Tag Archives: trust

How to Earn Consumers’ Trust

Let’s talk about trust. The insurance industry is built on it. So why is there so little trust between consumers and the insurance industry?

According to the 2018 Edelman Trust Barometer, financial services as an industry has improved in the percentage of those surveyed who trust the industry from 48% in 2014 to 54% in 2017. While the level of trust is at least moving in the right direction, financial services does rank dead last among all of the sectors polled. Last.

Trust is not something that comes easily these days anywhere, much less in the world of insurance and other financial services. This is not great news for an industry in which we literally sell a promise to be there when bad things happen to consumers and businesses, such as car accidents, fires or deaths.

Many insurers may think of data along these lines:

Consumers trust and understand that, at the end of the day, insurance carriers are in the business of data. It’s at the core of what we do, the data is how premiums are decided, how to best protect assets and develop the fastest solutions when there is a loss, how products are marketed and much, much more. Of course, carriers can be trusted to protect that data and consumers’ privacy.

As a regulator who often hears from consumers, I wouldn’t bank on that. Simply put, there is a lot of uncertainty around data these days. Cyber-attacks are in the news seemingly endlessly, from Home Depot, to Target, to Equifax. And if consumers know one thing, it’s that their data is out there, often on old systems that may or may not be properly maintained, and many big-name companies may not have succeeded in protecting that data, and thereby their privacy.
Consumers also often are bombarded with long applications or questionnaires, sometimes with rather personal questions. Often, they are left baffled trying to understand, “Why would these people need this information?”

See also: When Not to Trust Your Insurer  

Many agents or brokers requesting the data may not know themselves. Data collected by insurance companies is input into complex algorithms in trade-secret black boxes to which few have access, much less full access.

Simon Sinek provides great insight into why leaders and companies need to focus on answering the question of “why” to maintain the focus as anyone—leaders, product managers, agents and brokers—starts the process and as any of us review whether that vision is working. Sinek says that people should consider whether “Starting With Why” in innovation will instill trust and cooperation.

If companies are transparent about exactly why data is collected, consumers can understand how it affects them. Transparency also can allow agents, brokers, consumers and others collecting the data to ensure it is as accurate as possible.

This issue is being discussed inside insurers, at insurance departments and among consumers. There can be scary downsides to secret data black boxes in insurance and otherwise.

Insurers could also use the data to provide feedback to help consumers better manage their risks. It’s important that, as new technology brings new opportunities, those asking for the information fully explain the “why” behind requests for data.

Insurance is global, and changes in other countries may cause changes that affect U.S. consumers and companies. As the General Data Protection Regulation (GDPR) is on the eve of its effective date of May 25, 2018, in the E.U., the U.S. has the opportunity to learn from the experiences.

When the Iowa Insurance Division addresses these topics with companies, we point out the obvious. These are your consumers. If consumers ask the question about what data is being used and from what point, they should gain a clear response so they can understand fully before they consummate the transaction.

See also: 6 Lessons in Trust From Retailers 

Those in the insurance industry are given and trusted with much data. Because of that, much is expected.

It’s an incredible time to be in the business of insurance, and the expectations are high. The Iowa Insurance Division will continue to work with companies and consumers to discuss the proposed “why” for the benefit of all affected. After all, the insurance industry is built on trust.

6 Lessons in Trust From Retailers

When it comes to digital transformation, the insurance industry lags woefully behind other industries, and it is not just a question of technology. Even as the industry advances technologically, developing digital capabilities that rival other industries–from chatbots to IoT–selling insurance direct to consumers (DTC) has proved a difficult code to crack. Even Geico, the darling of online auto insurance sales, still closes the majority of its new policies on the phone, via an agent.

The retail ecommerce industry on the other hand has proven to us that there are very few things consumers are not willing to purchase on the internet. From buying groceries to booking airline tickets, consumers are comfortable conducting all kinds of transactions online, from the very simple to the most complex. Every day, millions of people even do their banking online. So what is the deal with insurance?

At Cake & Arrow, we have conducted hours upon hours of primary research in the insurance industry, talking to hundreds of consumers, carriers, agents and brokers in an effort to help our insurance clients answer this question and, in turn design better products and experiences. Throughout this process, we have learned a lot about how customers think and feel about insurance, perhaps our most lasting insight being a lesson about trust. The main reason consumers don’t want to buy insurance online directly through a carrier? They don’t trust insurance companies. This is why, even in the golden age of digital commerce, consumers continue to opt to purchase insurance through brokers and agents.

