When I was asked to speak on social selling to a group that comprised senior executives from the insurance industry recently, the immediate and obvious subject was trust. After all, It is difficult to think of an industry more dependent on trust.
With this in mind, I reached out to my network for ideas and I was directed towards three great reference points.
Firstly Stephen Covey
Stephen Covey, who I was privileged to see speak at Leaders in London many years before his sad passing, often spoke of the high cost of low trust. In fact he maintained that trust in all businesses was not just important but essential.
The subject of trust is also at the centre of an email from the desk of Jeff Bezos shared by Brad Stone,author of a new book the Everything Store. One of the many revelations about Jeff Bezos is that he is somewhat preoccupied with the public perception of Amazon. Bezos wants Amazon to be a company that people trust and love rather than one that people fear and hate. Bezos wants to be an Apple, Costco, Nike or Google not a Microsoft, Goldman Sachs, JP Morgan Chase or Wal-Mart. Interestingly the justice department and JP Morgan Chase are currently haggling over if $13 billiion is sufficient for losing the trust of its customers during the 2008 financial crisis
Thirdly the 3i’s Study: Insurance, Intermediaries and Interactions
The IBM Institute of Business Value study, Insurance, Intermediaries and Interactions (Dec 2012) took input from 8,500 consumers and 1,300 intermediaries in 17 countries. What they discovered was that trust in the insurance industry has been low since the studies were started in 2007. In fact, in the current study, 56% answered no when asked do you trust the insurance industry? Eek ! Interestingly no one in the industry is surprised by this and whilst is has increased (slightly) in the 2012 study no one in the insurance industry is happy about it.
The Price of Trust
The study also identified that trust is highly correlated to loyalty. The people in that room, all experts in insurance, could assess what churn, the consequence of a lack of trust, costs them far better than I ever could. However, I think it would be difficult to argue with Covey’s wisdom that there is ‘a high cost to low trust’.
Trust is Personal
What interested me though is that whilst customers don’t trust the industry, they do appear to trust people. Three quarters of respondents in another IBM study, Trust, Transparency and Technology (these studies are also exercises in alliteration) said that they did have trust in their personal insurance adviser. Consumers don’t trust the insurance industry but they trust the people they buy their insurance from.
In fact, more than half of those studied still buy from a person. In a time when there is less and less human interaction in business (think Amazon) it remains a foundation for insurance because of all the forms of interaction, we trust human interaction the most.
Personal Interaction has Changed
However, it can’t have escaped anyones attention that the way we interact has changed. Interaction is digital. Insurance customers are using social platforms as part of their buying process. More than 70 percent of study respondents use one or more social networks. They might ultimately buy from a person but the purchase is just one of many interactions. Like many complex products, there are a lot of interaction points. Websites, aggregators and increasingly, social media are replacing many of those face to face interactions.
Customers might not be concluding their final transaction on-line but they spend 60% (and more) of their time being influenced here.
Insurance Customers are better Informed
Consumers are not just interacting differently either. They are better informed than ever before. Before the Internet, complicated products and the difficulty in getting information (and sometimes in complying with regulation) kept insurance a sellers’ market. Now that insurance customers can easily find each other, and exchange experiences and ideas, the rules are changing. To create customer trust through interactions, insurers and intermediaries need to adapt. These are old rules but new tools
Who is responsible for trust?
So who (insurer or intermediary) is responsible for building and maintaining trust? Whilst much of maintaining a personal relationship is something that intermediaries have been doing well for a long time it would seem that it is not that simple.
The 3i study refers to a rare experiment in behavioural insurance conducted in 2011. The experiment was carried out at the Institute of Insurance Economics in Switzerland. One of the findings of the study was that customers see a perceived lack of quality as a reflection on professionalism and training i.e the fault lies with the intermediary and the insurer. With issues of reliability, customers see this as a reflection entirely of the insurer. Even a great intermediary cannot sell a poor product.
The experiment shows that the personal side of being a trusted adviser is only one part. Maintaining professionalism, knowing customers personally and treating them personably is something the vast majority of intermediaries have been doing for as long as they have existed. But intermediaries cannot do this alone. In fact the report concludes with a recommendation for insurers.
Insurers have to provide support. That can happen through training, through a corporate culture of customer first, through good and consistent products and messaging, and, last but not least, by giving intermediaries the tools and data they need to serve their clients well.
It would seem that even in a highly intermediated market trust is everyone’s responsibility.