Closing the gap

Britain’s insurance industry has a problem. The sector is not trusted by customers. In fact, almost half do not believe that their insurance company will pay out in the event of a claim, according to a survey of 1,000 people by comparison site Claims Rated, while 57 per cent find the actual process of making a claim ‘daunting, complicated and time-consuming’.

It is an invidious position for an industry that is there to support customers at times when they are at their most vulnerable. And yet, according to a related survey by Claims Rated, 71 per cent of customers who had made a claim found the experience either good or very good.

It is this disconnect between perception and reality that has prompted insurance giant Aviva to launch a major initiative to close the gap, restore trust and, in so doing, promote its reputation, starting with its UK operations.

Raj Kumar, global director – corporate reputation and brand governance at Aviva, explains: ‘People believe that the insurance industry pays out, on average, between 40 and 60 per cent of all claims. But we pay 96 per cent, on average, while a lot of our product lines pay out 98 to 99 per cent. That is a massive gap, and I feel that we, as an industry, have not done enough to close that gap.’

The first step on Aviva’s journey was the launch of its ground-breaking Ask it never initiative last April, which is designed to reassure customers claims will not be dismissed on technicalities. Claims will no longer be void because, for example, a customer wrongly identified a rim automatic dead latch as a five-lever mortice deadlock on their policy document. They are simply not asked such questions. Instead, Aviva will draw on data already available and local knowledge, such as council records.

If we just come up with a list of prescriptive actions, This is what we think you should do to solve your reputation, they won’t truly own it

Group communications director Nigel Prideaux explains: ‘If you insure with us, we won’t ask if you have a mortice lock on your front door because most people won’t have a clue. But a lot of insurance companies do ask that, and people get worried. What if I got that wrong? Will that invalidate my insurance? We are saying Don’t worry. We will take that pressure off you. We are pretty sure that we know what the locks are likely to be in your house. It’s that sense of taking away the uncertainty when filling in forms that maybe they have got it wrong.’

Such an initiative is also in harmony with Aviva’s corporate purpose to Defy uncertainty.

But the second step was to truly understand why the insurance sector has such a poor reputation, and what stakeholders really thought of Aviva. The process started with qualitative research. ‘Surveys are a blunt tool because you don’t get under the reasoning. Why did they say that? My question is always Yes, eight out of ten, but why? Or the response will be You have an image problem, and I’ll ask Why?’ says Kumar.

Instead, the insurance company started with a series of focus groups across ‘the whole gamut of people who have something to do with Aviva’, he adds. ‘We go very broad: the public, customers, MPs, regulators, media, NGOs, start ups, digital partners, suppliers and employees.’

The focus groups identified themes. Aviva then tested these themes with bigger groups. ‘We’re in insurance. We love numbers. We know this can’t all be based on qualitative analysis. We took the themes and tested them in larger surveys to see if they were validated by the numbers,’ adds Kumar. ‘So where we had interviewed ten journalists, say, we then looked at a pool of 300 journalists and said These are the main themes that came out, let’s test them on all those journalists. With the public, we took the themes from, say, 60 people and tested them on 5,000.’

The second piece of analysis identified the themes that resonated with a wider audience. No theme was disregarded but the qualitative research enabled Aviva to prioritise them.

‘We disregarded themes that did not come out across all stakeholder audiences. For example, certain groups said CSR was important to them. The investment community, NGOs, politicians, media and even our own employees said it was important but then if you asked them to prioritise, it changed,’ says Kumar.

‘If we spoke about people hanging up on the phone because they could not get through to Aviva, they said Well, if we’re not doing the basic job, let’s forget about everything else. We need to get this right before we start thinking about those things. Those are the kind of calls we were making.’

Breaking down the issues in this way allowed Aviva to identify the ‘meatiest issues’ to solve. Unsurprisingly, claims were a recurring theme. ‘Why do people feel like that?’ asks Kumar. ‘Is it product complexity? People have no clue what they have bought and what they are covered for. The question becomes: what can we do?’

Having identified the major themes that impacted Aviva’s reputation, it was time to explain to business units how simple actions could benefit them. ‘We tried to avoid the trap of coming out with metrics to measure success,’ says Kumar. ‘Our simple measure was If you finish the project, and the actions you said you would do, you will see a change in reputation.’

For Prideaux, this theme of collaboration was an important one. ‘It’s where the skills of the central reputation team come into play. They can’t just be brilliant brains about reputation, they’ve got to be brilliant diplomats. They must allow the businesses to own the actions. If we just come up with a list of prescriptive actions, This is what we think you should do to solve your reputation, they won’t truly own it,’ he says.

Kumar agrees. His team, who all come ‘from the business’, recognised that there was a danger in revealing the survey’s findings and then, as Prideaux describes it, ‘bore the ocean with a list of 100 actions’.

Instead, Kumar’s team shared the issues with ‘the kinds of things that could be solutions’, but allowed individual units to choose how to react. ‘We understand the challenges that they may have. We go in with the view that we know the situation you are in, but we also know the feedback we are getting. Let’s find a way to prioritise. What do they want to achieve in year one, year two…’

Prideaux adds: ‘The real skill is identifying those issues that really matter, and then looking at how we can move the dial – whether that is customer complaints or service levels. Each of those are big topics, but we can’t do everything because, frankly, there is a cost, but also if you have a million and one different strands all trying to solve reputation, then it gets confusing. Helping to prioritise is important.’

The real skill is identifying those issues that really matter, and then looking at how we can move the dial

The research led Aviva to launch a campaign that highlighted the high percentage of claims that do get settled, and to explain the most common reasons for rejecting an application. Last year, for example, it settled 991,700 claims – representing 96 per of those submitted – paying out £3.8 billion, or more than £10.4 million a day.

Delving into all Aviva UK’s business units, the research provided clear and transparent information on the value of claims met, the most common types of claims and why some had been rejected. For example, just one per cent of all motor insurance claims were rejected, predominantly because the potential payout was less than the policy excess, while most home insurance claims that were rejected were for items or events not included on the policies. Similarly, some claims are not settled because they fall outside the policy’s terms, such as damage due to wear and tear which is not covered in standard household insurance contracts.

But last year’s campaign also highlighted unusual claims that had been settled without dispute, including an amorous horse that mistook a customer’s car for a female companion – and damaged the bodywork after it swung its front legs onto the vehicle. And a monkey who snatched a holiday maker’s bag, rifled through its belongings, and smashed a mobile phone on the ground. The phone was replaced.

‘It is going to take a long time, but it is tapping away at these misconceptions,’ says Kumar. But he is clear that the initiative is not solely in his team’s hands.

‘It is not for me to say whether reputation has gone up or not, it is for the business units to feel it. For example, if one of the themes that they have agreed to tackle is service levels then we can tell them that complaints will come down because they have sorted the root cause.

‘And if complaints come down, then I know that a) costs will come down and b) one of our levers of dissatisfaction has disappeared. So, when they measure complaints and service effectiveness, they will see an uplift in that, a drop in their costs and a corresponding uplift in other metrics. For example, a team that handles 500 calls to change an address, which can now be done online, is available to satisfy other demands.

‘I have told the businesses that I don’t want to come up with a dramatic measurement of reputation right now, because we are at the beginning of the journey, but these results should tell you that we have improved. Already, we have an advantage for your business. You will automatically see either a top line or bottom-line benefit and, if you don’t, then I haven’t done my job well, because I have identified a weird metric that is not related to your business.

‘This is not an audit. We have said These are the issues, and you have to sort them. These are not fluffy reputation issues; these are business issues. That has been a great realisation also.’

If the ‘issues’ are sorted, then there is almost a multiplier effect through the stakeholder audiences. After employees, customers and the public are arguably the most influential stakeholder groups, from whom others, such as journalists and politicians, get their cues. Concentrating on the issues particularly raised by customers and the public, therefore, should automatically impact the other group because they will have fewer complaints raised by constituents or readers.

Kumar and Prideaux agree that one of the biggest aha moments within the business was the recognition that everything is connected. And that reputation is built on actions. For example, the communications team can talk to the media, public policy to the politicians and IR to the investors, but reputation cannot be left to these functions.

‘You cannot leave reputation to the external facing departments because it is built on actions, and actions are owned by literally everyone within the company,’ says Kumar. ‘In advertising, they say You can’t advertise yourself to greatness. It’s the same thing here. You can’t talk yourself into greatness. Reputation must be based on actions, so culture and mindset play big roles. And the second big aha moment was when the business stood up and agreed to this, saying Yes, it is our actions that matter. And once we do it, can you go and talk about it? That was a major switch.’

You cannot leave reputation to the external facing departments because it is built on actions, and actions are owned by literally everyone within the company

Prideaux says there was the need to educate people within the business on the difference between brand and reputation. ‘Brand is what you project out, what you want to be famous for, and reputation is what is reflected back. It is entirely through people’s experience,’ he says. ‘Customers might see a billboard, but their experience might differ from what is written there. There were some basic things, which might seem blindingly obvious, but these were big moments for people who might have deep set views that you can advertise or PR your way out of a problem.

‘Now every time we present reputation to the Board, the UK business will come alongside us and bring an action plan. It is not This is where our reputation is, it is This is where our reputation is, and this is what we are doing about it.’

As Kumar says: ‘We must fundamentally change the way we look at reputation to see it really grow, otherwise you fall into the trap of It’s always been that way. We must change a lot of things which people associate with insurance.’

Prideaux is adamant that focusing on its reputation is Aviva’s route to growth. ‘If we have a good reputation, more people will stay with us for longer and buy more products. We will hire and retain the best people.

‘It becomes a virtuous circle. Equally, with a bad reputation, you get into a negative spiral. Customers desert you. People desert you. That puts reputation right at the heart of decision-making, and it is a fascinating lens to look at either the issues of the business or the strengths of the business.’

Internally, Aviva’s employees are keen to get involved. ‘A lot of what we do internally is driven by purpose and the values of the business. It is not about a mouse mat and poster. It is why we talk about building reputation from the inside out. It is always culture first, then values and purpose which drives our reputation,’ says Prideaux.

‘If you go onto aviva.com, there are lots of videos of customer case studies. We are trying to bring these to life, by telling the story of how we helped somebody with a health claim or someone who had been burgled. Shining a light on things we do every day in the business is the role of communications.’

Much of the initial focus has been on tackling misconceptions around claims, but the reality is that the issue has a disproportionate impact on the insurance industry’s reputation. Just 30 per cent of policy holders will make a claim in any given year.

Most policy holders only reconnect with their insurance companies at renewal time, which is also when many existing customers become upset when they see more attractive rates being used to lure new ones. Indeed, 82 per cent of Aviva customers surveyed last year described such price disparities as the one of the most unfair practices of the insurance industry.

This revelation led to the launch of the industry’s first subscription-style insurance product. New and existing customers signing up for AvivaPlus receive a renewal price guarantee. ‘We are now looking at products that reward loyalty,’ says Kumar. ‘We shouldn’t just look at those customers who are making a claim because everyone’s experience matters.  And at the moment of truth, it really matters.’