Other parts of this series:
Customer trust, data and relevance
In 2018, market relevance demands personalisation, no matter what the industry. For LP&I providers, that means using data to understand, segment and target customers with personalised products and services at every stage in their lives. But none of that is going to be possible without trust. Why? Because if customers don’t trust an organisation, they’ll withhold their valuable data.
The more customers trust their life & pensions providers, the more data they’ll be willing to share with them. Responsible stewardship of data by LP&I providers will, in turn, build trust with consumers. LP&I providers that secure the richest streams of information (and that know what do with it) will have the most relevant and rewarding interactions with their customers.
It’s this crucial nexus between trust, data and relevance that we’ll be exploring during this blog series. First up, trust. How do life & pensions providers rank against other industries? Why does trust matter so much and how can it (or the lack of it) shape the future of the industry?
First, the bad news
Insurance companies, including life & pensions providers, score significantly lower than banks on the trust index: just 29% of customers trust insurers vs 40% for banks. What’s behind this relatively low level of trust? After all, unlike the tech industry (trusted by just 23% of customers), LP&I companies have so far avoided massive data breaches and high-profile privacy controversies.
The series of high-profile pension fund collapses and scandals over the past few years could be part of the problem. But whatever the cause, it’s an issue that needs to be tackled head-on. After all, knowing and trusting a brand is the biggest trigger point for buying life insurance and pensions products.
There is some cause for optimism
We found that trust and satisfaction with LP&I providers is broadly on the rise. In fact, there have been significant increases in recommendation levels for LP&I providers from 2015 to 2017 (from 20% up to 32%). And satisfaction levels are growing too (66% of customers were satisfied with the service they received in 2017, up from 58% in 2015).
Efforts to restore trust appear to be bearing fruit. But LP&I providers could and should be doing better. Many providers have a legacy stretching back hundreds of years and place trust at the core of their business values.
A unique advantage for LP&I providers
In the face of market disruption from start-ups and other new competitors, now’s the time for insurers to build on their heritage. Agile newcomers hold the advantage where speed, change and technology are concerned. But they have little or no brand recognition and require an enormous amount of personal information from consumers to support their innovative, tech-heavy offerings. Taken together, that means new entrants to the market may have inherently lower trust scores.
This creates a unique advantage for LP&I incumbents. Of course, they must harness new technologies. But at the same time, they can use their image as reliable, stable brands to foster and increase trust between themselves and their customers. And as we started this post by saying, that same trust will be key to unlocking future data flows and building relevance in the marketplace
In the next post in this series, we’ll be investigating the role data plays in the market and what LP&I providers can do to harness this resource and realise the massive opportunities it creates. In the meantime, to learn more, read our 2018 UK Financial Services Customer Survey.