OPINION: Why insurers must address your clients' trust issues

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It has always struck me as churlish how a system which repairs lives could be chastised. But that is the reality for insurance.

This has come to the surface again recently, with the potential removal of the preposterous fire services levy in NSW sparking the accusation that insurance companies will not pass on any rate cuts to clients.

The fire levy backlash has highlighted an almost dogmatic distrust of the insurance industry.

So the question lingers: what can be done?

It would seem the core component of this distrust stems from a common misconception of the industry – just because you have cover, does not mean the insurers will pay.

While attending the Life Insurance Conference in Sydney earlier this year, it was interesting to hear some research into life insurance customers when they tragically had to make a claim on someone’s policy. Many, perhaps even most, exclaimed their surprise and delight over how easy and convenient it was to be told the life insurance policy would be paid swiftly.

It seems many still suspected the insurer would wriggle their way out of paying (which is tricky when it comes to a fairly cut-and-dry situation like passing away).

As the Insurance Council of Australia notes in the wake of the Queensland floods, 90% of claims were settled. But does the industry make the most of this?

Much of the advertising that clients are exposed to centres on price and convenience (which probably has a fair amount to do with increased exposure to direct insurance advertising).

While it might involve stepping outside of the insurance industry’s often conservative approach, should the industry not be shouting from the roof tops about how claims will be paid, and in a worry-free manner? Especially if the client has the sense to use a financial adviser. There are signs of this manner of advertising, but do they go far enough?

It almost seems so simplistic as to be embarrassing to endorse. Like Fiat’s new slogan being: ‘Buy a Fiat. You will be able to drive about in it’. But if the core problem in the attitude towards insurance if the suspicion that claims will go unpaid, and that is simply not the case, then surely that is the message insurers and brokers should be advocating above everything else?

Trevor Treharne is the managing editor of Insurance Business Online.

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