Decent and Honest? Can Transparency Reinvigorate the Insurance Industry?

Regular readers will know I’m fascinated by successful start-up stories. And one thing I’ve noticed is that the most successful start-ups all put transparency, honesty and decency at the heart of their business.

Transparency is a relatively new concept for the business world. Or at least it’s new to shout about it. And it’s far removed from the image of cut-throat business where shareholders come first and companies only succeed by outsmarting customers, taking advantage of suppliers and wringing every last drop of energy from staff.

From Pact’s ethical approach, ensuring farmers get the best price for their coffee, to Skyscanner’s growth culture or TransferWise’s fair pricing policy, every start-up I’ve featured can be commended for their honest approach.

It’s a theme, I also explore in my book Leading the Crusade where I show how crusaders embrace transparency, happily sharing knowledge – even with their competitors.

In response to consumers’ positive response to transparency, big businesses are now emulating the approach. From MacDonald’s to Barclays, brands are keen to tell us how they are protecting the planet, treating staff fairly, and generally being open about their activities.

But one industry that, so far, has struggled to demonstrate transparency is the insurance industry. Before we look at that in more detail, let’s consider why consumers now demand transparency from brands.

The old way of doing things was to shield customers from negative information. But those retailers who were brave enough to include unbiased reviews quickly reaped the rewards.

Why did transparency become so important?

When did business change? Why are so many companies today eager to be seen as open and honest? Well, as with so many recent changes in the business world, I believe the rise of transparency correlates to the rise of the internet.

With information at our fingertips, it has become harder for companies to hide their activities from customers. Whether a customer feels short-changed or an employee is disgruntled, they can let the world know. And when shopping for products or services, customers can read reviews and choose those companies they feel align best with their own values.

In the early days of online shopping, many retailers were reluctant to put reviews alongside products. The old way of doing things was to shield customers from negative information. After all, why would customers buy something if they heard poor reports from a previous customer? But those retailers who were brave enough to include unbiased reviews, such as Amazon, quickly reaped the rewards. Customers loved the transparent approach and access to information and today, it’s rare to find a successful online shop that doesn’t include product reviews.

More than a trend

For the successful start-ups however, transparency isn’t simply the latest trend to jump on.

Unlike some of the bigger companies who are hurriedly shoe-horning ‘transparency’ into their strategies, start-ups don’t bolt decency and honesty onto their offering – rather it’s inherent in everything they do. They are not simply paying lip service. They genuinely are honest and don’t know any other way to operate.

Perhaps this is because so many start-ups are built from the ground up by individuals with a real passion for the product or service they are providing. They care about their staff and sincerely want to delight their customers. As a result, consumers are keen to associate with companies that make them feel good about making purchases.

Can transparency be repeated in the insurance industry?

I think it’s fair to say when asked to name ethical and fair industries, the insurance industry isn’t one that springs to mind.

Along with petrol and dental fillings, insurance is one of those necessary but uninspiring products we hate paying for. And whenever we take out a new insurance policy, there’s always the nagging feeling that somehow we’re being ripped off – parting with cash for something we don’t really need and paying over the odds for the privilege.

And the insurance industry has done little to counter this belief. From price hikes when renewing to overpriced policies and complicated T&Cs, we’ve long viewed insurance as a necessary evil.

If you’re unlucky enough to need to make a claim, the process becomes even more frustrating. Forced to fill out lengthy forms, pay an excess and prove your claim is valid, you can be left wondering why you bothered making all those monthly payments at all.

There have been changes in the industry thanks to price comparison websites and more accurate risk assessment but the insurance model has remained largely unchanged. Pay in thousands over your lifetime and see nothing in return – unless something bad happens. The feeling is always that you’re paying for something you hope you’ll never need.

Ready for disruption

Of course, this dissatisfaction has meant that the insurance industry, just like the finance industry before it, has become ripe for disruption by start-ups keen to bring openness to the industry. And although many questioned whether insurance could ever be exciting, we’re now beginning to see several insurance start-ups challenging the established $1.2 trillion industry, offering a revolutionary new approach to buying insurance.

Rather than simply copying established insurance models, these start-ups are using technology and transparency to shake up the way we buy insurance. Examples include Trōv which provides on-demand insurance for out-of-the-house contents cover. Using Trōv’s app, customers ‘turn on’ the insurance when leaving the house, meaning they only pay for insurance when they need it.

Commenting on changes within the industry, Scott Walchek CEO and founder of Trōv says:

“The whole industry is facing a bit of an existential crisis. There’s a new cohort emerging that has very little association with insurance providers and no brand loyalty. These new consumers imbibe everything from a smartphone and move so rapidly that insurers are facing a difficult time speaking with them in their language on their platform of choice.”

Other examples include Oscar which provides simple healthcare insurance and Jetty which offers insurance specifically for city dwellers.

As with many of the new insurance start-ups, Jetty is designed to appeal to younger consumers. As Luke Cohler co-founder of Jetty says: “Millennials have unique expectations compared to past generations, and want brands to care about them and understand their needs, be authentic and provide long-term value – especially with communications.”

Meanwhile, insurance start-up Lemonade goes a step further, transforming insurance from a necessary evil into a force for good. Find out how they’ve done this in my Lemonade case study.

Making transparency work for you

Consumers will always choose a company that’s transparent and honest over one that’s guarded and secretive. But to really make transparency work for your business, it must be authentic. This often requires a leap of faith, particularly for those not used to sharing business information or trusting customers. But those companies who successfully incorporate transparency throughout their activities will reap the benefits.

Join the Conversation:

New technology is opening up opportunities for ambitious businesses like never before. Keep abreast of evolving technology and new tactics to add to your growth toolbox by joining the conversation at Exceptional Business Growth Strategies for UK SMEs.

More about Mark Prince

Mark Prince is a hugely experienced executive with 30 years of global corporate leadership. Mark delights in the game of business and seeing committed companies grow. Mark has applied his approach of strategy development and deployment in a wide range of industries with an international dimension, including leading companies with ￡100m+ turnover and creating up to 65% sales growth.

Mark was a speaker at last year’s Growth Hacking World Conference and is the author of the Amazon 5-Star reviewed business book Leading The Crusade.

View more at: www.markbprince.com