It’s fair to say the human race has really been put through the wringer over the last few years. From massive geopolitical events such as the global COVID-19 crisis and the Russian invasion of Ukraine, to a cost-of-living crisis which continues to spiral and drive up the cost of even the most basic essentials such as food and energy.

Empathy is one of the qualities which most defines us as humans and our ability to place ourselves in the metaphorical shoes of another and try to understand the world from their perspective is a core component of how we relate to one another and develop relationships. This is also true in the world of business and perhaps in no other field is this more relevant than the insurance industry.

We in the insurance game are often interacting with customers when they have suffered some kind of hardship. Whether it’s something relatively minor like a fender-bender, or far more devastating such as a house fire or burglary, the need for insurers to engage customers with empathy during these moments has arguably never been more important than right now.

A Poor Reputation

Recent research in Canada has shown that 42% of those surveyed do not trust insurance companies – a proportion which has remained stable for over a decade. Before US insurers breathe a sigh of relief and assume these figures don’t apply to them, they should know that these numbers are reflected in similar research across all developed nations.

2022 research into the reasons policy holders assign high or low customer satisfaction ratings to insurance brands analyzed data from around 25,000 claims survey responses from more than 50 property & casualty carriers. The results of the survey revealed 46% of five-star satisfaction ratings mentioned a positive or empathetic adjuster attitude and handling approach as the primary reason for their satisfaction score, followed by timeliness of overall service (18%), excellent and effective claims communication (16%) and process effectiveness (12%).

Conversely, 34% of one-star reviews mentioned ineffective or suboptimal communication by the carrier or adjuster, negative adjuster attitude or handling approach (23%), followed by poor claims process explanation and expectation setting (21%).

The onus must therefore fall on insurance brands to find opportunities to connect with their customers on a more meaningful level and build trust by showing empathy during key interactions. Each time a customer gets in touch about a claim they are presenting a brand with an opportunity to show they are listening, and they genuinely care about their problem/s. The person on the other end of the call might be having the worst day of their life and, even if the claim is in relation to something more minor, they are likely to be experiencing some level of anxiety regarding making a claim and will be counting on receiving a service which is fair, transparent, and efficient.

A Culture of Empathy

It’s so very easy for insurance companies to feel detached from their customers – especially in this era of online purchasing. Back in the day, insurance brokers would engage with customers face to face and build relationships with them in a more traditional manner – it’s far easier to be empathic when you must look the victim of a tragedy in the eye when discussing a claim.

However, with the demands of the moder world meaning almost all insurance interactions are conducted either online or on the phone, the gulf between insurer and policyholder has grown incalculably wider. This means even more effort is required to not only place oneself in the shoes of a policyholder, but also communicate an empathic understanding to them without sounding patronizing or insincere.

The only way to achieve this is to make sure insurance companies establish a culture of empathy and understanding throughout the entire organization. If the leadership is promoting empathy and showing it to employees when they are experiencing problems in their own lives, those same employees are far more likely to pay it forwards when engaging with customers. Inversely, if a brand has a culture where the leaderships is distant and uncaring when it comes to its frontline staff, this attitude is far more likely to be passed onto the customer.

Final Thoughts

Empathy is a key element of the insurance puzzle and needs to be in the mix if the industry is to address its poor reputation and build trust among policy holders. Digital technology provides the insurance business with many advantages, but it makes establishing meaningful relationships even more challenging to establish, necessitating the installation of a culture of empathy throughout the organization.

The role of empathy in modern insurance is sure to be part of the conversation at Digital Insurance Connect 2023, being held in August, at the Austin Marriott Downtown.

Download the agenda today for more information and insights.