The battle to win (and maintain) trust: Are you ready for the future?

When it comes to customer relationships, nothing has changed and everything has changed. Trust has always been and will always be the bedrock of business success. However today, trust is won and lost on a different playing field as face-to-face, in-person interactions are replaced by digital exchanges. The stakes have never been higher.

Digital trust was the subject of this year's Future Ready event held on 28 September at the Swiss Re Toronto office. Guests heard a lively panel discussion featuring three professionals who work on the front lines in the battle to win the hearts and minds of consumers:

• Mark Hardy, Vice-President, Executive Product Owner, Life & Health, TD Insurance
• Paul Jackson, Chief Operating Officer, Gore Mutual Insurance
• Francesca Tamma, Head Behavioural Research, SRI Life & Health, Swiss Re
• Moderator: Kilian Blum, Head Data Strategy, Group Data Services, Swiss Re

Swiss Re Canada CEO Monica Ningen welcomed guests and panelists and set the scene with a thought-provoking assessment of the power of data.

"The volume of data transferred between consumers and businesses is staggering, and in our drive to become digitally enabled we risk losing sight of the fact that data can be a double-edged sword. Data is a game changer and business enabler, for sure, but it can be misused for nefarious purposes or simply mishandled with potentially catastrophic results. Inattention, error or a fraudulent act can instantly destroy trust, damage reputations and stock prices, and even provoke shareholder litigation."

Progress, at what cost?

Insurers are not only transitioning to the digital environment to deliver their products with greater ease and speed, but also to improve the efficiency of their internal processes. And that can be a heavy lift fraught with anxiety, according to Jackson.

"Unscalable, manual business was difficult to quantify and that's why we're moving from manual, subjective decision making to a more algorithmic system. You're talking about significant changes in underwriting workflow, claims and pricing. The transition has caused concern among employees, brokers and customers because everything we did as a business before 2020 was touched by a person who had the latitude to make decisions or deviations."

TD's Hardy stressed that the human element shouldn't get lost in the race to digitize.

"The challenge is how to deliver an experience people can trust. Sometimes it's not big algorithms and data but thinking about the human element, the behavioral aspect. We're trying to be more transparent about the process upfront so customers understand why they're having to answer questions."

A two-way street

Trust goes both ways: not only must a customer trust their insurer, insurers need to trust their customers or else they'll find themselves underwriting on faulty information. Swiss Re recently released a report on digital trust, and Tamma, who heads up behavioral research, shared some of the research findings.

"The way an underwriting journey is designed can minimize the 'fudge factor,' by paying close attention to how questions are written, particularly life insurance application questions about smoking and alcohol use."

Tamma added that it's useful to explain why a consumer is being asked questions, because better information can not only yield a more accurate quote, but a lower price.

"If a person understands they could get a lower premium by sharing their data, they'll be more likely to share their data." 

Tamma also pointed out that asking someone to share potentially sensitive or stigmatizing information digitally can be advantageous. When an insurer asks questions about mental health, for example, there's less perception of it seeming judgmental when it's typed into a device rather than given in-person or over the phone.

Consistency is key

The rush to digital can be chaotic and even dizzying, and Hardy reminded the audience that one of the biggest challenges is to be consistent.

"Too often you fill out a questionnaire online then someone you don't know calls you from a number you don't recognize to schedule an appointment. If I get an email offer from TD and click to a website that looks different – that's not consistent and I don't trust it. Humans want consistency."

Swiss Re's Tamma agreed.

"Make the journey smooth, without friction that slows down the process and impedes decision making. Transparency and comprehension should come first and foremost. This applies across all industries, not just insurance."

A smooth journey implies simplicity, which isn't won without considerable effort. Nowhere is that more evident than in the typical insurance policy, which due to its complexity can overwhelm a consumer and provoke feelings of confusion at best, distrust at worst.

A little help, please!

"Translating policy language into something that's readable and understandable is a challenge we relish," said Hardy. "We are constantly working on delivering plain language while remaining true to the terms and conditions, exclusions and endorsements of the policy."

And that's one of the reasons Jackson can understand how a consumer can feel lost without some human interaction.

"When there's no human touch at all, that's not very friendly to the customer. They often suspect there's a scam in there somewhere. That said, we have far more human intervention and hand holding through the process than I would like. So we're introducing some artificial intelligence (AI) to get information to customers faster before we create the disruption."

The panelists agreed that striking the right balance between digital and human interaction is tricky.

"At the end of the day we're applying a human lens to an algorithmic business," said Jackson. "We need to be logical in the way we understand what we're asking. So it's important to have sensible people at the edges who can help our customers with the journey."

The customer comes first

More insurers are striving for selective automation, picking their spots and doing it only where it makes sense.  

"We only automate something that works to the benefit of the customer," said Hardy. "Otherwise it goes through a human underwriter. We always want to have a person on hand to explain the negative outcomes. If it's to their benefit they trust the process. If it isn't, they don't."

But saying something doesn't automatically make it true. Is it effective to label something as "trustworthy?"

Tamma said, "The jury is still out. There's no label that can win that trust just yet. Behavioral research has shown that assigning letter grades to products can be faulty because the grades can easily become inflated, like A+++. One best practice is from the appliances sector, where a very helpful and objective metric for the consumer is energy consumption based on the cost of the appliance."

The dreaded black box

It's also true that just because something has more numbers behind it doesn't necessarily make it better.

Gore Mutual's Jackson: "Credit scoring is controversial. People don't understand the correlation between their credit and their Auto premium. It's not palatable to the public, and it's a political issue. We're trying to bridge between political considerations and how we underwrite."

Swiss Re's Blum asked about the perceived fairness of algorithmic decisions.

"What do customers expect and how can we increase the perception that we design them to be as fair as possible?"

Jackson: "It's a hot topic and there's scrutiny and controversy around it. I wonder if there is a customer expectation or understanding of how much the algorithm is driving decisions? Customers tell me they only think about what their car is worth, how often they drive it and how old they are. They don't know the depth of the data and analytics and the proxies we're using."

He added, "We'd like to be more transparent with customers about what's driving their price but sometimes regulation makes that difficult to impossible. Ontario auto underwriting is driven by black box actuarial pricing – which is hard to explain. It all used to be on one page and  understandable."

There is, however, an antidote to mistrust or even misunderstanding, and that's a company’s track record and reputation. According to TD's Hardy, "brand drives trust which helps you overcome many barriers."