Dr Matthew Connell analyses the results of the CII’s latest Public Trust Index in light of the global pandemic
Throughout 2020, we have seen the devastating effect Covid-19 has had on businesses. During this period, there has been a great deal of debate on the impact this will have on trust in insurance, especially in light of controversies around business interruption (BI) cover.
The CII’s Public Trust Index measures public attitudes to insurance and offers some important clues about how small and medium-sized enterprises (SME) have reacted to the impact of Covid-19 and, crucially, what insurers can do to build trust in these challenging times.
Since 2018, the CII Public Trust Index has tracked attitudes among individuals and SMEs. From the beginning, we have focused on SMEs that hold property, liability and motor insurance. In 2020, in the light of the issues around Covid-19, we added BI insurance to that list.
We test attitudes by presenting SMEs with about 50 statements, such as, ‘The policy is explained clearly’ and ‘The company handles complaints professionally and fairly’. SMEs are then asked to rate the importance of each statement and the way their own insurer is performing against it. The gap between importance and performance is measured as an ‘opportunity score’ – the bigger the gap, the bigger the opportunity to improve trust.
Since 2019, we have also tracked SMEs’ attitudes to their insurers overall. This gives a ‘headline’ sense of how SME sentiment is changing.
The research is done three times a year. Each time, the newest cohort of responses is added to the previous ‘wave’ of figures and the oldest cohort is dropped. This means changes in attitudes tend to get ‘smoothed’ over time. The last three waves of the research were in January, May and September this year, so they give a good sense of how attitudes have changed through the course of lockdown and its aftermath.
At the highest level, we can see that customer satisfaction with insurers among SMEs has fallen slightly in 2020. Throughout 2019, 82% of SMEs were satisfied with the service they had received from their insurer, but in the combined results for May and September 2020, this figure has fallen to 79%.
Perhaps not surprisingly, satisfaction levels for BI insurance, which has seen so much controversy in the last few months, has been lower than for other products.
One key finding of our research is around claims, and the amount of ‘Respect’ consumers have. The statements that make up this element are:
- My insurance company did not try to avoid paying out.
- I did not have to prove that my claim was genuine with lots of receipts or pictures.
- The people you deal with show compassion.
The overall score for respect among businesses that have not been significantly impacted by Covid-19 is very low and in line with what we have seen in previous years. The score for firms that are significantly impacted, however, is much higher, and is reaching the point at which we would recommend urgent corrective action, rather than a more evolutionary approach.
So, what actions can insurers take? Again, the Trust Index provides some important pointers here, because it tells us the key areas where insurers are falling behind expectations most often.
The combined results from May and September show the three most important areas for insurers to focus on for firms that are most significantly impacted by coronavirus.
The first area for firms to address is the speed of claims. This is particularly difficult in the context of BI claims, where the legal process around the Financial Conduct Authority test case has taken several months. However, it does highlight the importance of not waiting for the legal position to be clarified before paying claims or reaching a settlement where the claim has some merit. It also shows the importance of giving businesses advice on how they can continue to trade while their claim is being made, perhaps by sharing information about the government’s schemes for small businesses.
The second area to address is the tone in which claims are handled. SMEs may be businesses, but they still want to feel that they are dealing with human beings. Insurers normally score very well on showing compassion during a claim, so the fact that the expectation gap has widened in 2020 for people significantly impacted by Covid-19 suggests that the uncertain legal situation is leaving firms less willing to engage with clients and more likely to use more ‘official’ language that is designed to minimise liability and avoid making concrete commitments.
The third area to address is the context around the ongoing relationship with an insurer. SMEs that have seen a change in circumstances, and which have perhaps made a claim, want to know if that claim is going to affect their premiums in future. From their point of view, they want to see if a claim is going to genuinely help them, or if it is going to be ‘clawed back’. Again, a focus on ongoing communication and transparency on how risks are assessed will be essential.
There are no easy answers for businesses facing Covid-19 – the economic impact on the UK is already estimated at more than £200bn. However, by engaging with SMEs during the course of the pandemic, we can see areas where insurers can make changes to maintain trust with customers and build a stronger basis for doing business with SMEs in future. The watchwords going forward are: speed, compassion and clarity of proposition.
Dr Matthew Connell is director of policy and public affairs of the CII