While insurers are striving to innovate and navigate challenging market conditions, they are failing to meet customers expectations, while customers also need to adapt to the changing insurance landscape, Alastair Swift, Head of CRB Global Lines & CEO of Willis Limited, highlighted during S&P’s European Insurance Conference.
Speaking on a panel at S&P’s recent conference in London, Swift explained that although he feels carriers are failing to meet the expectations of customers, in general, companies are trying to operate in a “different and difficult market cycle while trying to innovate and trying to be creative.”
He used the cyber space as an example, noting that it has taken a quarter of a century, from an innovation standpoint, for the product to become mainstream for all, yet it’s still considered to be in its infancy and in need of further development.
“So, I do think insurers are trying to adapt, but you actually need customers to adapt as well. 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. And it is very tough to get people to change their mind on what they should be protecting through insurance, and that’s when innovation becomes difficult,” explained Swift.
One of Swift’s primary concerns is the response of insurance firms during challenging circumstances. He used the situation in Israel as an example, noting how insurers have been receiving premiums from clients in the country for the last 20 years, and have paid out any losses and cover any claims.
“This builds up the public premium, so when there is a bad situation insurers are in a position to be able to pay. It’s not to put it all back to shareholders,” he said.
Adding: “When you then have the situation that, unfortunately, is going on there at the moment, reducing your capacity dramatically at the time of need for a client and increasing pricing significantly, is not a great move. What it ends up doing is forcing people out of the commercial insurance market and into self-insurance, if they can. Obviously it is different in the SME and personal line sector, but within the commercial sector it will force people into self-insurance.
“And the fastest growing area of insurance and reinsurance, at the moment, is captives. Like I say, I don’t think the insurance market actually truly is creating and developing as it should be, because otherwise it wouldn’t be forcing as much premium to be in captive and in self-insurances as it is today.”
From an insurance broker perspective, Swift said that a lot of products look like they have been downgraded, citing that even though there are more and cheaper options in the market, they are not very functional.
The executive stated: “From a price point of view, yes, there’s more products, customers now have more options to go for a cheaper price. But often there’s a chance they’re buying something they don’t actually understand and/or have less functionality.
“Now, we have also looked at the customer satisfaction score that we’ve been running for nearly 15 years. and what we have observed is that over the last decade customer satisfaction has been going up and up regarding clients. It is absolutely brilliant seeing a lot of use of technology over the last 10, 15 years. Amazing. However, this upward trajectory was disrupted by the cost of living crisis, which unfortunately caused satisfaction scores to plummet.”
Swift concluded: “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. And if you’re paying more for something, you actually are expecting more. So, at this point in time, complaints are going up, and while we’ve got additional products, customers are even more unhappy than they were before.
“It’s not necessary because of the product, it’s because everything else is costing them more and they’re not happy about the prices to start off with and they’re expecting all the bells and whistles when they’re no longer here.”
