Survey Shows New Insurers Battle a Trust Deficit

We’ve said it before and we’ll say it again: insurers face an uphill battle when it comes to winning customer trust.

And if you need more proof, we’ve got it. Kin recently surveyed insured homeowners and asked if they’d be willing to work with a new home insurance company they haven’t heard of before.

Almost 83 percent of respondents said no.

While 14.5 percent of respondents would if it meant cheaper premiums, almost 50 percent of respondents said nothing would motivate them work with a new insurer.

83% of homeowners aren’t willing to work with a new insurance company they haven’t heard of before.

Survey Highlights

• 83% of homeowners are not willing to work with a brand-new insurance company. Only 14.5% would if it meant cheaper premiums.
• 49% say nothing would motivate them to work with a new insurer.
• 33.5% have never changed home insurance providers.
• 24% haven’t switched providers in 10+ years.

Customers May Act against Their Own Interests If Trust Isn’t There

These results may be further evidence of the well-documented trust issue customers have with insurers.

As we cited before, a 2018 TrustPilot report [PDF] found that 31.1 percent of consumers say that finance companies are “not trustworthy at all” or outright “untrustworthy.” Of these companies , including banks, mortgage lenders, and robo-investors , insurance companies were ranked as the least trusted of all.

And in case insurtechs wants more bad news, a 2017 World Insurance Report found only 26.3 percent of customers trust insurtechs.

These misgivings may be preventing homeowners from making decisions that lead to more insurance savings and greater satisfaction. After all, they have a lot of reason to work with new insurers — especially insurtechs.

They just might not be aware of it.

As we know in the industry, neglecting to shop insurance offers costs homeowners big time. According to Consumer Reports, 50 percent of policyholders who switched insurers in the last three years reported finding a better price.

Consider this in tandem with findings from 2017 World Insurance Report. It found 34.6 percent of respondents say insurtechs offer better value for the money and 31.8 percent say they offer better service as compared to traditional insurers. Remember, these are the same customers who were reluctant to trust insurtechs.

Now consider the 74 percent of our respondents who haven’t switched home insurance providers in five or more years. The above studies suggest:

• They are missing opportunities to save money on their policy by not shopping around more often.
• They are missing opportunities to get better service and more bang for their buck by not giving insurtechs a try.

50% of policyholders who switched insurers in the last three years reported finding a better price.

A Lesson for Entrepreneurs: Never Undervalue Customer Trust

Building trust isn’t just a challenge for new insurers — new companies and entrepreneurs in all industries are tasked with the challenge of encouraging customers to trust a company they’ve never heard of before.

With that in mind, here are some ways new insurers — and entrepreneurs — can help bridge the trust gap:

• Invest in brand awareness. Ever hear about the illusory truth effect? It’s the tendency to believe something is true if it’s repeated enough. It’s also a way to contextualize the importance of brand awareness: enough exposure to your brand (repetition) will help customers feel familiar with it — and be more inclined to trust it (truth).
• Reach out and check in. Learn from our experience — customers want you to check in and see how they’re enjoying your service or product. This is an especially useful way for new insurers to differentiate themselves from traditional insurance firms that have a track record of rarely interacting with customers. According to a 2017 Bain & Company survey, only half of the surveyed customers had any contact with their insurers in the past 12 months — for any reason. It’s one of the many reasons we created a customer wellness team, and the results have been incredibly positive.
• Leverage social proof. When 90 percent of customers read online reviews before a purchase and 88 percent trust an online review as much as a personal recommendation, you know reviews are a trust-building force to be reckoned with. So use your positive reviews to your advantage — in your marketing, across social channels, etc.
• Be social. Studies show more than 50 percent of brand reputation comes from social interaction online. New insurers should take note. Interacting with customers on social media is a chance to humanize a company in an industry that’s not exactly known for its friendliness and approachability.

And remember, building customer trust is an ongoing investment. Experiment with your strategies with that end goal in mind.