Public Trust Index launched by CII to measure consumer sentiment
Consumers are most frustrated by new customers being offered cheaper premiums than existing customers
Those who have claimed on their insurance have been pleased with their insurer’s performance
The research focusses on staple insurance products for retail consumers and small businesses, including: home, motor, travel, commercial property and liability insurance.
The CII is launching its new ‘Public Trust Index’ (Index), which has been designed to measure consumer confidence in insurance. The Index reveals where people are confident in the insurance profession and areas for improvement, and is based on detailed research with consumers, SME[i]s, insurers, regulators and public bodies. The researchers looked at what those buying insurance consider to be important and compared this with how those same individuals perceived insurers’ performance. The research included in-depth interviews with consumers, SMEs and those working in the profession.
This first Index indicates that the number one issue for consumers is the perceived lack of loyalty from their insurer, this is where researchers found the biggest gap between consumers’ expectations and insurer performance[ii]. Consumers are fed up with retail insurers offering cheaper premiums to new customers than they are offered at renewal. This marketing technique, known in the profession as ‘dual pricing’, has come under fire in recent years as the growth of comparison websites has made it easier for people to shop around for insurance and see that they could get a better price with their insurer if they were a new customer.
When it comes to buying insurance, consumers want to feel confident in their insurer, that they will provide good cover and settle claims quickly. Across all areas of the research, confidence was ranked as most important by those buying insurance (74%), followed by an easy buying process (70%) and good protection in the insurance product (68%). Yet on each of these points there was a sizeable gap between the customers’ expectations and the perceived performance of insurers, rewarding customer loyalty had the biggest gap at 13%, followed by protection (level of cover in the product) 7% and confidence in the insurer (7%).
Surprisingly, the research revealed that price is relatively unimportant when buying insurance, despite the fact that being rewarded for loyalty is a key issue for many. Instead having a claim settled quickly was ranked most important (76%) along with having a claim handled in a respectful manner (71%) and having control over the way a claim is settled (69%). This shows that the way in which claims are handled is still a key area for consumers, however the fact that a new customer can get a cheaper price than an existing customer is a key concern.
The Index highlighted that where insurers are doing well is in settling claims. In fact, those who have had to claim from their insurer tend to feel more positively towards insurers than those that have not. Almost three quarters (74%) of claimants felt their claim was dealt with quickly, that it was handled respectfully (70%) and 68% that they had control over how their claim was processed. This shows that the insurance profession is delivering at the point where consumers really need them to.
The research revealed that insurers have also made it easier than ever for consumers to get the right protection for their needs. Many (69%) people say they find it easy to buy from insurers and 67% are confident in the products that they are buying. Thanks to developments in technology, most policies can be purchased in minutes online or renewed automatically, which helps people stay protected and reduces the risk of driving without insurance.
Sian Fisher, CEO of the CII, comments on the research: “This first Index highlights how the insurance profession is performing and areas for improvement. Insurers are doing an excellent job when it comes to settling claims and keeping people protected, which flies in the face of some of the popular cynicism towards insurance. However, the disparity between the pricing for new and existing customers in the personal lines market is eroding trust and we as a profession must work together to address this.
The research underlines the importance of the ABI and BIBA principles on maintaining fairness between new and existing customers when setting renewal premiums published in May, and we call on all insurers to implement these principles fully and wholeheartedly.
“We also believe there is a real opportunity for insurers to help their customers mitigate the risks they face. Telematics has been successful at helping people improve their driving by providing instant feedback on each car journey and we want to work with insurers to do more like this with other products. One area is home insurance, where ‘irreplaceable’ family photos could be protected against destruction through electronic storage. Insurers need to think creatively to help consumers get the most from their insurance and build trust.”
The Chartered Insurance Institute (CII), the leading professional body for the global financial services profession, exists to promote higher standards of integrity, technical competence and business capability. With over 115,000 members in more than 150 countries, the CII is the world's largest professional body dedicated to insurance and financial services.
Our membership covers all disciplines within the insurance industry (claims, broking, underwriting), those working in the life and pensions sector, the mortgage advice market and financial advisers (under the Personal Finance Society brand).
Our Royal Charter requires us "to secure and justify the confidence of the public" in our members and in the insurance and financial services sector.
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