck in ‘unrewarding’ relationships with their insurers?

Insurance News

By Terry Gangcuangco

There are tons of reasons to get out of a bad relationship – that between a policyholder and an insurance provider has boiled down to cost, according to new research.
“Deteriorated to the point of estrangement” was how managed service provider for mobile customer activation Wiraya described relationships between brands and consumers in the UK insurance market. And as with any contract, social or otherwise, lack of trust has its impact.

To illustrate the trust issues going on between insurers and the insured, here are the figures from studies commissioned by Wiraya:
  • Customers inflate claims against home, travel, and vehicle insurance by 15%.
  • Providers think clients inflate claims by as much as 31%.
  • 55% of customers believe greater transparency in how premiums are constructed is essential in building a better perception of insurers.
  • 53% of insurance professionals feel greater transparency would curb the tendency to inflate claims.
  • 31% admit not knowing what to do in the event they need to make a claim.
In fact, according to Wiraya, 38% of the UK has never made a single claim with their insurance provider. A good 53% of respondents describe their relationship with insurers as “unrewarding,” with 63% citing price as the factor most likely to make them switch.

So what do customers want? In line with the call for transparency, 41% identify better instruction on the claims process as another way to improve their perception of providers. In addition, 33% find value in more personalised thoughtful communications while 15% think added services such as travel tips would help.

More interestingly, 26% confuse price comparison websites for actual insurers, meaning something’s wrong when it comes to brand recognition. The same percentage of respondents stated GoCompare as an insurance provider; 23%, Comparethemarket; and 21%, MoneySupermarket.

Wiraya also found that it’s department stores that consumers trust more, with traditional providers such as Admiral and Hastings Direct being favoured by just 12% and 6% of respondents, respectively – compared to the 25% for John Lewis and Tesco’s 23%.

“The popularity of department stores and grocers for insurance is a reflection of how damaging price competition has become for insurance providers,” noted Sam Madden, UK director at Wiraya. “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.”

Related stories:
Study finds ‘pain of rejection’ drives fraudulent insurance claims
Insurance costs to rise after Supreme Court ruling: Insurers

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