The life insurance sector survey conducted by PricewaterhouseCoopers in 2016 revealed that only 42 per cent of current life insurance policyholders believed that, if they made a claim, their insurer would pay it out.
Thinking about this in a different way, consider if just under half of all airline ticket holders did not believe their flight would reach its destination without crashing. No one would fly anywhere. In the financial services sector, this lack of trust was reinforced by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry hearings in 2018.
Of course, the hearings featured purposeful examples of where the industry failed, rather than highlighting that well over 90 per cent of all claims on life insurance policies are paid out. So why is there such a disconnect between life insurance policy holders’ perception and this reality?
I believe the answer lies within the entwined twin pillars of integrity and trust.
Certainly, the Hayne Royal Commission was a long time coming. The report’s recommendations will perhaps accelerate changes that had already started in the sector, particularly around corporate governance and advisers’ business models.
The challenge for advisers
Undoubtedly, financial advisers now find themselves in particularly challenging times.
The latest research from CoreData has found that amongst people who were abreast of the Royal Commission findings, levels of trust in financial planners dropped from 60 per cent (where 100 per cent is complete trust) to 35 per cent in the third quarter of 2018 and is currently at 36.6 per cent, well below pre-Royal Commission ratings.
Hayne’s enquiry shone a spotlight on where the financial services industry fundamentally lost sight of what’s most valuable: the public’s trust, and the CoreData figures suggest advisers have work to do in this regard.
I believe life insurance companies, as partners with advisers, have a role to play in supporting advisers navigate the evolving industry. Moreover, I am passionate about the opportunity for insurers to partner with advisers to achieve our mutual goal of rebuilding Australians’ trust in the sector.
Having thought deeply about trust and its twin, integrity, this is how I believe financial services business can orient themselves to rebuild trust:
Always act with integrity
This translates into corporate cultures that are based on doing the right thing by employees, customers and stakeholders. Courage is fostered, promises are kept, honesty and honour are the organisation’s touchstones. Most importantly, staff incentives support and drive the right behaviours.
For example, people matter. At Integrity I personally interview each new team member to ensure alignment with our corporate values. The catalyst for creating a new life insurance company was to act differently to what we had sometimes seen in the industry. Our team is a collection of industry stalwarts that are driven by always doing the right thing. I’m passionate about protecting and growing that culture as I believe that the right people will keep the company true to its purpose.
Ask how we can make it easier for customers to do business with us
Listen to customers (advisers and their clients) and question the internal status quo. New world companies have fundamentally changed consumers’ expectations of the relationship they should have with their service provider. Relevant products, increased transparency and providing customer-centric services that exceed expectations demonstrates that insurers understand and assist their customers, which is key to building trust.
This feedback Integrity received from advisers and clients on their frustrations in dealing with life insurers, which identified 16 major pain points, formed the starting point in building our systems and processes. These included a lack of transparency on product and price, opaqueness around product features, ancillary benefits and calculation of premiums, duplication of information in the application process, inefficiencies in navigating application forms, and wasted time when making changes to the application.
By uncovering what advisers’ and clients’ pain points are, insurers can make it easier for customers to engage with them and thus start to rebuild trust.
Treat everyone with fairness and respect
Building trust comes from treating others with respect and fairness. For insurance companies, our employees notice, our customers notice, and our intermediaries notice when we are living to these standards, or not. One of the quickest ways to destroy trust is to be out of alignment with customer and community expectations.
Perhaps the greatest test of a life insurance company’s respectfulness and fairness is at claims time. One way we can show this is by providing insurance benefits that demonstrate our care and respect for our policy holders as they deal with challenging life events.
We must each play our role helping Australians have better outcomes, particularly when they face life’s unexpected challenges. This year presents an opportunity for us to set a new course as an industry, where some may struggle but where those that act with integrity will be trusted and ultimately flourish.
Chris Powell is the chief executive and managing director of Integrity Life.