Supporting vulnerable customers – a great opportunity for insurers to rebuild reputation amid Covid-19 crisis

The number of Brits who identify as vulnerable customers has doubled in a year as the coronavirus crisis sent concerns about health and personal finances rocketing, according to new research from Consumer Intelligence. 

The research revealed that more than a quarter (26%) of Brits now consider themselves a vulnerable customer, up from 13% a year ago.

Those who self-identify as vulnerable also have higher levels of concern than non-vulnerable customers, with 36% very worried about their family’s physical health, 26% about their own mental health and one-in-four very worried about being able to afford necessary outgoings. 

The FCA defines a vulnerable customer as someone who due to their circumstances is “susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”, and Consumer Intelligence chief executive Ian Hughes said insurers need to be wary of inadvertently discriminating against this section of their customer base.

“Stressed, worried, and distracted people – especially those under financial pressure – think very differently about insurance, interact differently with insurance companies, shop differently and claim differently,” he said. “Understanding behaviour and supporting the needs of those customers is vital – but not enough. Insurers must act now to make sure they aren’t contributing to the detriment vulnerable people are experiencing through their interactions, or negligence.

“This group makes up a large part of insurers’ customer base. They need the protection of insurance more than ever, and they need the protection of insurance companies to ensure they’re getting the right information at the right time, the right cover, and the right price.”

And Michael Sicsic, managing director of Sicsic Advisory, which assisted with the research warned that insurers also need to be aware of the increased regulatory oversight they will be subjected to during the pandemic.

“The FCA will take a keen interest in how insurance providers can demonstrate their understanding and support of vulnerable customers, both during the coronavirus crisis and beyond,” he said. “Now is the time for companies to start finding their vulnerable customers and start taking positive action.

“This is a crucial moment for insurers to develop their relationship with customers beyond purchase and renewal touchpoints. Those doing the right thing now will reap the rewards in customer loyalty and brand equity further down the line.”

An amazing opportunity

Despite the challenges facing insurers dealing with the coronavirus crisis, Hughes said that the pandemic could still present insurers with an opportunity to better serve their customers and improve their relationship with consumers.

“I see this as an amazing opportunity for insurers to connect with customers in a way that they may not have done before,” Hughes told Insurance Times. “Their customers will want to connect with them, because these are vulnerable times, and this is a great opportunity for insurers to help and support their customers, and that can be something that actually creates loyalty.”

The difficulty for insurers, however, lies in how they communicate with their vulnerable customers, with those successful insurers going on to reap the benefits of improved customer loyalty and an improved standing in how they are perceived by consumers.

“The challenge for insurers is that giving clear and consistent information is not something I think about when I think of the insurance industry,” he said. “This could be a really interesting time for insurers to think about how they can best help their customers.”

Further research from Consumer Intelligence has found that the insurance industry remains at the bottom of the list for contacting their customers about the coronavirus pandemic, with consumers more likely to have heard from their gym or fast food outlet.

In fact, only 52% of those surveyed by Consumer Intelligence had heard from their insurance provider in recent times, compared to 89% of consumers who had heard from supermarkets.

And Consumer Intelligence’s Catherine Carey said insurers could learn a lot from how other industries have handled dealing with vulnerable customers.

“One of the things the NHS has always been good at communicating with vulnerable customers, because it is something it has to do day in, day out,” she told Insurance Times. “They way they do that is through simplicity in messaging with a low reading age, and the industry has something to learn – it is quite an easy thing to do.

“Something else for insurers to think about is before the pandemic, they really only had the renewal notice to contend with in terms of engagement with their consumers, but now the pandemic has hit it opens up those contact points with consumers who are worried about their finances and need reassurance.”

“That is somewhere where insurers can really make a difference if they get a handle on it,” she added.

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