Why has there been a loss of trust in the insurance industry since the pandemic? Our expert panel discussed what insurers and customers can do to restore confidence.
No industry escaped unscathed from the COVID-19 pandemic, but insurers and their customers were particularly hard hit. At The Angle, Markel’s thought-leadership event focusing on the realities of the professional indemnity insurance market, the expert panel discussed the loss of trust the industry has seen, and what can be done to address it.
Trust has been a challenge for insurers even before the pandemic. This is partly because insurance is a unique product in the sense that purchasers do not see or realise its value until and unless they need to make a claim.
Even then, they will only be satisfied if their understanding of the policy is aligned with that of the insurer, and the claim is paid. Unfortunately, however, that is often not the case. The problem is further exacerbated by media coverage of insurance often focusing on instances where the insurer has “refused” to pay out, even if the decision was the correct one according to the terms of the policy.
Since the pandemic, insurers have been hit by a “double whammy”, said Katie Prescott, Technology Business Editor at The Times, who was chairing the panel. Insurers have had to deal with reputational damage off the back of the pandemic, combined with the economic and political turmoil that it has wrought.
So, what can be done about it?
Prescott recounted a message she’d received during the early days of the pandemic from someone who had made a claim on his business interruption insurance. He was met with “32 days of silence”, followed by a “mean-spirited response… highlighting a tiny exclusion clause”. After being sent “round and round the complaints system”, he did eventually receive a pay-out, but he said it had negatively affected his perception of the insurance industry.
“What’s the point of insurance? It should give you confidence”, said James Trezona, founder and managing director of the communications and marketing agency Rooster Punk. “You want to know if you’re covered, but some of these policies are so complex that it’s hard to be totally sure until you’ve made the claim.”
“Insurance should give you confidence, and you can’t really have confidence unless you’ve got trust”, agreed Derek Cribb, CEO of IPSE, an association of independent professionals and the self-employed. “You have insurance policies that are written by insurance people, but they’re purchased by non-insurance people. While we can try and simplify it as much as possible, there’s almost certainly going to be an understanding gap between what you’re buying, and what the insurance company is selling. We have a lot of nervous members picking up the phone just to ask, ‘am I covered?’”
“I’m not sure there’s a simple answer – we’re in a volatile period”, Cribb continued. “Insurance policies often have complex wording written by technical experts, and the way that’s communicated to the customer could be improved. But I think you could argue that it’s a two-way process. We need to encourage customers to ask more questions about the policies they’re buying, because that will bring them greater confidence in navigating a complicated market, and that’s going to start rebuilding that trust.”
Building confidence and trust is a key objective for Markel’s advice line, said Beverley Bates, director of advice services at Markel Law. “When you buy an insurance policy, knowing that you have that legal and tax support on the other end of the phone, all year round and on an unlimited basis, does help to build a relationship.” Clients can call the advice line with any issues they have, “even if it’s nothing to do with their insurance policy”, which “helps to build that trust.”
Ultimately, rebuilding trust will require a multifaceted approach. Simplifying and clarifying policy language, while encouraging customers to ask questions before purchasing, will help to bridge the “understanding gap”. At the same time, insurers will need to continue working to build and nurture relationships with clients. Having the systems in place to weather continuing economic and political turbulence will also be crucial.