Uppsala universitet

5.2 Mistrust in Insurance Relationships
A unique feature of the distribution of insurance services is, as mentioned above, the fact that a
customer buys a service which he or she won’t actually notice until a loss is suffered. Hence,
the policy holder initially consumes a service in the shape of extremely intangible risk coverage
and then after some time has elapsed, when something occurs which is covered by the
insurance policy, he or she may have the “opportunity” of consuming the service in another
shape, namely the claim settlement. In a recent case study made of ten corporate customers of
one of the major Swedish insurance companies, this dual consumption involving two different
insurance managers was concluded to be one of the causes of customer mistrust towards
insurance firms. (Arneving & Demelid, 1997).
According to this study there is a mutual mistrust between insurance companies and
their customers. From the insurers’ view it was based on the customers’ propensity to try to
gain from fraudulent behaviour, but was more categorically expressed by the customers
towards the insurance firm. The claim settlement is but one of four areas where relationships
often fail due to imperfectly managed interaction. At the claim settlement, customers almost
always perceive themselves to have been encountered with suspicion by the agent, as there is a

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possibility of the customer wanting to gain from his own loss. The second area is in relation to
the offers made to gain customers, often through drastically lowered premiums. How are these
really to be interpreted? Third is the concept of complexity and difficulty in understanding the
service provided, which was discussed earlier. The final area concerns the history of the strictly
institutionalised and regulated insurance business, entailing badly delivered services (Arneving
& Demelid, 1997).
As a consequence, a large responsibility is placed on the shoulders of the key account
managers of insurance companies. In considering relationships with corporate clients in the
insurance business, as in banking, the situation seems to be the same, namely, that the
relationship manager of the financial service provider is of vital personal importance to the
customer, and he or she is, in many cases, the reason for maintaining the relationship with the
bank or insurance company (cf. Danielsen & Gidhagen, 1995; Sonshine-Pasher, 1996b).
The concept of trust in the relationship is very much related to the ability to grasp the
services provided, and there are two ways of enhancing the relationship (see Figure 5). The
relationship manager may either put efforts into increasing the customer’s level of
comprehension and then work towards the transformation of mistrust into trust or,
alternatively start building a mutual confidence in the relationship, and at a suitable point
incorporate the effort to make the service more tangible to the customer. Seen from any angle
the key account manager, the insurance agent, is the hub in every relationship. Information
management is not only about gathering market information about customers, but also about
the ability to transfer product information in a comprehensible manner to the customers. In that
way at least some of the mutually perceived mistrust in insurance relationships would
disappear.