Society is becoming ever more 'woke' as people worldwide become more aware of racial and social injustice and other critical issues that affect us all. Social media and on-demand news fuel this awareness; however, as the world becomes more informed, an era of widespread distrust is enveloping us. A recent report by Edelman shows that people's fears about the future are driving this trend of distrust towards government, business, NGOs, and the media. And that within the business sector, financial services is the least trusted category of all.
As customers worldwide demand greater transparency and higher standards than ever before, trust has never been harder to earn or easier to lose.
The insurance industry has, unfortunately, historically struggled with trust issues. In 2018, the financial services industry was rated the least trusted of all major industries. The industry is now improving as companies become leaner and use technology to deliver more for less. However, there is still clear evidence that consumers would prefer to obtain insurance through a traditional, non-insurance brand they already believe in. More than a third of consumers tell Deloitte they would be interested in buying insurance from a large retailer. This fact suggests the loyalty these organizations have created offers real value to consumers.
But how do you go about creating the same level of trust? At LifeHash, we believe the answer lies in technology.
The COVID 19 pandemic has resulted in an increasingly digital-first consumer, and the future of insurance lies down the same path. A recent study by Accenture has found a greater appetite in younger generations for digital offerings that help them make safer, healthier, and more sustainable choices. In the same study, 69% of the 47,810 respondents stated that they would share significant amounts of data on their health, exercise, and driving habits in exchange for lower premiums. Critically, however, only a third of the respondents trusted insurers to secure their data against cyber attacks.
By now, it's evident to most insurers that data can bring a lot to the table. But, only by selecting the right data source and using complementary technology will you derive insights that improve customer experience.
Big tech has seized the opportunity. Microsoft, Salesforce, Amazon, and others have empowered society with AI; infusing applications with artificial intelligence, such as intelligent typing tools or even AI-assisted app development. Insurers, too, have adopted AI and machine learning to add value by streamlining their products and services. While the use of AI soaring by 50% is a leap in the right direction, unfortunately, it doesn't solve every challenge. And, although it indisputably improves productivity and helps make valuable predictions, it raises a significant discussion around data ownership, transparency, privacy, and security.
Blockchain solutions can secure information and reassure consumers by promoting transparency and giving users control of their data, helping to rebuild trust in the process. Storing data on a blockchain of driving habits, health records, and insured goods provides a single, secure source of truth that both the consumer and the insurer can rely on to substantiate claims. The most valuable aspect of blockchain here is that it provides data ownership to customers while creating the possibility for increased transparency.
How does blockchain provide this? In short, by providing a decentralised and immutable ledger of data. To break that down, blockchain uses a network of hundreds of thousands of computers owned by individual entities to form a decentralised web. Due to a single entity not controlling the network and because everybody is aware of the data in the network, you can't simply change a piece of that data. In addition, data is reinforced by encryption that further protects it from manipulation.
An important realisation, is that this system can work with many different kinds of data, and the benefits applied to any situation where transparency and data provenance are of the utmost importance.
While we see that data can make the difference in how and which services we offer customers, we also see that the ownership and handling of that data are critical topics. While you start to rely more and more on data-based insight to provide highly customised services such as usage and behaviour based insurance, you must also empower customers to control their own data and provide clear transparency to reassure them through their insurance journey. Putting transparency first seems to be very effective: 94% of the 2,000 customers responding to a 2019 study by Label Insight identified transparency – not privacy – as the number-one factor motivating brand loyalty. The level of transparency now required is unheard of among traditional insurers. Underwriters collect personal data but do not indicate how it will be analysed or used, and communication with customers is almost entirely one-way. Applicants receive an acceptance or rejection letter with no explanation, and policyholders rarely hear from the insurer again until it's time to file a claim.
It is clear that the time for a one-sided market has passed. Consumers choose trust and transparency above all else and it seems like the only way to offer this is to work together with consumers on systems that promote personalised offers transparently and safely.
LifeHash can work with the insurance industry to rebuild trust with customers by using innovative, immutable technology to modernise the claims process, guarantee data security and ownership, and provide a single independent source of truth.
Transparency is about sharing information about important processes openly, without the need for the customer to constantly request it.
Trust is important in a customer relationship because it has a big impact on the customer experience. If customers don't trust a company, they tend to not purchase their services.
Blockchain systems are inherently trustless. This means that they can operate securely and effectively without the need for anybody to trust each other.