On the surface, fixing this problem may seem simple. All carriers need to do is to gain the trust of their customers, right? Easier said than done. While earning trust may seem like a simple enough idea, it is an issue most carriers don’t even know how to begin to tackle.

In my experience, when you want to learn to do something well, the best thing to do is to emulate an expert. In the case of consumer trust, it’s the retail e-commerce industry that has, over the past two decades, mastered the art of consumer trust. Each and every day, millions of transactions happen online, and most consumers don’t think twice about ordering their groceries, electronics, clothing, books and everything in between over the internet. This hasn’t always been the case! Gaining the trust of consumers has been a hard-won battle, and those who have done it well (Amazon) are ruling the industry. If imitation is the highest form of flattery, what lessons can the insurance industry learn from the retail industry that can help them foster trust with consumers and drive a truly digital offering?

1. Establish consistent workflows.

The retail industry has the benefit of a consistent process across products, stores and platforms. For the most part, everyone basically understands the standard steps in a checkout flow. Select your product, fill in your shipping and billing information and purchase. And while there are of course optimizations that can be made to make an experience better, in general, consumers know exactly what to expect when purchasing a product online.

The same cannot be said for insurance. Unlike a book or an item of clothing, insurance is not a static product sitting in a warehouse with a price tag. Insurance products are complex. Coverage and prices are variable based upon any number of risk factors, and complex underwriting rules and changing regulations can make it difficult for consumers to understand what exactly they are buying and how it is priced.

This leads to confusion in the process of quoting and buying insurance and to a lack of standardized practices across the board. From a user experience (UX) and design perspective, one of the first steps the industry can take toward gaining consumer trust is to simplify and standardize the quoting process so that consumers know what to expect when buying insurance online and understand each step of the process.

And while underwriting rules and regulations will need to be streamlined to establish an effective industry standard, insurance companies can start by being more transparent with users about what to expect in the quoting process, including informing users about how their personal information is being used. This will help customers better understand the quoting process, feel more comfortable dispensing with personal information and give them general confidence in the process by establishing clear expectations.

See also: Top 10 Insurtech Trends for 2018  

2. Invest in quality visual design.

Over the past two decades, we’ve seen retail ecommerce design evolve, following a general trend toward customer-centricity. Flash sites, cluttered home pages and flashy fonts have given way to clean, simple designs that streamline the shopping process, communicate the brand and are organized around customer needs, interests and behaviors.

The insurance industry needs to follow a similar path, leveraging user-validated design to create trust with customers. A modern, usable, well-designed website is a signal of legitimacy. It tells customers that a real company is behind a product, and this company cares enough about its customers to invest in the experience.

A strong visual design that implements best practices removes that cloud of doubt in the mind of a customer and builds confidence and pride in the end product. In the same way that a strong brand is a promise of quality, a great visual design is an early demonstration that a carrier cares enough about a customer to invest in a quality digital experience that will translate into a quality product.

3. Implement a killer content strategy.

Content strategy is just for news sites, magazines and blogs, right? Wrong. Content is an important piece of the sales process. For our retail clients, we have learned that crafting and executing a killer content strategy is critical to helping customers learn about a product, understand occasions for using products and gain insight into the actual value of a product. Effective education about products and services demonstrates a company’s willingness to keep its customers informed. And the more a customer feels he understands what a company does and what its products are about, the more he will trust it.

While we often see short marketing messages on insurance carriers’ sites, few insurance companies invest in content on their website to help explain to their customers the value of a product or the differences between products, and to educate them on when and where to use the product so they feel empowered when making purchasing decisions. Educational and informative recommendations will help insurance companies establish a rapport with consumers as a trusted adviser. Companies must even be willing to tell customers when a product isn’t right for them and demonstrate that they care about more than a sale, but about helping their customers make informed decisions that benefit them. A killer content strategy will help insurance companies do this effectively.

4. Enable the right level of customization.

The best retail experiences allow for just the right amount of customization. When buying clothing online, for instance, we can choose colors and sizes and have a choice of different delivery options. Subscription services like Trunk Club allow shoppers to input information about personal style preferences, including color and pattern preferences, set price points and decide on frequency to receive a custom selection of clothing recommendations when, where and however often they desire. This kind of customization breeds customer loyalty and, like a good content strategy, can help customers being to think of a company as a trusted adviser with their best interests in mind.

Insurance companies should explore enabling similar types of customization. While easy packages are just that–easy–they don’t drive stickiness with customers. Giving customers the ability to modify and tweak plans according to their unique needs and circumstances will drive a connection between a customer and a product. In the same way that these types of customizations breed loyalty in retail e-commerce customers, giving customers more control over choosing the kind of coverage they need at a price they can afford is a powerful way of building loyalty and competing with other carriers on something other than price.

