Less than a third of people trust insurance providers, despite their comparatively small role in the financial crisis, according to PwC’s latest report, "How financial services lost its mojo – and how to regain it". The report is based on analysis of a survey of over 2,000 people across the UK.
Lee Clarke, insurance risk and regulatory partner at PwC, commented:
“Many customer-focused insurance providers will feel that this perception is unfair. Nonetheless, tackling this lack of trust must now be an over-riding priority. Those who don’t change now, and those who don’t make the right changes, risk going further down the road where the people they are trying to reach have stopped listening and will only pay attention again when something genuinely different comes along.”
The report also reveals that although almost one in two people (49%) believe regulation of the financial services sector has been strengthened in the wake of the crisis, a greater proportion (57%) do not believe the reforms that have been implemented are sufficient to ensure that history will not repeat itself.
The survey suggests that consumers’ lack of trust is affecting all financial services sectors, not just banking, reflecting a generalised malaise across the industry. As table 1 reveals, fewer than one in three consumers now trust their bank, while for other types of financial services company, ratings are even lower. The fact that certain types of institution have been at the forefront of industry issues in recent years has not prevented other organisations, such as insurance providers, from suffering reputational damage.
Table 1: How trust in financial services firms has been eroded
|
|
Number of customers who
trust organisation |
Number of customers whose trust has
increased in the past year |
|
Retail banks |
32% |
10% |
|
Investment banks |
15% |
6% |
|
Financial advisers |
28% |
6% |
|
Insurance providers |
27% |
6% |
|
Fund managers |
12% |
5% |
|
The police |
53% |
10% |
|
General practitioners |
76% |
13% |
|
NHS nurses |
79% |
14% |
Repairing trust
The survey suggests that consumers’ personal experience with insurance providers is generally the most significant factor in determining the level of trust.
Table 2: Influences on people’s trust in financial services providers
What are the most influential factors affecting whether you distrust financial services providers?
|
|
Retail
banks |
Investment
banks |
Investment
banks |
Fund
managers |
Lawyers/
solicitors |
Financial
advisers |
Personal
experience
dealing with
provider |
41% |
20% |
39% |
19% |
35% |
30% |
|
Press coverage |
30% |
32% |
25% |
25% |
22% |
23% |
Transparency of
price and
terms/conditions |
27% |
22% |
25% |
19% |
19% |
21% |
Conversation with
friends/family |
20% |
16% |
23% |
14% |
26% |
21% |
The insurance industry’s traditional response to concern about consumer mistrust has been to stress goals such as greater transparency. However, the survey suggests the impact of further work of this type might be relatively limited, at least in isolation. Though greater transparency is the single improvement most likely to rebuild consumer trust in financial services, even here fewer than one in two people (46%) would be impressed by such changes.
Lee Clarke, insurance risk and regulatory partner at PwC, commented:
“The lack of trust in insurance providers partly reflects a failure to articulate the value they are offering, leading to suspicions that their overwhelming priority is to make short term profits. Providers must find new ways to explain the services they are providing, encourage consumers to voice their goals, priorities and expectations, and to respond to these.
“Insurers are starting to ask their customers to publically review and share their experience of the company, whether good or bad, online – much as the travel industry has been doing for years. This openness can substantially improve company approval ratings with customers.
“Taking genuine and conspicuous steps to satisfy customer goals, priorities and expectations, especially where there is no obvious short term gain – or even a clear cost – to the provider, is a response we’re starting to see more of.”
Digital commerce is a growing phenomenon – to which financial services are well suited – and this is likely to be a key battleground going forward both between incumbents and also for challengers. As table 3 reveals, people consistently rate financial services companies ahead of businesses such as retailers on their data practices. However, the data suggests that insurance providers are lagging behind other financial services providers. The opportunity here is for insurance providers to use the existing reputation of the financial services industry as relatively trustworthy custodians of customer data in this particular battle.
Table 3: Financial services companies are more trusted to securely hold data
Which of the providers that acquires information on you do you trust to hold this data securely?
|
|
Trust |
Distrust |
|
Your bank |
52% |
21% |
|
Your savings provider |
47% |
20% |
|
Your pension provider |
39% |
18% |
|
Your insurance provider |
35% |
26% |
|
Your investment provider |
23% |
22% |
|
Your financial adviser |
25% |
21% |
Online services such as
social networking sites |
15% |
50% |
Online services such as
online retailers |
22% |
40% |
Jonathan Howe, insurance leader at PwC, concluded:
“Ultimately, this all translates to the quality and resilience of insurance provider brands, not in the sense of logos and colour schemes, but in the sense of the expectations that exist in the minds of customers and other stakeholders of consistent, superior service provision. With the traditional barriers to entry becoming eroded – or becoming harder and more costly to sustain – brand is becoming the critical strategic asset of the future, and companies must therefore rediscover their mojo with customers to stand out for the right reasons.”
|
