Canadians lack trust in their insurers

While Canada’s results are consistent with those of other mature markets, such as the U.K. and Australia, they are still of concern.

“[The survey results] speak to the fact that the insurance companies really do need to look at what their customers value,” says Marc-André Giguere, Canadian insurance leader with E&Y in Toronto, “whether it’s clearer communications or an easier way of doing business with the insurance companies.”

Compared with other industries, insurance companies rank near the bottom of the list in consumer trust, according to the E&Y research, which polled 24,000 people in 30 countries. Even other industries in the financial services sector ranked higher. For example, 81% of Canadians reported that they trust banks.

This phenomenon is alarming to the insurance industry because having the trust of consumers is important in order to sell policies.

“When you look at what insurance is, there must be quite a bit of trust because people are trusting insurance companies for a very long period of time – sometimes 40 or 50 years – with their money,” says Wendy Hope, vice president of external relations with the Canadian Life and Health Insurance Association Inc. in Ottawa.

The low levels of trust in Canada’s insurance industry probably stem in part from high-profile cases of denied insurance claims. Such stories can rattle consumers’ confidence in their own policies, even though the vast majority of claims are paid out, Hope says.

“When the insurance industry does make it into the news, it’s usually focused on something negative that has happened,” Hope says. “A lot of what people’s perceptions reflect is not necessarily what’s actually happening with a majority of the industry’s customers.” She adds that the insurance industry could do a better job of promoting more success stories.

In addition, clients’ relationships with their insurance companies generally aren’t as close as relationships with their banks. That’s because clients deal with their banks frequently to conduct transactions pertaining to many aspects of their finances. In contrast, clients often have direct contact with life insurers only at the time of application and when processing payments and claims.

Of the Canadians that E&Y surveyed, 51% said they had not received any communication from their life insurers in the past 18 months.

In many cases, clients view their financial advisor as their primary point of contact with the insurance industry. Although insurance advisors work closely with clients during the sales process, many advisors maintain little or no contact with a client after selling a policy.

Although investment advisors tend to maintain ongoing communication and annual reviews with clients, insurance advisors focus most of their time on attracting new clients rather than following up with existing ones.

Furthermore, when clients do interact with their insurer or insurance advisor, that contact often is related to a claim resulting from a death or illness in the family. As a result, clients may associate their interactions with the insurance industry with those unpleasant circumstances.

“You only talk to your insurance company when something has gone wrong,” Giguere says.

Thus, advisors and insurers should focus on making each transaction and exchange with clients as pleasant and seamless as possible, says Tamseel Butt, vice president of operations with New York-based Metropolitan Life Insurance Co.’s Americas division, who spoke during an E&Y webinar in November to discuss the results of the survey.

“The interactions that we have with customers are very limited,” Butt says. “The key is to make those limited interactions meaningful and memorable.”

Advisors and insurers also should consider contacting their clients more often. Only 19% of Canadians surveyed said they are “very satisfied” with the communication they receive from the insurance industry. About 40% of Canadian survey participants said they want to hear from their insurers at least semi-annually, and indicated that they want information personalized to them.

“Customers are looking for more personalized, value-added communication – not just the generic mailout that everybody gets, but something that is specific to them, specific to their needs,” Giguere says.

Many insurance advisors are doing a good job of providing value-added information already, Hope says, and insurance companies have become more proactive about communicating with policyholders in recent years through newsletters, social media, interactive online tools and educational resources.

“With all of the work that [insurers] are putting into their websites and education and financial literacy,” Hope says, “there is quite a bit of information going out to consumers.”

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