And while enabling customization is important, it is really critical that companies don’t take things too far, allowing customers too much customization and, in the process, sacrificing the experience. In speaking recently with a carrier, I learned of a story of customization gone wrong. The carrier’s data showed that customers who were able to customize a package were more likely to purchase a policy. Emboldened by this piece of data, they created a new quoting page that allowed customers to customize every aspect of their policy. Lacking the qualitative info on how and why people were more likely to convert when customization was enabled and without user testing on the new custom design, they missed some essential information. Allowing their customers to customize everything about their policy made the experience overwhelming, and conversions ended up falling off significantly.

I tell this story as a reminder to companies that testing and validating every design decision with users is critical–and one of the reasons the e-commerce industry has been so successful at digital.

5. Play around with promotions.

Promotions are one of the most reliable and time-honored means of staying competitive for retailers. Promotions can make or break a business. Free shipping on big orders, Black Friday sales and BOGO (buy-one-get-one) offers are all commonplace in the retail e-commerce industry, and are incredibly effective at creating consumer loyalty and trust.

While, in the insurance industry, it is nearly impossible to offer dynamic pricing or let customers actually play with coverages to get a fully custom price due to regulations, discounting isn’t something to be overlooked. Bundling is a real thing, and customers are more likely to purchase a policy if they see a real deal–and understand its benefits.

For example, I’ve seen many insurers combine rental insurance with auto insurance at a discounted price. When customers see deals like this, they oftentimes don’t understand the full benefits of the deal. For example, they may not know that rental insurance protects not only their property but also against liability and, considering the coverage, is incredibly affordable. Developing a robust content strategy to better inform customers about deals and the benefits of coverage will not only increase sales and stickiness, but help customers begin to truly appreciate the value their insurance company is bringing to their lives.

6. Leverage user-generated content.

When shopping online and in store, we have come to rely on ratings and reviews to help us evaluate products and make purchasing decisions. User-generated content, such as Instagram posts of real customers wearing clothing or jewelry, can help us see how a dress might fit a certain body type or how a piece of jewelry looks in context. This level of transparency sends customers a clear message that as a company you have nothing to hide–further inspiring trust.

See also: Sharing Economy: The Concept of Trust  

Just like in retail, user-generated content can be integrated into your content strategy and can do the work of educating customers about your products–explaining the difference between certain coverage offers, for example, or why as a carrier you stand out from other companies offering similar products.

Real content generated by other customers helps customers understand how a certain policy works–what the service is like, what the claims process is like, what kinds of scenarios are covered. It can be scary to leave your company and offering open to negative user feedback, but, if you are doing your job, it will end up being more useful than it is harmful.

Insurance companies still face many hurdles to getting consumers to trust them and to earning the kind of rapport with customers that the retail industry has established over the years. Anything short of a truly standardized process across all carriers and products will continue to cause confusion and suspicion among customers. But there is nothing stopping insurance carriers from taking strategic steps toward customer-centricity, emulating more mature industries like retail e-commerce that have done it well.

This article first appeared on the Cake & Arrow website, here.

How Insurtechs Can Win Consumers’ Trust

Insurance technology companies can be innovative, efficient, agile. They can delight their customers with modern user-experiences, impress them with low costs from reduced overhead and surprise them with swift service. But there is one area where they face an uphill battle to take market share from large, established insurance institutions. Trust. Why would a customer risk choosing an insurtech company with a young record in the industry over a traditional player with a long-held reputation for being well-capitalized? When the hurricane hits, can the insurer be trusted to honor the payout?

See also: The Insurer of the Future – Part 9  

The answer for insurtechs is not to focus on battling the behemoths to create equally huge capital backup. Insurtechs have to win the battle for hearts and minds. Insurance is about customers achieving peace of mind. But the industry is plagued by major misalignments of interest. Customers may well understand that the major players have enough money to pay their claims but they don’t necessarily believe they will pay out. There is a trust deficit. Large companies with capital have high costs and, unfortunately, making payouts can directly impact their profits. Regulators aim to protect customers and ensure fair payments. But, in the end, the cost of the additional compliance bureaucracy is passed on to a distrustful end-customer anyway.

Insurtechs need to rely on their competitive advantage — technology. That technology, and specifically blockchain, can be deployed to ensure customers receive their payouts automatically. As a customer, you can have no better peace of mind than knowing you will receive payment immediately with no questions asked. Insurtechs can provide “parametric” insurance policies where events trigger automatic payments, eliminating the burden of customers’ claims processes. Parametric policies can work, for example, for flight-delay insurance. If a customer buys a policy against a late arrival of an hour or more and a plane is indeed officially logged as behind the clock, then payment is made automatically. Blockchain technology has the power to create an unalterable database that can be trusted immediately by the insurer and customer alike, meaning the transaction is transparent and automatic. In this way, blockchain enables provable fairness to allay consumers fears over the industry’s misalignment of incentives. The same parametric insurance mechanism can be used for weather. A six-week drought can prompt payout to farmers who fear their crops will shrivel. The farmers do not have to prove their loss. The data executes the policy automatically.

See also: 10 Trends at Heart of Insurtech Revolution

It is possible to imagine a world of insurance with vastly reduced overhead – a world where payments are automatic and there is no need for cumbersome claims processes. This clearly means insurance policies can be cheaper – and cheaper policies opens the possibility of more granular policies targeted at the real lives of customers. This is another way the insurtechs can win the trust of customers – by being perceived as helping solve their actual, specific problems. A sports club can organize a tournament and insure its players against injury. That kind of specific policy is currently likely to be seen as low value for the big insurance companies. But with their lower costs, insurtech companies can use blockchain to design a bespoke policy that serves customers and creates profits.The insurtechs can use their cost efficiencies to provide bespoke policies that create an intimacy with a customer and that, in turn, builds trust.

The Entrepreneur as Leader and Manager

Entrepreneurs are doers. One of the strengths of successful entrepreneurs is that they get things done. However, relying solely on their own capabilities is limiting.

We only have so much time, energy, creativity and intelligence; it is a finite game. To realize the fullness of our potential, we have to harness the time, energy, creativity and intelligence of others. We need to be playing an infinite game.

To do so, we must learn to lead and manage.

In this complex and ever-changing world in which we live, we typically are dependent on others to get the results we want. As an entrepreneur grows his or her business, the interdependencies multiply. Entrepreneurs have to trust others — and other people have to trust them.

See also: 6 Tech Rules That Will Govern the Future  

The starting point is leadership. My friend and colleague Dr. Herb Koplowitz defines leadership as follows:

“Leadership is the ability to set a direction and coordinate the actions of others in implementing it.”

Leadership is primarily concerned with vision and strategy. Vision is the direction toward which you want to take your business. Strategy is the clear plan of action to get there. Management is concerned primarily with accountability and authority. The challenge for many entrepreneurs is that they lack clarity around their vision; they lack strategy to build the right structure; and they have never learned how to exercise authority or hold people accountable.

For the entrepreneur, the ability to create highly productive working relationships that can fulfill their vision depends on three factors:

  • Effectiveness: Doing the right things to reach their strategic goals.
  • Efficiency: Doing things right to optimize the use of resources and to reduce costs.
  • Trust: Creating a positive working environment where people feel safe, respected and valued for their contributions.

As a leader and manager, it is important to take the time to develop and implement a business plan that includes:

  • A well-articulated vision (where do you want your business to be in five years?)
  • A clear strategy to reach that vision (what needs to happen to fulfill your vision?)
  • A formal organization structure designed to implement your strategy (who and what do you need to support your strategy and achieve your vision?)
  • Staffing and managerial leadership practices to maximize effectiveness, efficiency and trust (how do you need to transform the way you lead your business?)

See also: Incumbents, Insurtechs Must Collaborate  

To take your business to the next level, you need to be a leader and a manager.

How Crucial Is Trust in Workers’ Comp?

Your employee was just injured at work. He is in pain, cannot perform regular job duties and is unsure how quickly he can return to work. His mortgage, medical care and kid’s tuition payments are due next month. It is a vulnerable time for him, with substantial uncertainty.

When a football player goes down on the field and is carried off, the crowd applauds in support of the player, and the player often returns a smile. When a worker is injured on the job, what happens at the workplace before and after the injury can affect the costs incurred by the employer and the outcome achieved by the injured worker.

Twelve new state studies from the Workers Compensation Research Institute (WCRI) aim to help CFOs and other stakeholders identify ways they can improve the treatment and communication an injured worker receives after an injury, leading to better outcomes at lower costs.

The studies interviewed 4,800 injured workers from across 12 states who suffered a workplace injury in 2010 and 2011 and received workers’ compensation income benefits. The 12 states surveyed were Arkansas, Connecticut, Indiana, Iowa, Massachusetts, Michigan, Minnesota, North Carolina, Pennsylvania, Tennessee, Virginia and Wisconsin. The surveys were conducted during February through June in 2013 and 2014—on average, about three years after these workers sustained their injuries.

