A new report from UK professional body the Chartered Insurance Institute says brokers should refocus on building trust with their customers, particularly SME clients.

Trust is critical as it has a significant impact on how insurance is purchased and serviced, the report prepared by the institute’s New Generation Broking Group says.

“Trust is a mammoth challenge in the insurance sector,” the report says. “Without trust, customers cannot be confident in what they are paying for and are not forthcoming with accurate information which damages all parties involved.”

The report says there are a number of ways to help brokers work on the trust challenge. They should ensure clients understand why a particular product or cover has been recommended, be honest about what can and cannot be done as well as demonstrate loyalty.

Brokers should also focus on value instead of price in conversations with clients and show they understand what customers need.

The report says trust is a strong belief that somebody will do what is best for you, essentially putting the client’s interests first to an expected standard and delivering on all promises.

In recent years surveys have showed trust is a concern for the insurance sector, further reinforcing the challenges facing brokers. Negative stories of insurance have additionally affected consumers’ confidence in the industry.

“Bad news sells and this is a factor that will always be difficult to combat,” the report says. “One bad article can paint the whole sector in a poor light, tarnishing the hard work many are making towards development.

“Insurance is often seen as a grudge-purchase because consumers don’t see the value of their policy until they make a claim.”

It is therefore critical that brokers take the trust issue seriously.

“A lack of trust in the sector consequentially leads to underinsurance, meaning customers are at an increased risk of having their policy voided, cancelled, claims only partially paid or not paid at all, and previous payments even being recalled,” the report says.

“Consumers only detriment themselves when they intentionally underinsure to obtain a lower premium because they don’t trust or understand why a higher premium is charged.

“The point of view that the insurance sector charges unnecessarily high premiums and then avoids paying out claims is painfully familiar and begs the question, how can the sector change this?”

Click here for the report.