WINNING BACK THE TRUST The Financial Crisis that the world’s Economies have been subjected in the recent past have left a lot of destruction in its wake. It has wrecked havoc on Economies, damaged businesses, driven down profits and in addition ravaged the cornerstone of business relationships. In the Financial Sector, Trust is the cornerstone of doing business.
The crisis has wrecked damage on Trust and one devastating factor is that trust is very difficult to regain once broken. In a social context, trust has several connotations. Definition of trust typically refer to a situation where by one party called the trustor relies on the actions of another party called the trustee to perform a certain task.
The trustor (voluntarily or forcedly) in the process abandons control over the actions to be performed by the trustee. As a consequence, the trustor is uncertain about the outcome of the trustee’s actions and he can only hope that the agreement is carried on .In the meanwhile the trustor can develop and evaluate expectations, based on the faith he has on the trustee. The uncertainty involves the risk of failure or harm to the trustor if the trustee does not behave as desired or breaches the trust.
Trust can be attributed to relationships between people. It can be demonstrated that humans have a natural disposition to trust and to judge trustworthiness. Conceptually, trust is also attributable to relationships within and between social groups (families, friends, communities, organizations, companies, nations etc.). It is a popular approach to frame the dynamics of inter-group and intra-group interactions in terms of trust. In economics, trust is often conceptualized as reliability in transactions. In all cases trust is a decision that enables human beings to deal with complexities that would require unrealistic effort in rational reasoning.
The business of Insurance is guided by Trust. Whereas commercial contracts are guided by the legal principle of “let the buyer beware”, Insurance Contracts, because of their fiduciary nature, are subject to the Common Law Principle of Utmost Good Faith. According to this principle, the parties to the contract are required to disclose all material facts relating to the contract and failure to do this renders the contract voidable. Insurance is a promise between the Insurance Companies and their clients (customers) that at the most difficult times of their lives and in case of a crisis, the Company will be there to help them out. At the heart of this value proposition is not the premiums that the customer will pay but the trust that the Insurance Company will be there in times of need.
The Insurance and Financial services industry has to be relied on to deal fairly with customers, be open about its business, and provide products that meet expectations of the customers. In a research carried out with several consumers of Insurance Industry products, one question asked was whether the customers thought that the Industry players were honest and open. Although there was a spread of opinions, the predominance one was that the Industry is neither open nor honest. This means that the customers do not trust the Insurance service providers, and this is naturally a boon for disaster.
The Industry is perceived to have broken the promises it has made to the public and has been unable to deliver on them. This is not a situation that the Industry should allow to continue, and it is clear that a lot needs to be done to correct it. It should be treated as a major concern for the industry players and become one of their core functions i.e. the function of redeeming the Industry’s image. There is little doubt that a problem exist and most players in the Industry accept that the issue has to be tackled.
The most important question is how can it be tackled and what can companies do to improve the situation? Insurance is a very complex business and involves huge amounts of technical data/details that the public is not aware of, and would find difficult to understand. In addition Insurance provide essential services to modern life, without which it would be difficult for a modern society to function. People do not trust the industry because they are scared of it. Despite the going on, the industry has been largely quiet, and consequently has not been building any friends. It has not invested in a human face to put in front of the public.
Many Industry players have participated in discussions about the situation in conferences and workshops, but that appears to be the end of the Story, as there have been no substantive efforts to follow up on the resolutions made. One of the most important things to note is that trust and credibility cannot be rebuilt by oneself. It is given and appreciated by the others based on ones behavior and their relationship with you. People cannot learn to love the industry until they do not know those who run it. This should be the first major initiative in rebuilding the trust and confidence and those who run the industry should come out and be known by their clients. It has been mentioned above that another cause of mistrust is the fear that the public have for insurance. To reduce the fear, improve credibility and re-establish trust, the industry must not just tell the truth but must be seen to be telling the truth at all times.
The industry for a long time have relied on very long and legally crafted wordings that even the players themselves have very little understanding of. A lot of them have not read what a policy document is all about except what is in the schedule of the policy. A lot needs to be done on these Insurance documents, and might mean removing all the small prints, legalese, and having clear documents printed in line within the ambits of the principle of utmost good faith and the full disclosure. In effect, the industry should strive to make moral contracts with their customers. To be able to achieve this, the Industry should listen to its clients.
Listening is more beneficial than talking. The service providers should listen more to the customers, and be ready to apologies and be willing to change. It should be noted that ideas are with the clients and not with the Companies. The company’s duty should be to interpret correctly the needs of the customer with a view to satisfying them. It should not dictate to the customer the products they should buy. These calls for change and the industry must also be seen to change. Change is not an event, but is a continuous process. In the current world, change is the only constant, and those who are not willing to change will eventually perish. It is important that the process of listening to the customer continues, and the change process be a continuous one. It is important that the customers continue to see that their inputs remain valuable and effective. This will ensure the survival of the companies. Lastly, the industry should strive to be human and show a human face.
Insurance Industry players have been accused of being aloof and not involved with the public. Business is about people. People run companies and people buy from companies. If the heads of the companies seem to have come from a different world, in which they are unaffected by the events which dominate the lives of the people, there will be little or no communication at all. Communication plays a very prominent role in this and the Insurance Industry should come out and tell the World what they do. They are the real leaders of commerce; they make people prosperous by oiling the wheels of the Economy and making other industries operate- Aviation, Construction, and Engineering etc. Insurance gives protection when most needed and helps in planning for the future in very uncertain environment. Insurers are apparently the real heroes of the business world. This can happen if we come out of our hiding places, and start showing a listening and caring face to the public.