Canadians Show How Insurers Can Regain Consumer Confidence

Anyone who doubts whether U.S. insurers can do anything to influence how consumers feel about the industry hasn’t been paying attention to the efforts of their colleagues north of the border.

Mary Lou O’Reilly, senior vice president of issues management and communications at the Insurance Bureau of Canada (IBC), the national trade association for Canada’s property and casualty insurers, related her group’s proactive reputational risk management approach during the recent annual conference of the Insurance Marketing and Communications Association in Toronto.

I was on hand to deliver a speech about the industry’s outlook, and have her permission to share some of IBC’s success stories with you.

Setting the stage, O’Reilly described the 1990s as a “golden age” for Canadian insurers, with carriers “vocal and visible,” highlighted by a national campaign to combat insurance fraud, and a high-profile effort in the recovery from a massive ice storm.

The following decade, however, was another story altogether, as the industry’s approval ratings plummeted thanks to what O’Reilly called a “perfect storm” of negative developments. Escalating claim costs (particularly in auto insurance) hammered insurer bottom lines, prompting much tighter underwriting, rising prices, and heavy-duty criticism from lawmakers, media, and consumers. In one province, there was even talk of nationalizing auto insurance.

“The P&C industry had essentially lost its voice,” she recalled. “Our reputation was in tatters and our credibility was down the tubes. We became Public Enemy Number One.”

Focus groups reiterated the IBC’s worst fears.

“Mostly what we observed through the glass was anger,” says O’Reilly. “If the participants didn’t have a bad experience with insurers on their own, they had heard horror stories from friends, family, or colleagues. Since insurance is a word-of-mouth, pocket-book product, it didn’t take long for that attitude to go viral.”

However, additional market research commissioned by IBC revealed that consumer feelings towards insurers could be influenced by more than just the price of coverage. “They also want insurers to be concerned and caring,” notes O’Reilly. “They want insurers to pay claims, but they also want to know that the industry is doing something to protect them and their communities.”

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In response, and following intensive focus group testing, the IBC developed a proactive campaign to cast insurance in a more positive light.

“You have to appeal to consumers on an emotional level so they’ll listen to you on an intellectual level,” suggests O’Reilly. “It’s very difficult to educate anyone about the industry if they don’t want to listen, so you need to get their attention by being a positive force in their everyday lives. You need to reach out to them on issues they care about, not simply the ones we deem important.”

To coordinate its brand-polishing efforts, the IBC formed the Restoring Consumer Confidence Coalition, to which the Canadian property and casualty insurance industry made a long-term commitment. “We realized there were no quick fixes,” says O’Reilly. “We were in this for the long haul.”

The coalition targeted three major stakeholders—consumers, government policymakers and the media. “Our goal was to regain enough trust to at least convince people to look at both sides whenever an insurance-related issue came up,” she notes. “That might sound like a fairy tale, but we believed we could make it a reality.”

In putting together its brand-rebuilding program, the IBC sought to make sure its initiatives resonated with consumers on a personal level and was regionally adaptable.

The IBC’s major focus was on injury prevention, under the banner “Be Smart, Be Safe.” Getting involved in safety and accident prevention “wherever people are—whether at home, on the road or at play—shows that insurers care about them,” according to O’Reilly.

One point in the industry’s favor is that “consumers recognize our expertise in risk management, so we had a lot of credibility going in,” she says. “In addition, consumers told us that safety was an issue that mattered to them.”

Part of IBC’s effort was a multi-media campaign against distracted driving, including person-on-the-street interviews asking about “the craziest things they’d seen people doing behind the wheel,” she notes. IBC also traveled around the country exhibiting its “DUMB Car”—which stands for “Distractions Undermining Motorist Behavior”—a simulator that tests driver reactions to distractions such as cell phones, music-playing devices, eating and drinking, and even personal grooming.

The driving simulator, taken to schools and other public forums around the country, includes an actual-size driver’s seat, gas pedal and brake, dashboard and plasma monitor. “It was a fun way to teach people how dangerous this kind of behavior can be,” explains O’Reilly, who said the DUMB Car “resonated with consumers and generated tons of media attention.”

IBC also became an active partner in “Operation Red Nose” during the holiday season, donating money and manpower, including insurance company executives among the volunteers who drove impaired partygoers (and their cars) home.

More recently, IBC unveiled its “Dry House” interactive teaching tool at local fairs and home renovation shows. The device was described by O’Reilly as “a large touch-screen exhibit staffed by IBC ambassadors that demonstrates how to prevent water damage and basement flooding.”

The group also started a “Writing the Wrongs” campaign, in which IBC staff wrote letters to the editor and op-ed articles to correct misinformation about the industry. 

IBC’s brand reputation-building efforts had a measurable impact. From 1998 to 2003, the industry’s favorability rating dropped from 5.8 (out of a possible high of 10) down to 4.9, IBC’s research found. The percentage of those saying they were satisfied with their insurers fell from 43 percent in 1998 to just 29 percent in 2003.

Just 18 months after beginning the campaign to restore consumer confidence, reports O’Reilly, the industry’s favorability rating was back up to 5.7, before topping 6.0 shortly thereafter. Consumer trust in the industry increased from a paltry 37 percent to a more respectable 46 percent.

Even the tone of media coverage had improved. “When we started, 63 percent of media stories about the industry were negative, but that’s only 27 percent now,” she notes.

The IBC’s efforts are ongoing, although the program—which has a budget of about $5.8 million a year—has been recast as the Maintaining Consumer Confidence Coalition. However, the biggest challenge, warns O’Reilly, is “complacency.”

“Once the industry’s numbers started climbing back up, there are lots of other places to direct this money,” she says. “But you’ve got to keep at it. Be consistent, be responsive and be compassionate.”

Could a similar program improve the reputation of U.S. insurers? While O’Reilly concedes that the United States is “massive” compared to its Canadian neighbor, “you can usually find a way to make a difference in your communities,” she says, suggesting that insurers consider “decentralizing” their efforts to respond to local priorities.

She also advises the industry to follow the IBC’s lead and “develop tools to make insurance company employees effective ambassadors to communicate more positive messages about what we do to make people safer and more secure wherever they work, live, or play.”

U.S. insurers already have a lot of positive work to promote. Indeed, the Insurance Institute for Business and Home Safety delivered a presentation at the IMCA conference about its efforts to test structural resistance to wind and fire. Included was a dramatic demonstration of how simply having a front door open out into the street rather than into the home can make the difference between a total loss and relatively minor damage in a windstorm.

IBHS generated a lot of media buzz with its latest tests, and over the years the long-established Insurance Institute for Highway Safety has cast the industry in a positive light as well.

So how about the industry sponsoring a TV realty show in which insurers and their associations go around the country showing what a difference sound loss control can make? What have they got to lose?

What do you folks think?