Consumer Confidence Survey Highlights

The CPCU Society Takes the Pulse of the Market
How will consumers react to recent charges of collusion and unethical practices in the insurance industry? In May, the CPCU Society conducted a survey of its Member Opinion Panel and insurance consumers to measure awareness of the allegations, and to gauge the impact on consumer trust. CPCUs were also asked what measures would be needed to restore public confidence.

A Major Hit on Buyer Confidence?
In the past year, some of the largest firms in the insurance industry have been accused of fraud, bid-rigging, or worse. These allegations have grown into a widening investigation of industry practices, criminal charges against executives, and the resignation of top management at implicated firms. The ultimate impact of these events will largely depend on whether the consumers of the insurance product, including property and casualty coverage, view the problems as the result of the bad behavior of a few, or evidence of a widespread industry ethical breakdown.

Measuring Confidence
To get an accurate assessment of the outlook for consumer confidence, the Society polled two groups:

• Members of the CPCU Society, as represented by its Member Opinion Panel, and

• Insurance consumers, represented by a national sample of U.S. adults (18 years or older) developed by International Communications Research (ICR).

What Can We Conclude about Customer Confidence?
Three key conclusions can be drawn from this research:

1. As of today, the general public remains only marginally aware of the allegations roiling the insurance industry. Almost all of the Society panel members responding to the survey (96%) said they were somewhat to very familiar with the allegations, while only one-third of consumers possessed the same familiarity.

2. Consumers are less concerned about these allegations than industry insiders. Less than one-half of the adult population surveyed (44%) expected the allegations to have more than a minimal impact on consumer confidence in the property and casualty insurance industry. In contrast, 78% of CPCU Society members on the opinion panel forecast appreciable damage to public confidence.

3. Insurance professionals believe that existing policies, if enforced, and further staff education and training are the industry’s best responses to the crisis. About three-quarters of the CPCU Society panel members responding to this survey consider enforcement and training to be the industry’s best hopes. However, a smaller proportion (about 60%) believe that firms in the industry will actually expand their enforcement efforts.
   

What Do Panelists Think the Industry Should Do In Response?
While the public’s relative lack of awareness of the allegations may not be surprising, given their technical nature and the commercial focus of the business practices involved, the second conclusion is more startling. This muted response from consumers represents both an opportunity and a risk for the property and casualty insurance industry.

The opportunity is one of time. A window of time currently exists for insurance firms to ensure full disclosure and transparency, and to communicate that commitment to their customers. The risk is that this window of time may shut suddenly, if the scope of the investigations widens and the story starts to hit the national, non-trade media.

According to the CPCU Society Member Opinion Panel, most firms need only to enforce and communicate existing ethics policies, such as the CPCU Code of Ethics, not invent new ones. A greater emphasis on training and education will ensure its clear communication and understanding throughout the enterprise. And improved transparency and full disclosure will help insulate firms against a consumer backlash in the event the industry’s reputation deteriorates.