Our research points to six causes of mistrust in insurance, as detailed in a previous article.
Worse, insurtech startups are hammering the incumbents. Globally, there are 1,552 insurtech startups across 14 categories through Q3 2019, according to VentureScanner.com. They have cumulatively raised $31B. Each one believes it can disrupt their niche and steal market share from what they perceive to be an inadequate incumbent.
But are insurtechs more trustworthy? How? We have looked for some examples to see how exactly insurtechs are winning trust:
#1 Too often buyers are unclear what they are buying. The Financial Conduct Authority issued a rebuke to the industry in its report Smart Consumer Communications citing the “fog” of industry jargon, and the “maze” of bureaucratic processes that confuses consumers.
#2 “Consumers are sceptical because they don’t understand how insurers arrive at a price,” says Manan Sagar, chief technology officer EMEIA of Fujitsu UK. “I was recently quoted £300 more for my car insurance renewal. Why? If the insurer could say it’s because I did 40 mph in a 30 zone, and am being penalised, then I would understand. In that case, there would be clear facts based on my driving performance data to explain the price rise. But in my case there was no explanation, and that is all too typical.”
#3 Data breaches destroy trust in financial services brands. Alas, often the insurer perpetrates the violation via a misguided assumption of what consumers will tolerate. Even the best can err. Admiral Insurance built a policy around using Facebook posts to analyse the user’s personality. It claimed Likes, the tendency to use well-constructed sentences, and precision on times when meeting friends, could offer insights.
#4 Consumers want to feel their provider understands their needs. Unfortunately, too many insurance products lack relevance. The coverage may be too broad: such as travel insurers which offer either one month or annual policies, and nothing in between.
#5 We live in an era when user interfaces are intuitive and smooth. Elite technology companies experiment through multivariate testing to shape Graphical User Interfaces that are beautiful to look at, informative and require no instruction manual. Insurance, by contrast, is lagging in the CX stakes.
#6 Perhaps the biggest cause of reduced trust in insurance is the belief that insurers won’t honour the policy. The concern is more than money. After all, 99.9% of life insurance claims are paid out, 91.6% of critical illness, and 88.1% of income protection, according to the ABI.
(to be continued)
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This article is part of a series of articles and webinars dedicated to the insurance industry. FintechOS has talked to leading companies from incumbents and startups to accelerators and consultants, to get to the heart of the question that is keeping the industry busy: why is there a crisis of trust in insurance?
For more findings on insurance:
➡️ Watch the recording of the webinar – on demand: https://fintechos.com/how-insurers-can-win-back-customers-webinar-success/
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On the same topic:
Insurance: The Root Causes of Low Trust
Claims Management: How To Do It Right
“If Not for the Technology, The Business Might Have Been Shut Down Because of the Lockdown”
The Greatest Challenge Facing Insurance
