During the recent S&P European Insurance Conference held in London, Alastair Swift, the Head of CRB Global Lines and CEO of Willis Limited, discussed the ongoing challenges faced by insurers in addressing customer expectations within a rapidly evolving market. His insights came amid a backdrop of innovation attempts and difficult market conditions that have left many customers dissatisfied.
Swift articulated that while insurance companies are striving to innovate, they are hindered by their inability to fully meet the needs of their clients. He stated, “Companies are trying to operate in a different and difficult market cycle while trying to innovate and trying to be creative.” He noted that the emergence of cyber insurance serves as a prime example of the industry's struggles; despite being established for a quarter of a century, the segment is still viewed as in its infancy, suggesting that significant development is still required.
A central theme in Swift's address was the need for customer adaptation in response to the shifting insurance landscape. “You need customers to commit, you need customers to believe that they want to start training and changing what they like from an insurance perspective,” he explained. This transformation presents a significant challenge for insurers, particularly when customers are resistant to altering their views on what types of coverage they require.
Swift raised concerns regarding the conduct of insurance firms in crisis situations, citing recent events in Israel where insurers, after 20 years of premium collection, are now significantly reducing coverage and increasing prices in the wake of heightened risk. He argued that such actions can drive customers away from the commercial insurance market and into self-insurance arrangements. “What it ends up doing is forcing people out of the commercial insurance market and into self-insurance, if they can,” he said, highlighting a troubling trend where captive insurance mechanisms are becoming increasingly popular as businesses seek alternative risk management options.
Further analysis from Swift indicated that many brokers believe that the array of products available has been diluted. He highlighted a dichotomy where customers may have access to more economical options, but these offerings often lack functionality and may not be fully understood by policyholders. “From a price point of view, yes, there’s more products, customers now have more options to go for a cheaper price," he noted, cautioning that “often there’s a chance they’re buying something they don’t actually understand and/or have less functionality.”
Customer satisfaction scores, as observed by Swift over a decade, showed a consistent upward trend until recently. The advent of the cost of living crisis has disrupted this positive trajectory, leading to a notable decline in satisfaction. He remarked, “Are we meeting customer expectations? I’d probably say no, because everyone is short of cash at the moment. Everyone’s paying and having to pay more.” He noted the growing discontent as customers, facing rising costs, expect greater value from their insurance products despite financial constraints.
Swift concluded by emphasising the misalignment between rising customer expectations and actual service delivery, suggesting that the current market conditions may not favour the development of innovative and beneficial insurance solutions that adequately address emerging needs and retain customer confidence.
Source: Noah Wire Services