Many insurers will have grand plans for their digital strategies in 2021. And while a lot of interesting things will come out of those strategies, they will in the end count for little unless they help build the one thing that every insurer needs most at the moment, which is trust.
You may recall a survey by PwC a few years ago of UK insurance executives. 28% of them said that they were “extremely concerned” that trust would affect their firm’s growth. On top of that, 72% of them thought that it would be harder to sustain trust in a digitised market.
More recently, in early 2020, that level of concern was mirrored in independent research commissioned by the Association of British Insurers. The research’s main conclusion made for stark reading. In terms of ‘consumer attitudes to data and insurance’, consumers engaged with the market through “a double layered lens of distrust.”
A Double Layer of Distrust
This double layered lens of distrust means that “consumers are primed to feel particularly cautious and sceptical when it comes to their data in the context of insurance”. It also means that “…they are more likely to interpret new developments in relation to their data as designed to work in the industry’s best interests…”
So what does this add up to? Well, it shows that both consumers and insurance executives believe that digital strategies have to work in ways that build trust. Without this, those digital strategies are just not going to deliver the growth and profit that sustain insurers as sustainable businesses. And you could think of this in another way. If an insurer’s digital strategy is not demonstrably doing things that build trust, then how much of a risk is that?
A Vital Distinction
Now, the important point to remember at this point is that trust is not something that an insurer does itself. Trust is something that others give to the insurer. What the insurer has to do are things that build its ‘trustworthiness’. The insurer who does those ‘trustworthiness’ things well, will find that consumer trust in them grows.
So what are the things that you do to build trustworthiness? This have been explored in some detail by Onora O’Neill, the Emeritus Professor of Philosophy at Cambridge University. She identified four ingredients to trustworthiness: capabilities, reliability, honesty and goodwill.
What this means is that your digital strategy, to support the trustworthiness of your firm, has to show the type of capabilities, reliabilities, honesties and goodwill that confirm to a consumer that your firm can be trusted. So what are they then?
Let’s look with that last one, goodwill. It tunes directly into ‘why you are doing what you are doing’. What goodwill does is differentiate those firms who pay attention to honesty, reliability and competence because it’s the right thing to do, from those firms who do those things because they’re relying on trust to grow their business. Intention matters, and is more obvious to consumers than most firms think.
That goodwill comes not from a metric here or process there, but from a ‘way of seeing things’ within a firm. And that ‘way of seeing things’ is communicated most consistently through the firm’s ethical culture. What your firm has to do then is identify aspects of your ethical culture that are central to the formation and delivery of a trustworthy digital strategy, and bring them to the fore, so that consumers can recognise them and judge them.
Now, digital strategies often have lots of capabilities and reliabilities written into them, but unfortunately, they are all too often orientated around technologies and technologists. In that format, they will contribute little to the firm demonstrating its trustworthiness. Of course, no consumer wants to do business with a firm whose systems are unreliable or built by people less capable than they needed to have been. That’s not the point here though. The point is that those capabilities and reliabilities have to be ones orientated around outcomes that give confidence to the consumer that they can trust your firm.
A Significant Source of Consumer Mistrust
Take reliability. The ABI research referred to earlier found that 86% of consumers are concerned about firms selling or sharing information about them when those firms don’t have permission to do so. And 53% remain uncomfortable with this even when they have given permission for their data to be shared. What this points fairly strongly towards is how your firm handles consent, both for its own data and that brought in from data brokers. Of course your firm’s approach to consent will be within the law, but that’s not enough. Consumers take for granted that your firm is working within the law, but they want more than that, in the form of things that signal that you can be trusted.
All too often, insurers use very generic forms of consent, in large part because it gives them as much flexible as possible in how they work. And that’s fine for the firms, but consumers told the ABI researchers that it was not at all fine with them. Indeed, the researchers highlighted it as one of the key layers of distrust.
Trust is Built Upon Outcomes
Let’s move onto capabilities. Your digital strategy can talk about cloud, mobile and all sorts of data, but what consumers are interested in are outcomes that are fair, non-discriminatory and clear. Your decision systems for underwriting, claims and counter fraud have to be capable of delivering such outcomes on a consistent basis, so that consumers can just trust you to ‘do the right thing’. And that consistency is important, for it allows consumers to get on with other things, knowing that they can just trust you.
When it comes to honesty, I often sum this up as ‘doing what it says on the tin’. There are two strands to this. Firstly, you need to be clear about what exactly you will do in circumstance X or Y, and why that is the case. And secondly, you need to be evidencing how well you are fulfilling that. Consumers have been found to put a lot of store by firms ‘doing what they said they would do’, especially in financial services. So while this may seem like one of those ‘things we do all the time’, it is in fact something that is often talked more than evidenced.
These examples of how a digital strategy can help consumers have trust in a firm need of course to be tailored for each insurer. So how can you take a step in that direction? Here are eight examples of where to start looking…
Eight Steps to help Consumers have Trust in a Firm
- Look at the way in which your products and services are being designed and targeted, and the marketing and distribution processes that support this (honesty).
- Look at how you’re using data and analytics, and weigh up how this supports always acting in the best interests of the consumer (both individually and in the round). Better still, ask consumers this question (honesty).
- Look at how you’re assessing the capabilities of your digital strategy. Then gauge the extent to which those capabilities help deliver outcomes for consumers that are demonstrably fair, non-discriminatory and clear (capabilities).
- Look at how you’ve incorporated ethical decision making into your system specifications and design. Do something similar in weighing up the capabilities of the people delivering those systems (capabilities).
- Look at your digital strategy through a number of privacy lenses, such as consent, proportionality, secondary use and reasonableness. Your firm may be GDPR compliant, but that’s not the same as being trustworthy (reliability).
- Look at your consent processes and rigorously critique them from a customer perspective. Borrow consent analysis frameworks from other professions to do so (reliability).
- Turn to your firm’s purpose and look at the extent to which your digital strategy supports it. Do this through both revered and critical perspectives (goodwill).
- Look at how your firm’s digital strategy and its ethical culture are aligned, again through revered and critical perspectives. Break down both into constituent parts and mark in dependencies and conflicts (goodwill).