Auto and home insurance policyholders distrust many insurance companies, according to new Forrester research.
Based on a survey of 10,000 U.S. financial services customers conducted from March to May 2022, no insurance company received an above-average trust rating, measured by a score of 65 to 74 out of 100 possible points. The survey examined the opinion of customers in seven categories about their trust in the 12 most popular insurance companies. USAA ranked first with a score of 73.6, while six other insurers scored above the industry average of 62.7. The rest of the top scorers were in order: Nationwide, Erie Insurance, AAA, State Farm, Farmers Insurance, and Allstate. Forrester calls the range 55 to 64 “weak” and 54 and below “very weak.” Of the other insurers in the rating, Progressive scored the least points – 58.
The seven categories, or “Levers of Trust,” as Forrester calls them, are Accountability, Competence, Consistency, Reliability, Empathy, Honesty, and Transparency. In insurance, accountability, reliability, and empathy are the most important levers, according to Alison Clark, chief analyst at Forrester and co-author of the study titled 2022 U.S. Financial Services Customer Confidence Index Ranking.
“Empathy usually plays a very big role, especially during an economic downturn,” she said. “This is an area that auto and home insurers need to think about. The brands at the top of the list, especially USAA, are firms that share common mission factors. They are there to support their members. Compare this to some insurers. at the bottom. Progressive posted a very high loss ratio, which may indicate that they did a very good job rebutting the claims.”
Clark pointed to remarks made by Dave Pratt, general manager of real estate at Progressive, in the company’s second quarter earnings report in Augustabout “refusing to raise prices as a result of increased requirements. This can have a huge impact on the credibility of auto and home insurance.”
Clark stressed that trust is correlated with insurers’ income. According to the survey, 90% of customers who said they trust a company will continue to do business with that company. “With customers who have high trust in firms, they are more likely to do things we know are profitable, like recommending to family and friends, repurchasing coverage from the company, and using complementary products,” she said. she. Of the customers who said they did not trust the company, only 40% or less said they were willing to engage in such revenue-generating behavior.
Clark said the Forrester study is designed to show insurers what builds customer confidence, how to measure that trust, and how to address weaknesses. She added that improving customer empathy is the area with the most potential for building trust. “Actually, empathy is what they excel at the least.”
Insurers can create programs to help employees respond proactively and with understanding to customer concerns, Clark says. “You might want to measure how much your firm thinks your firm understands their feelings and needs and cares about their financial well-being,” she said.
Clarke added that building trust requires an enterprise-wide strategy. “You need someone who looks at the data and understands what’s going on and then creates the right program to move forward,” she said. “It doesn’t just say that you are trustworthy.”