'Why insurance leaders should care about digital trust'

Since I started my career three decades ago, there has always been this paradoxical rhetoric about the insurance industry’s risk averseness, mainly stemming from the absence of a flurry of innovative products, services and processes.

Perception is not always reality, as I see many players in the industry embracing innovative technologies and finding ways to improve the experience of customers. Many of these advancements are aimed at improving access, increasing affordability, improving understanding and better aligning risk premium with assumed exposure.

Rather than being risk averse, I believe our industry is simply very risk aware. This is particularly helpful now, as we are heavily investing in revolutionary technologies such as artificial intelligence (AI) and machine learning that rely on sensitive data and automation with algorithms. How do we ensure the machine does not discriminate? What is our response to the fear of data misuse? What do we adhere to if there are no international standards?

At Swiss Re, we firmly believe to truly harness the potential of new data-based technology, we must earn the trust of clients and consumers.

The rub: a clear definition of what constitutes digital trust is still taking shape. What we do know is the digital transformation of the insurance industry must be underpinned by trust that emanates from our employees, our regulators, our shareholders and, most importantly, from our customers.

Customer touchpoints

It is critical to strike a balance between expanding our digital footprint and ensuring data is handled in a transparent and responsible manner.

Ethical considerations must be taken into account not just after implementation, but in the planning and development phase of complex investments. Digital trust cannot be delegated to a single office or department. It runs through everything.

In a new publication, the Swiss Re Institute has illustrated the ubiquity of digital trust. “Decoding digital trust” describes how we look at digital trust through the lens of a consistent methodology. The study also builds a business case for digital trust that will be essential, given the industry’s increasing dependency on data.

The digital trust pyramid begins with the reliability zone: the ability of insurers to connect with consumers. With investment in new digital distribution channels and processes, the digital design of insurance accessibility has huge implications for the industry.

The design of virtual touchpoints with the customer is just one step in the customer journey, but it has a big impact on trust and willingness to share data. While face-to-face interactions between customers and companies usually have an inherent trust quotient, a virtual interaction scenario could be radically different.

If there is merely a black box in front of consumers, people will be reluctant to share financial and personal information.

Choice sets on websites and mobile apps can be designed in a way that is beneficial to consumers – avoiding so-called “dark patterns” and “sludges” that can harm consumers, which in turn stymies adoption. 

Along the value chain

The challenge for insurers is that fostering trust must be done on many levels throughout the whole value chain. AI is the next digital frontier. Machines are being programmed both to learn and take decisions. It will affect everything from welcoming clients to underwriting decisions.

The potential benefits for insurers of AI are manifold. Success requires first winning the trust from our customers, regulators and other stakeholders. Accomplishing this will require even greater transparency from industry participants. We need to be able to shine a light on digital black boxes and to explain and even challenge our algorithms.

The Swiss Re Institute study reiterates that increasing regulation on data, AI and so on will not solve the trust challenge on its own. The authors write: “Where companies may see data legislation as being insufficient to create trust, they can sign up to standards codified by a third party.” And they can be broad in their remit, extending beyond data protection to encompass areas including the ethical use of data.

Such certifications are already emerging worldwide, with one example being the Swiss Digital Trust Label, which we at Swiss Re consider a unique endeavour. Swiss Re has already received this certification for our Magnum Go automated underwriting solution.

The label gives clients and consumers a transparent means of comparing the trustworthiness of digital services they may be considering. 

Beware the limits

I see immense opportunities for “risk aware” insurers to foster digital trust. But we also must contend with the reality we may come up against some natural limit.

Insurers support some of the largest decisions and most significant events of our lives. While customers might be willing to buy car coverage or travel insurance from a bot, when it comes to life insurance – to help support loved ones in the event of a tragedy – they may prefer to speak to an experienced agent. The human touch is unique.

Finding the sweet spot between automation and the human factor will hinge on trust. Automation and people must complement each other. While machines can make decisions, they remain machines. They cannot take responsibility; they are not accountable. Accountability must remain with real people, so that digital trust can flourish. 

Moses Ojeisekhoba is chief executive, reinsurance at Swiss Re