Building trust when it comes to protection claims

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When it comes to protection insurance, the independent advice community could well be called our backbone – as most major financial decisions between customers and providers go through expert advisers. As such, it’s no surprise that the overwhelming majority of customers have made the most precious of all investments in financial advice: their trust.

However, some UK consumers still carry misconceptions about the wider insurance sector that we need to address if we are to best serve consumer needs and meet the good customer outcomes enshrined in the Consumer Duty.

Tellingly, our last Health & Financial Fears research found that only six in ten UK workers (58%) were confident that an insurance company would pay out on a claim. So how can we lead the charge and nurture stronger relationships with the UK public?

The numbers count
The keyword is transparency. Clear communications, open statistics and data play a vital role in encouraging customers to trust that an insurer will help during a time of acute need. When an insurer publishes its annual claims results, it is not a victory lap – it is a concrete demonstration that the insurer has honoured its part of the bargain during a client’s time of need.

Let’s look at a personal example. We recently shared The Exeter’s 2023 claims data across our income protection, health insurance, and life insurance products. In 2023, we paid 93% of all claims, with many industry peers reporting similar levels. The discrepancy makes clear that there are still significant misconceptions amongst UK consumers.

The issue of trust
Sharing claims data is one way to address misconceptions and build trust with our customers. But we must contend with a real truth: unfortunately, some consumers don’t always trust claims statistics, despite their accuracy. According to the AMI Viewpoint research, only 49% of consumers trust insurer claims statistics with 46% stating that they think the numbers sound too good to be true!

Whilst it’s good to be performing above consumer expectations, this misconception poses a thorny problem. How can providers and advisers reassure consumers, if they are sceptical of claims?
Financial advice can settle some consumer concerns.

The AMI Viewpoint also found that those consumers who received financial advice were more likely to take insurers at their word. In fact, the difference can be as much as 20%. A total of 60% who received advice more than once say they do trust insurer claims statistics, versus the doubting 40% who never received advice at all.

And the problem is deeper than just consumer perception. Recent adviser research from The Exeter found that a third of advisers reported that they were concerned over whether insurance providers would pay out health insurance claims for their clients.

This is a two-sided issue, and so it requires an equally double-sided response. Both the consumer and adviser communities need reasons to develop further trust in insurers, to banish the misconceptions. So where do insurers start?

Winning over the customer
Firstly, whilst our industry does amazing things and regularly pays billions in claims each year, could we be paying even more?

The facts are simple. Although the majority of insurers overwhelmingly approve more claims than they decline, annual claims statistics continue to highlight a variation in the number of new claims that insurers are not able to pay each year, particularly with income protection.

This variation in reporting could not only cause confusion but could also impact adviser and customer confidence. At this crucial juncture, our industry must ask itself two pivotal questions. Is there a need for a standardised approach to communicating claims statistics for both new and ongoing claims? And, do we need to break down reasons for misrepresentation more clearly and consistently as an industry to help audiences easily understand why claims have not been paid?

There is also a need to produce and promote claims stories more widely, further building the trust between advisers and consumers. Customer testimonials are powerful tools that help advisers provide a concrete proof point of value and are reassuring for consumers to hear.

The difficult part in promoting these stories is in reaching the consumer, especially those who are not actively receiving financial advice or are not avid readers of insurer websites or trade press publications!

There is however a precedent for a consumer-focused awareness campaign. 10 years ago, we saw the brilliant 7 Families initiative, which took seven real families, who had lost their income because of an illness or accident and gave them income protection for a year.

The aim was to help real people who were facing financial difficulty and to demonstrate the value of income protection insurance and its additional benefits in providing a much-needed safety net.

But that campaign was a decade ago and there is still a clear and present need for a fresh and sustained industry collaboration to drive awareness amongst the people who might benefit from income protection the most: the end customer.

Working with advisers
Intermediaries are key to discussing claims statistics and stories with clients – but if one-third of our collaborators struggle to fully trust insurance providers, how can we get them on board? In truth, building trust takes time but it is important to remember that the relationship between an adviser and an insurer is not transactional – it is a collaborative partnership between two parties who share an equal interest in delivering positive outcomes for the customer.

As such, there is a need to challenge each other in the right way when it comes to claims performance to ensure that we are working together to deliver the best outcomes for claimants.
Advisers should feel empowered to openly discuss claims outcomes with insurers, while both parties need to work together to understand and reduce common areas of misrepresentation which may prevent a claim from being paid.

Key to this collaboration is ensuring that clear channels of communication are in place at every touchpoint, from claims assessors and business development support to marketing.

Claims statistics, industry collaboration and human-interest stories are powerful examples of how our industry is looking to build trust with consumers and each other. We could do well to continue on this path and do all we can to improve our efforts so that no consumer is ever left without an insurance product when the circumstances of their lives mean that they need it.

Final thoughts
The data is unequivocal: the independent financial adviser is the very first port of call for many UK workers who decide to investigate how insurance can benefit them. That’s deserving of celebration. However, collectively we cannot afford to rest on our laurels. Publishing annual claims data is one step in a longer journey when it comes to building trust but there is more to be done if we are to increase consumer trust and the trust we have in each other.

Shelley Walker is head of marketing and Jamie Page is head of protection distribution at The Exeter

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