AXA Equitable has posted an interesting man-on-the street interview (embedded below) revealing low levels of trust for financial institutions. It reports that "the Chicago Booth/Kellogg School Financial Trust Index, released January 24th, reported that people’s trust in America’s financial system has increased from 20 to 26 percent over the last two years." Financial institutions may be heartened by the increase in esteem, but the bigger picture -- if I may very broadly paraphrase the AXA narrator -- is that their reputation, while no longer down the drain is still in the toilet.
The financial crisis showed that the "masters of the universe" really weren't such masters after all, and their incompetence had staggering consequences both here and abroad. Without a doubt any improvement is good news for the financial services industry and, frankly, a little surprising. Perhaps, as Bertie Wooster was wont to say, time is indeed the great healer.
AXA does good service in this video, making a very powerful summary point at the end: "Trust is part of the foundation of any institution. But trust must be more than a marketing campaign that a company uses to its advantage. Instead, trust needs to be a principle engraved in an institution and a relationship earned by an institution with its clients."
Along with financial institutions, insurers need to earn trust not only with customers/clients but with the general public by imbuing their processes with behavior worthy of trust, especially the claims process. But insurers also need to do a better job of explaining both what they do and why they do it. Few are likely to agree with the reason a claim is denied, so insurers must do a better job of explaining to policyholders what is and isn't covered. And they must do a much better job of explaining to the public the challenges presented by fraud.
The challenges faced by different insurance sectors vary significantly, and doubtless no sector is as emotionally fraught as health insurance. Consider this Facebook post, made by one of my most well-educated and sophisticated friends yesterday:
Two differences between health insurance companies and the mafia:
1) The mafia actually has a code of ethics 2) Its legal to shoot the mafia when they try to kill you.
Insurers need to think long and hard about what they must do to turn such opinions around.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio