Risk and Trust in the Affinity Insurance Market: Always Present, Always Changing
You’ll find few constants in insurance. However, two themes will never wane: risk and trust. Risk is ever present, and people will always require protection from the unexpected, while trust is necessary to the promise of that protection. Even so, the level of risk and trust are variables and liable to change.
Over the past decade or so, trust has moved away from being based solely on relational factors to also include informational sources, such as reviews, social media, and so on — all made possible with technology. Without such a shift, businesses like Uber, Lyft, and Airbnb would be nothing more than pipe dreams. However, these once small startups understood how to leverage the new dimensions of trust and, therefore, grew into thriving enterprises.
While technology has brought about a lot of good and serves as the foundation of many companies, it has also ushered in something entirely new: cybercrime. Hacking, identity theft, and financial fraud are now risk factors for any person using the internet — or doing business with any company using the web. After all, the world is full of stories about credit and debit card data breaches at corporations.
Both risk and trust are in a near-constant state of flux, providing ample opportunity for innovation in the affinity insurance market. Nevertheless, this can pose a challenge for many insurers, especially when it comes to meeting customer needs.
The Importance of Trust: Affinity Marketing Opportunities
According to Edelman, 70% of people say brand trust is important when making purchasing decisions. With such a high number, this factor — be it relational or informational — should never be underestimated with affinity marketing. Alumni, trade, and other professional associations still exist and present great opportunities for insurance companies to leverage the classic form of “referral” trust for sponsored benefits. Unfortunately, Millennials and Gen Zers aren’t as prone to seeking memberships as previous generations.
Within the affinity insurance market, it’s beneficial to add to your roster of partnerships to remain competitive and meet the needs of the new generation of consumers. Seek out new products and new risk opportunities; then, use this information to establish new insurance models. Insurtech businesses have certainly done this, uncovering niche communities not yet with protection and building new products and platforms for meeting these customers’ needs.
Social media alone is rich with potential for the affinity insurance market. So many groups are now in existence, and greater attention should be paid to the likely risk factors inherent in these digital associations. The data is already there; it’s now time to gather, disseminate, and evaluate the information to understand the risk and attach value to it.
For example, Allianz allows consumers to easily purchase coverage via its app. This is not all that revolutionary. What is revolutionary, however, is its attention to the customer experience. The brand adds even greater value, offering travel recommendations, security alerts, and other services to reduce risk. Above all, Allianz is focused on meeting customer needs beyond the traditional insurer-customer relationship.
The importance of trust and the prevalence of risk in insurance aren’t new — not by a long shot — but both have taken on new forms. Just a few years ago, you wouldn’t imagine getting in a stranger’s car to catch a ride to the airport or staying overnight in a stranger’s home. Those things are now the norm, though. Technology has established informational trust through reviews, referrals, and recommendations. For those working in the affinity insurance market, there’s potential to build stronger connections with this new normal.
To discover other ways to keep consumer trust at the forefront of the business, follow PIMA on LinkedIn.
Published on March 1, 2021.
PIMA® (Professional Insurance Marketing Association®) is a member-driven trade association focused exclusively on the group-sponsored benefits market.