If recent reports into the falling levels of trust placed in the insurance sector are to be believed, then the industry needs to reinvent its perception in the mind of consumers – a fact not lost on Ashley Doody (pictured), chief product officer at Personal Group.
“Customers need to be reassured that when they do need their policy, it will be there for them,” he said. “The world and the protection that people need is changing at pace. Insurance companies, therefore, need to make sure their policies remain relevant to their customers. This is where a personalised approach will become even more important.”
Doody noted that companies must consider the value-added extras which will improve their customers’ lives. There is an increased need for insurance companies to start offering more proactive solutions through risk management services and pre-emptive protection. For example, somebody who is purchasing life cover may want to take more proactive steps to protect their physical health - and this is where insurance providers can present an expanded value proposition.
During a recent webinar held by the Chartered Insurance Institute (CII), senior leaders throughout the insurance sector tackled the question of how to improve trust in the services offered by the industry. MD of Fairer Finance James Daley said that a simple solution would be rewriting policy documents in as clear language as possible without “dumbing down” the policy.
Particularly in the retail space, doing so is strengthening your position, Daley said, as 99% of cases will be fought at Ombudsman level, where fair and reasonable is what counts. There are many cases which indicate that the Ombudsman does not think it is fair or reasonable to bury an exclusion deep within a policy document or to write it in a language many people cannot understand.
“Even if it is there in black and white, that doesn’t mean you can necessarily stand by it,” he said. “And that also does transfer to the courts. There isn’t much case law around this, but the Consumer Rights Act says that consumer-facing contracts need to be written in plain and intelligible language, and that anything onerous needs to be bought prominently to a customer’s attention. So, again, there can’t be something lurking in the small print that customers didn’t expect.”
What insurance companies need to do, Daley said, is draw out the things that customers don’t understand during the purchase journey and explain them.
“When customers are buying the product and going through your journey, that is the moment you’ve got their attention for five minutes. And that is the moment you have to help them understand what your product does and what it doesn’t do,” he said. “And if you’re worried about attrition, what about playing a video at the moment they buy? And you can say, ‘just while we’re processing your card details, here’s a 60-second video that tells you three things that we know our customers misunderstand’. Nobody does that yet.”
It is possible to create contracts that are legally watertight, he said, and which will put insurance businesses in better stead at the Ombudsman. Daley said he thinks too many insurers hide behind the fact that they’ve had this policy document for the last 20 years, and because no major disasters have happened, believe it is probably fit for purpose.
“But actually,” he said, “when we [at Fairer Finance] go through the process of rewriting these things from scratch, we find that a lot of the wording isn’t fit for purpose, and it doesn’t even do what the underwriter intended it to do in its current form. Going through that process is time-consuming, it’s expensive, it’s painful, but it’s a valuable pursuit for your business.”
