Is Technology the Answer to Boosting Consumer Trust?

Compared to 78% who trust the technology industry, 70% who trust automotive and 69% who trust retail, only 57% of consumers trust the financial services industry, according to the 2019 Edelman Trust Barometer.

The 2018 LIMRA Insurance Barometer Survey, meanwhile, reports that 31% of consumers do not purchase life insurance because they don’t trust insurance companies—and 33% don’t purchase life insurance because they don’t trust insurance agents.

In an industry built on “the promise to pay something in the future,” says Ed Majkowski, Americas Insurance Sector and Advisory leader, EY, those low numbers are a problem. “You have to have a high level of trust in insurance just by the very nature of the product.”

Why does trust matter so much for any business, but especially an insurance business? “The answer to that is a math answer,” says Bernhard Klein Wassink, principal, Global Insurance Customer & Growth leader, EY. “Higher satisfaction and higher trust reap a higher net promoter score, which drives conversion rates when you’re selling and retention rates when you’re servicing, and a higher value placed on the relationship. Both agents and carriers benefit from more trusting customers.”

But as EY points out in its 2019 insurance outlook, insurers have historically taken a reactive rather than proactive approach to macroeconomic trends, demographic shifts, market demands, technological developments and regulatory changes—and that has hurt consumer trust.

“In a day and age where you can pretty much stand anywhere in the country, ask a question to your phone and get a pretty accurate answer on the spot, that raises the bar for insurance companies and agents,” Majkowski points out. “Customer expectations continue to increase, which means insurers and agents have to be able to interact with one another and with the customer in a consistent manner.”

And what that looks like, precisely, has a whole lot to do with technology. “There’s an unavoidable segment of customers, which will grow over time, that wants to interact digitally first, and some of them will pull that all the way through to buying,” Klein Wassink says. “That’s not because EY or the carrier or the agent says so—it’s just a fact of life, and that means you have to meet them there.”

EY’s report outlines three new capabilities insurers can develop in order to maintain trust among consumers: tracking shifting customer and market variables; identifying demand before it materializes; and launching products before competitors. “When carriers provide digital self-service, they see that those service transactions have a higher satisfaction yield, which supports trust,” Klein Wassink explains. “The technology sector may have more of that seamless, frictionless experience, but carriers can build toward that, too.”

So how can the distribution force follow suit? “Customers want to do research online, and then they want to have a conversation,” Majkowski says. “More carriers will start dealing with customers direct, using digital capabilities for routine, self-service things like processing a transaction or adjusting a bill. But consumers want to continue the discussion after they’ve gone online and done a little homework.”

That’s good news for agents, 55% of whom are willing to give up some of the role they play in servicing in order to spend time with customers on advice and problem-solving, according to EY’s research. “Agents have to learn digital marketing, they have to have websites that work, they have to have lead generation mechanism themselves,” Klein Wassink says. “What a lot of carriers are doing is trying to beat down on the administrative tasks they put the agents through so that agents can spend more time marketing and selling.”

From experimentation with chatbots to new product offerings that incorporate technology like wearables, “you see a lot of attention on the customer experience itself,” Klein Wassink says. Take, for example, a new producer appointment: “That can be a painful process for an agency, or it can be simple and digital. Or, if I want to look at my commission report, that can be five phone calls and a fax, or it can be a simple online lookup. But as an agent, you have to use the tools carriers are giving you.”

Majkowski believes independent agents are “invaluable” in the insurance trust equation. “The way you deliver that value will continue to morph and evolve with the rest of the world, but I don’t see that as a threat,” he says. “Independent agents are going to be able to handle more volume as they get more away from basic, administrative and manual things that their carriers will continue to automate, and they’ll spend more time having these conversations with their clients about the things that matter most. That role is not going away any time soon.”

“Digital and its adoption shouldn’t really be a conflict for agents,” Klein Wassink agrees. “It’s a complicated equation, but that notion of channel conflict—that’s a discussion from four years ago. Most agents like this new digital world. They want to play. If they keep that attitude up and carriers help them with the tools they need, I see this as a positive story.”

Jacquelyn Connelly is IA senior editor.