ACTUARIAL POST: THE ECOSYSTEM OF TRUST
This article was originally commissioned for Inner Workings, a monthly column written by Tom Murray, in the March 2019 edition of the Actuarial Post.
Insurance is generally regarded as a background product, one of the necessities of life that most people have but do not regard as very exciting when compared to most of their other possessions. Rarely do you find people snapping or instagraming the moment when their policy proposal is accepted. In a world when even the most mundane events are seen as fodder for the voracious social media beasts, the highpoint of the insurance cycle doesn’t quite make the cut.
Therefore, when it comes down to deciding which life provider to choose, customers tend to value solid experience over novelty and go with a brand that they feel they trust. By its very nature insurance is a highly trust-dependent product – you pay either a large sum up front or a smaller amount on a regular basis and only receive benefit much later, when something goes wrong. Clearly, trust is a key factor when it comes to deciding which provider to select.
So, it is important to understand what forms the basis for this trust. What will be the key factors that inspire trust in consumers to hand over money in the expectation that at a future date, the company will deliver on its promise?
Longevity is certainly one of the key ingredients - most people would instinctively trust a brand name that has been around for a long time. The comfort factor in knowing that the company has a long history makes people feel confident, albeit not necessarily with good reason, that the company will be around for a long time into the future, and therefore will be able to fulfil its side of the contract.
Along with longevity, comes an automatic understanding of what they do. When life providers have been around for a long time, then the majority of consumers have a high awareness for them and have either dealt with them in the past or know people who have dealt with them. Thus, they feel they know the company well, which automatically gives makes them feel confidence in these companies.
But the corollary is also true. Trust in people comes, not just from how well you know them, but how well they know you. You will instinctively trust people more if they are empathetic and understand your motivations. It follows that brands which understand the needs and wants of their customer base will be far more trusted than those that don’t. This is why many new start-ups in the fintech area are so good at building a client base as they are able to use the vast amount of personal information available to drive customer experiences that demonstrate strong understanding of the individual customer.
This is an area where the fintech, or more specifically the insurtech market has an edge. Using modern cross-platform technologies and focused on the way consumers in today’s markets interact with their technology, the amount of information these firms can gather about the needs and wants of customers is immense. And the Z generation, those born from 1996 onwards, are only too happy to provide that level of information if it leads to a more personalised and focused service. This generation is the future of commerce and has already, according to a recent survey from Goldman Sachs, are set to eclipse millennials as an economic force.
With this level of information, the ability to create uniquely personal customer journeys is possible, and therefore the capacity to deliver the experience level valued by the younger consumer base is already in place. Because for this generation, it’s not just a question of making one’s products and services available in the cloud; it’s about reimagining the services that are more in tune with their lifestyle.
This is where partnerships between multiple Insurtech offerings backed by traditional product management and brand longevity combine to provide a complete package; novelty in terms of product and service is very important but when it comes to long-term trust, the advantage of an experience-rich name backing the offering is immense.
The future consists of these ecosystems, where insurers, technologists, investment houses and social media platforms combine to deliver the bespoke tailored financial products and services that today’s generation is looking for. Products and services can be customised for the individual whilst still carrying the security of tradition in terms of compliance adherence and financial backing. The customer of tomorrow is a complex individual who insists on bespoke service. It is the combination of expertise and talents that will be able to deliver.