To really build customer trust the ‘value exchange’ needs to be constant by Nick Telfer, Vitality

With Trust, Value and Engagement appearing as standout themes at this year’s Protection Review Conference, Vitality’s Nick Telfer looks into why protection needs to be more than just "peace of mind"

I seem to remember that the last face-to-face Protection Review Conference was back on 11 July 2019. This was the day that England hammered Australia by eight wickets to go through to the final of the ICC Cricket World Cup. On 11 December 2021, the Protection Review provided another thought-provoking conference, however, the England Cricket team this time failed to deliver in the first Ashes Test in Brisbane.

For me, there were three standout themes on the day: Trust, Value and Engagement. All areas where the protection industry has struggled to evidence, especially in the eyes of customers.

Trust has always been an enduring challenge for the protection industry. In spite of compelling evidence from the ABI to show that 98% of all claims were paid in 2020, potential customers still don’t expect us to payout. Perhaps this is not surprising after all, as conference chair Kevin Carr pointed out in his opening statement, it is likely this speaks to a wider perception of insurance in general – from disputed home insurance claims to business interruption during Covid.

Adding to this, for protection, the proposition has traditionally revolved around life insurance, often arranged on a term basis where the likelihood of the claim event happening is small. As an example, Vitality’s risk calculator shows there is just a 3% likelihood of a 30-year-old male dying during the next 25 years. Because of this, very few customers receive any real benefit from their protection policy other than something very intangible, often referred to as “peace of mind”. So, is the issue here really trust or is it the lack of value and engagement that protection customers have had from insurers in the past? As content marketing expert Abbie Knight’s session clearly articulated, we need to work harder as an industry to create “a real value exchange”.

From price to advice

As a market, we have become obsessed with price. In the past, the differences between pure term assurance policies have been subtle which has meant that price has been the dominant factor in many advice models. To me, simply choosing the cheapest policy the customer asks for is not advice.  How many shops do you go into where the salesperson tries to sell you the cheapest thing on the shelf? Not many. That’s probably because they went out of business a long time ago.

Our industry is doomed if minimising the value of each customer is the end game. That way customers don’t get the cover they need, and they certainly don’t value it. As I have said to advisers many times, the one thing that is certain is that if you sell the customer the cheapest policy there will always be someone who can get it for them cheaper.

Moving away from price to advice is where value can be demonstrated. The passionate debate between Tom Baigrie and Phil Jeynes about the pros and cons of advised and non-advised protection sales missed one thing for me - and that was the very definition of advice: a focus on value, not cost.

Tangible value builds trust

Additional services built into insurance contracts can help to provide more immediacy of value exchange through access to medical support such as health screenings.  But access to these services shouldn’t be dependent on something bad happening. Isn’t it right that there is a place for services and benefits which are designed to help prevent the risk event happening at all? That means customers can benefit from these services earlier and see a positive outcome. After all, a customer doesn’t want to have to claim. Offering customers value from day one of a plan can help break down price being a barrier. “Value” doesn’t need to just come from incentives and rewards, but also from the policy acting as a vehicle to a better understanding of health as well as a tool to help them improve it.

There’s a bigger picture message here too. As pointed out by Hannover Re’s Tim Smith, the industry can “build consumer trust by sharing tangible value”. A point built upon by Protection Guru advice specialist Rob Harvey, who added: “Advisers are best placed to have a discussion about added-value services in a way that builds real value for clients.”

Then there is the issue of engagement. I’m pretty sure every Protection Review Conference has discussed this. In fact, probably every protection conference for the last 15 years has discussed this issue. A few providers engage with their customers while some don’t. If we are to move away from a transactional market to one where advice is truly valued, we need to engage with our customers once they have bought from us. The value exchange needs to be constant.