Covéa’s Vicki Heslop on what the industry should be doing to show it cares about vulnerable customers

These are tough times. While insurance businesses are battling the headwinds of spiralling claims inflation, lower premiums and increasingly sophisticated financial crime, their customers and employees are now facing the worst cost-of living crisis in generations, which is causing misery and distress for many, especially those with vulnerabilities.

We learnt a lot from the Covid-19 pandemic, not least about vulnerability. Many people still carry its mental and financial scars as they navigate the current crisis. Perhaps it’s unsurprising then that the independent research Covéa commissioned earlier this year revealed that four out of five respondents self-identified as vulnerable.

The most cited vulnerabilities related to someone’s ability to understand communications or low reading age, followed by low financial resilience. Mental health is also a significant issue, with one in four people living with anxiety – a condition that can affect capability. It’s clear that vulnerability, which was once seen as a ‘minority’ issue, is now mainstream.

Action is needed, not least because the Financial Conduct Authority wrote to insurance CEOs in June, expressly highlighting the need to support all vulnerable consumers who stand to be disproportionately affected and suffer the greatest detriment, not just in terms of their finances, but in their physical and mental health too.

In recent years, the insurance industry has made great progress in delivering ever more sophisticated digital offerings. Customer convenience and greater efficiency makes it quicker and simpler for customers to get quotes, take out cover and make claims, which benefits both customer and insurer alike.

However, this doesn’t reflect the full picture, and it fails to include those whose vulnerability makes them unable to access or navigate the system – and this group is not in the minority.

Communication is key

Just one in four respondents to our survey think that insurers listen to their issues, and just one in five think that insurers care. There is a huge gap between customer expectations of disclosing an issue to their insurer, and the comfort they expect to receive from taking that step. This is compounded by consumer reluctance to ask an organisation for help until they reach crisis point.

Communication is key. Only just over half of survey respondents were aware that they could actually ask an organisation for help if they were in financial difficulties. Much clearer, simpler and more forthcoming communication and signposting about ways to contact an insurer are needed.

Shame and embarrassment are barriers for some customers, so it’s crucial that customer-facing employees are supported and receive adequate training to handle complex and emotional customer interactions, and offer practical solutions in a non-judgmental way.

The strain that this puts on customer-facing employees can be considerable. Employees are also consumers with the same pressures on health and finances as the customers they help.

It’s clear that vulnerability, which was once seen as a ‘minority’ issue, is now mainstream.”

Complex interactions are increasing, and research highlights less than half of customer-facing employees feel equipped to deal with such difficult conversations. That’s why we’ve made it a priority to train all our people specifically to support them in helping customers in vulnerable situations.

This year’s floods and the more recent wildfires starkly demonstrate the real and ongoing threat to property, livelihoods and life, and the value of insurance in compensating for loss.

Against this backdrop, one in 10 people say they’ll be unable to afford their insurance at renewal or purchase add-ons like legal cover, or they will tweak cover levels or increase their excess to reduce premiums. This will leave those whose financial resilience is already low – the people who are having to choose between heating and eating – without a safety net.

It’s vital that we engage with our vulnerable customers, and find ways to enable those who are facing difficulties – whether that be physical, emotional or financial – to continue to benefit from the protection that insurance provides.