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R-E-S-P-E-C-T: What the Insurance Industry Can Do To Earn It Back

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Perhaps it’s a casualty of the long battle over national health insurance reform. Maybe discontent over escalating insurance premiums triggers it. But whatever the reasons, most Americans simply don’t trust the insurance industry.

Only 32% of Americans–less than 1 in 3–said they trust insurers “to do what is right,” according to Edelman’s 2010 Trust Barometer, the public relations firm’s tenth annual global survey of trust. That figure stands only slightly above the 29% who trusted insurers a year earlier, at the height of the recession and financial crisis. Among 13 major industries, the insurance sector ranked last in the 2010 survey.

This survey’s results aren’t an anomaly. In a Bloomberg national poll released March 24, 3 in 5 Americans said they have a “very” or “mostly” unfavorable attitude toward insurers. The industry ranked below Wall Street (57%) and banks (53%).

What can insurers do to restore the trust levels the industry used to garner? Edelman’s U.S. Financial Services Trust Barometer, which surveyed 500 Americans ages 25 to 64, identifies 4 key initiatives the industry and its advisors could take to help reinvigorate consumer trust:

Initiative 1: Commit to transparency in communications and to excellence in customer service.

To establish and maintain a trusting relationship, insurers should communicate frequently and honestly with customers. They should drop the insurance lingo and communicate simply and plainly so that messages are clear. It will pay off. A recent survey by Siegel+Gale, a strategic branding company, found that 84% of U.S. homeowners and investors said they are more likely to trust a company that uses jargon-free, plain English in communications.

Transparency is vital. Respondents to the Edelman Financial Services Trust survey said “quality of communications” and “customer service” are more important than “price” and “top leadership” in influencing trust and corporate reputation. Indeed, 75% of the respondents rated “communicates frequently and honestly” as important, while 70% said “has customer service available by Web or phone for help or advice” was imperative. Pricing products fairly and competitively also was rated important by 70% rating, while “has highly regarded and widely admired top leadership” was labeled as important by only 46%.

The National Insurance Producer Registry, a non-profit organization that works with companies and regulators to assist the exchange of insurance licensing and reporting information, believes the key to restoring consumer trust in the industry lies with increased transparency through technology innovations, especially digital, and more uniformity in industry standards.

“Reputation and customer security is at stake,” says Maryellen Waggoner, the organization’s executive director.

Initiative 2: Unlock the value of your most important assets.

Don’t rely solely on the CEO as a spokesperson since the chief executive or other senior executives rate the lowest (32%) as the most trusted source to provide accurate information. On the other hand, advisors rank as the most trusted source to provide accurate information. This indicates that insurers would benefit by educating advisors and their company representatives to ensure that reality meets perception.

Initiative 3: Activate customer advocates and ambassadors.

This initiative reflects the survey finding that the second most widely used source for financial information, including insurance, is conversations with friends and peers. In addition, young people ages 25-34 look more favorably on insurance companies than do those 35-64, the survey indicates.

Insurers and advisors would do well to develop friends-and-family-referral programs. They also should consider using the voices and faces of real people in promotional materials, and communicating more directly with young customers who also can become advocates.

Initiative 4: Use communications tools to reach clients.

A single information source isn’t considered most credible today. So insurers and advisors should use all the arrows in their communications quiver. They should generate thought-leadership pieces and other articles in business magazines and newspapers, communicate in many different ways on their website and strive to gain television and radio news coverage.

Young people, in particular, find an assortment of information sources– including the Internet and social media, such as Facebook and blogs–more credible than do their older counterparts. For instance, 37% of respondents ages 25-34 look to online search engines for information; 17% gather it from social networking sites and 16% from blogs.

For insurers, the findings from the Edelman financial-services survey should point to a clear overall conclusion: Trust has emerged as a new line of business, one to be developed and delivered. Insurers that embrace this new reality, where the interests of all stakeholders must be considered equally, will see their credibility rise accordingly–and consumers’ levels of trust in them to do what’s right.

Jeff Zilka is executive vice president and general manager of Edelman’s Financial Communications and Investor Relations practice in Chicago. You may e-mail him at [email protected].


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