The research found that a worker’s fear of being fired after an injury had a large and pervasive effect on costs and worker outcomes, like return to work. The fear of being fired may arise out of the relationship between the worker and the supervisor. If the relationship is low trust, the worker is more likely to fear firing when injured.

To describe the level of trust or mistrust in the work relationship, workers were asked to agree with the statement, “I was concerned that I would be fired or laid off.” Workers were given four possible answers—strongly agree, somewhat agree, somewhat disagree and strongly disagree. Depending on the state, 18% to 33% of workers strongly agreed that they feared being fired when injured.

Overall, workers who were strongly concerned about being fired after the injury experienced poorer return-to-work outcomes than workers without such concerns. Across all 12 states, 23% of those concerned about being fired reported that they were not working at the time of the interview—double the rate observed for workers without such concerns. The following are other findings from workers who were strongly concerned about being fired:

  • Concerns about being fired were associated with a four-week increase in the average duration of disability.
  • Workers who were strongly concerned about being fired had higher rates of dissatisfaction with care (21% were very dissatisfied with care) when compared with workers who were not concerned about being fired after the injury (9%).
  • Workers who were concerned about being fired were much more likely to report problems with access to care. Among workers who were concerned about being fired, 23% reported big problems getting the services they or their provider wanted. The rate was double the 10% among workers who were not concerned about being fired.
  • 16% of workers who were strongly concerned about being fired reported large earnings losses at the time of the interview predominantly because of injury, compared with 3% of workers who were not concerned about being fired.

What do these findings really signify? The following are some alternative possibilities:

  • Workers reporting a strong fear of being fired might know they have a difficult relationship with their supervisor. That difficulty might translate into fewer opportunities to return to work, or more active management of the nature of medical care and the selection of medical care providers.
  • The worker may be exaggerating the possibility of termination, being a pessimist by nature, and that tendency to overreact might characterize the workers’ general performance on the job—perhaps resulting in fewer return-to-work opportunities and more active management of the care by the payers.
  • The worker may be more likely to retrospectively report a fear of being fired if the worker has had a poor outcome. Poor outcomes color the worker’s view of most events in the course of the claim. Conversely, workers who have experienced excellent outcomes tend to see events in the course of handling the claim in a much more positive fashion.

This is not the first time we looked at trust as it relates to workers’ compensation. A study we did several years ago on attorney involvement, which was covered by CFO magazine, looked at why injured workers hired attorneys. The character of the employment relationship, for example, was a factor for the 23% who strongly agreed that they hired attorneys because they feared being fired or laid off. 15% also strongly agreed that they needed attorneys because their employer could perceive their claims as illegitimate.

Employers Can Make a Difference

WCRI contacted Lisa Healy, who is a manager of claims at AGL Resources, a natural gas-only distribution company in the U.S. She told us that AGL has been very successful in managing and reducing its workers’ compensation costs. In part, she ties this success to practices where employees in the organization feel engaged and trust the company. The following are five things she told us the company is doing to facilitate trust:

  1. Establishing a set of values and a code of conduct with the ability to report those who violate it without fear of retaliation. This gives an organization depth in terms of morals and standards, which appeal to workers of all ages.
  2. Holding claim adjusters accountable for treating injured employees in an honest fashion with dignity and respect.
  3. Encouraging employees to identify possible safety hazards as well as recommend opportunities to improve safety. When workers are encouraged to point out safety issues or offer suggestions on how to improve things and these comments are taken seriously and addressed, trust is formed.
  4. Providing a 24/7 nurse triage program to speed treatment for injured employees so they get the care they need as soon as possible. The employee can contact the nurse triage line immediately after feeling a twinge of pain or sustaining an injury that doesn’t require emergency treatment. This service not only ensures the employee gets the right care immediately, it also cuts down on unnecessary visits to the physician when the employee can use self-care treatments such as ice, rest, elevation or an aspirin.
  5. Promoting early return to work with transitional duty positions whenever possible. Research has shown that the longer a worker is out, the harder it is to for the worker to return―not to mention that the costs go up the longer that person is out, so getting him or her back quickly shows the worker you care and is good for the worker and the employer.

The WCRI research is an important first step in realizing how important trust is between employee and employer to ensuring good outcomes when the employee is injured on the job. Additional studies by WCRI and others will provide further information on which policymakers can base appropriate measures. But employers can act now, as AGL Resources has demonstrated, to improve trust while lowering their workers’ compensation costs — through early intervention, putting safety first, effective return-to-work programs and access to medical care.