Briefing: Are you being served?

By Mike Edgeley

While many reading this column won’t remember the popular sitcom Are You Being Served from the 1970s, customer service is now more topical than ever and is at the forefront of our industry’s challenge to regain customers’ trust.

Industry challenges

The insurance industry has faced a confluence of issues that, collectively, have eroded its reputation, image and levels of trust.

Most recently, for example, customers have faced greater financial pressure as a result of economic conditions. At the same time, many lines of insurance have become more expensive.

Looking back, the Covid-19 pandemic and business interruption insurance debates attracted negative press, the awful Grenfell Tower fire impacted cladded risks, indexation was affected by higher costs in supply chains and post-Brexit parts procurement – and not to mention the impact of consistent advances in technology.

These have all played their part in creating higher premiums and, combined with the dark science that drives some aspects of the insurance rating cycle, have all fuelled consumer discontent.

The financial pressures on customers have led to some worrying trends.

As of 2023, Biba research showed that 26% of SMEs had stopped buying compulsory employers’ liability insurance, while 22% had stopped purchasing professional indemnity insurance.

While some of this trend may relate to increased homeworking and a belief that certain insurance policies are not needed, there is no doubt that good practices – such as purchasing cyber cover and maintaining up to date Rebuild Cost Assessments – are increasingly challenged by customers because of the impact on price.

Essential protection can, for the more financially stressed, move from being ‘essential’ to a ‘nice to have’ purchase.

Trust

The lack of understanding around how premium costs transpire and the bad press on high profile incidents have contributed to driving low levels of consumer trust.

A December 2023 Which? report based on its monthly Consumer Insight Tracker survey stated that “just a fifth of consumers said they trust their insurer to act in their best interest”.

A July 2024 UK Customer Satisfaction Index (UKCSI) – a barometer compiled by the Institute of Customer Service twice a year – claims that customer satisfaction across all industries is at a decade low.

While there were winners and losers in this UKCSI update, the insurance industry’s ranking has perhaps not surprisingly fallen compared to the previous two surveys.

Whenever this level of disconnect between an industry – I prefer the term profession – and its customer base increases, there is inevitably more scope for that industry’s regulator to step in to improve the quality of service.

While we all tend to moan about the increased level of regulatory scrutiny, the FCA’s Consumer Duty underscores everything that well run businesses should naturally be doing.

Insurance has a myriad of service providers all sat behind the policy or claim of any one policyholder. Unless that complexity is distilled into easily digestible information, the lack of understanding that often entails can be exposed in times of crisis.

Improving customer experience

Against this rather pessimistic outlook, it is interesting to see comprehensive analysis by McKinsey and Company, published in September 2023, and the Institute of Customer Service, published in June 2024, which both highlight a close correlation between higher customer satisfaction and a company’s financial and operational performance.

Technology, process efficiency, system prompted scripts and responses, artificial intelligence and advised versus non-advised products are all avenues that brokers explore to improve their service, efficiency and margin.

However, focusing too much on these areas can lead to a gap in connectivity with customers and their understanding.

The Institute of Customer Service research, for example, identified the increasing importance of measuring metrics relating to trust, customer ethos, ethics and how the customer feels about their experience.

The role of the broker is, after all, to help customers navigate market complexity. In my previous military career, one senior leader explained his role as “to absorb complexity and convey simplicity”. That quote resonates with where we seem to be today as a profession.

Building a profession

As part of our continued drive to engage with our employees and include their feedback to help develop Clear Group, in April 2024, we set colleagues on our Early Careers Programme three topics to research and report back to the board.

One topic – on organisational identity and purpose – resulted in a well delivered presentation around our own guiding principle of ‘doing the right thing’.

In a profession where everyone claims to be the best broker, Clear Group’s perspective on differentiation is focused on investing further in the employee lifecycle – from onboarding onwards, with emphasis on training, ethos and client service.

We find ourselves in challenging times from an industry brand perspective.

But while everyone looks to ensure they are adhering to the tenets set out in the Consumer Duty, in the long term, many businesses may be better served by looking internally at the more basic requirements of ensuring they have well trained employees with the right ethos that are doing the right thing.

And after all that, on reflection, perhaps my title for this article should have simply said ‘Changing our industry into a profession’.