The countdown to Consumer Duty has been ringing in insurers’ ears since plans for the new regulatory standard were first announced in December 2021. Today, the wait for many is over as the Duty comes into force for new and existing products or services that are open to sale or renewal.
A core component of the guidance is around supporting customers in vulnerable circumstances, with organisations required to focus on the diverse needs of their target market at every touchpoint of the customer journey – be that on websites, online portals, or text and telephone channels. With that in mind, it’s no surprise that the searchlight on how insurers can support vulnerable customers is now burning brightly, as highlighted by Phil Michell (pictured), consulting director at Davies.
He noted that this increasing focus is not just down to the march of Consumer Duty, but also shaped by broader trends in the population. Approximately 47% of adults across the UK are displaying some element(s) associated with vulnerability, he said, with almost one million individuals suffering from dementia alone – a figure forecast to grow to 1.6 million by 2040.
“And there’s a significant group of customers who aren’t necessarily financially vulnerable, but do have elements of vulnerability who require additional support, which is covered in the broadest sense and spirit of Consumer Duty,” he said. “But right now, in our view, these conversations aren’t necessarily fully encapsulated by organisations when they think about customer vulnerability or when they think about Consumer Duty.”
Research recently carried out by Davies identified that vulnerable customers tend to be a poorly represented subset of the market, not least because they are much more likely to be digitally disenfranchised. They often don’t have access to the same channels to be able to leverage their feedback more effectively, he said, which makes it more difficult for organisations to take on board their feedback - which can lead to under-representation.
The complexity of engaging with vulnerable customers is being amplified by two key trends – the increased number of people who self-identify as vulnerable and the rising amount of people who – for a myriad of reasons - do not recognise themselves as vulnerable. On the latter, Michell noted that while this makes it more challenging for organisations to engage with their vulnerable customers, they still have a duty to identify those behaviours and react accordingly.
“A light has been shone for me on this recently because my father is suffering from early-stage dementia,” he said. “Seeing the world and his interactions with organisations through his eyes, I know that while he would not recognise himself to be so, he definitely is vulnerable. And while the behaviours these vulnerable people portray are difficult to pick up on, they can be identified.
“For instance, individuals repeatedly making contact about the same issue when it has been resolved should be a red flag. That’s one level of it. Another is that organisations do have the capability to look at an individual’s journey path within a website, for example, and to pick up on symptoms and behaviours that are illustrative of a customer who is struggling – and then identify the opportunity to engage with that customer appropriately.”
The opportunity to engage more fruitfully with vulnerable customers is being perceived by some insurers as a challenge because so many organisations are not yet responding to the actual requirements of vulnerable people. A chatbot that pops up asking, ‘How can we help’ is not actually helpful to most vulnerable customers, he said - if anything, they see this as a further barrier to overcome, rather than a solution.
Identifying some of the mistakes made by companies, Michell highlighted that while digital advancements have allowed companies to change their websites on an almost daily basis, “just because you can, doesn’t mean you should”. The drive should be to create stability for vulnerable customers, he said, and these same new technologies can be efficiently used to create that stability by allowing users the choice of having the same online experience every time.
Creating a more streamlined and simplified website interface is also an effective means of supporting vulnerability in customers, he said, as this provides them with fewer options, reducing the number of customer experience ‘gaps’ that can arise.
“I would also say what we’re seeing is organisations almost driving customers to interact through the preferred channel from the organisation’s perspective, rather than the individual’s perspective,” he said. “But there will always be a place for vulnerable customers in more traditional methods of communication. So I would advise not to cut away those channels, but to make them available where necessary.
“And I do recognise some of the commercial advantages of alternative self-help, automated channels for volume transactions. But companies need to recognise their customers and recognise when they’re displaying evidence of vulnerability and respond accordingly.”
Davies’ research has revealed that a surprising number of organisations do not have a vulnerable customer experience strategy in place. Also clear, Michell said, is that even when companies do, they’re often not looking at the data they’re capturing through a vulnerable customer lens. Instead, they’re aggregating data together, which means they can’t analyse factors like customer satisfaction, NPS, customer advocacy and customer effort through that lens and understand the difference.
Offering his advice to organisations looking to support their vulnerable customers, Michell emphasised the need to, “find more ways to listen to your customers”. Companies should be utilising every tool at their disposal, he said, from speech analytics, to text analytics, to training staff to recognise vulnerable behaviour ‘triggers’.
The training of agents to identify and respond appropriately to customer vulnerability is especially critical, Michell said. And in a call centre environment, where individuals are being measured on average handling time and the number of transactions they undertake, companies need to empower their employees with the resources and training necessary to handle such cases with due care and consideration.
Something Davies is seeing as a real game-changer is the use of the representative organisations of vulnerable customer groups. Organisations like the Alzheimer Society are essential in providing the voice of the customer, he said, and are often willing to come into operations and bring to life the challenge that these consumers are facing.
“That’s the enlightening point for me,” he said. “If you can walk in the shoes of someone that has those challenges and issues, you become so much more empathetic to them and your ability to be able to respond to them becomes that much greater.”
Looking across the wider UK business environment he said it’s interesting to see that many of the organisations making significant inroads into supporting vulnerable customers are not those constrained by Consumer Duty. The opportunity therefore exists for companies to learn from the example set across other industries, particularly the utilities market which has made great strides in not just recognising and capturing data around customer vulnerability – but also reusing it.
“One of the travesties that we see is organisations are capturing this information, but they’re not using it during subsequent interactions,” he said. “And the ability to capture knowledge about a customer beyond the immediate and then utilise that through all the channels they use, even down to the agents that interact with them, is an opportunity for real differentiation.”
Michell noted that responding to the needs of vulnerable customers represents the intersection of the right thing to do and the sensible thing to do. While vulnerable customers might not yet make the majority of consumers, he said, they are an increasing component - and unless organisations start to look through that lens, the tip-over point of vulnerable customers overtaking non-vulnerable customers is going to take them by surprise.
“Setting the right customer experience strategy improves the service companies can provide to their customers be that though reducing effort, improving satisfaction or improving advocacy,” he said. “While price is an essential component within the product offer, our research has shown that customer experience is a fundamental component in the decision-making process of renewal and also in the feedback people give and receive.
“From personal experience, I know that the organisations that I see treating my father with respect have passed that advocacy on to me as well. So this isn’t just about the individual themselves, it’s about the halo effect associated with that and the positive light in which organisations can project themselves.”
