Insurance company AIA has found itself in a legal tussle following an elderly couple suing the company over a fake insurance plan. The couple is suing AIA for negligence and lack of care.
According to reports on The Straits Times, the fake plan called AIA Thank You policy was worth US$5 million (S$6.7 million) and the duo were duped into believing that the plan was made for only a select number of customers. The couple had been paying the AIA bank since November 2002 and only learnt about the falsehood of the account when they made inquiries about the maturity payouts due in January 2008. Subsequently, the agency in charge Sally Low, who was under the management of the AIA-related firm Motion Insurance Agency then, was sacked by the company.
However, the couple is now claiming that AIA and Motion have failed to create a secure system with checks and controls in place to look out for its customers and prevent forgery. The couple also claims that AIA did not actively verify directly with the couples the payments made to the firm.
An AIA spokesperson told Marketing, “At AIA Singapore, we focus on building strong relationships and helping customers meet their protection and financial needs across generations. Customers are at the heart of everything we do, and ensuring their well-being remains our commitment as The Real Life Company. The AIA Group, including AIA Singapore and AIA Company Limited, has a zero-tolerance policy against any market and/or customer related misconduct.”
She added that the company takes the allegations seriously and is working closely with its lawyers to respond appropriately to the legal suit.
“We have always and will continue to focus our efforts on meeting the protection and savings needs of individuals and families in Singapore, affirming our pledge and promise to customers,” she said adding that it will not be appropriate for AIA to comment further at this stage.
Traditionally speaking, insurance companies have often had a hard time communicating with customers due to the nature of the industry. According to an article by financial advisor at Amerieprice financial, Stephanie Milosavlevski, just thinking about life insurance makes many people feel uncomfortable and death being an unpleasant subject makes it harder for insurance companies to connect with consumers. Thus, it comes as no surprise that consumer levels of trust for insurance companies are significantly low.
Meanwhile, just last year an Ernst & Young study revealed that consumer trust in insurance companies is significantly lower than that of even banks. Globally, 70% of consumers trust insurance companies, which is lower than the levels of trust in supermarkets (84%), banking (82%), car manufacturing (80%) and online shopping sites (78%). In mature markets — such as Europe (61%) and Australia (53%) — there are even lower levels of trust. According to the study this is largely because of the low frequency of contact insurers have with their customers and the lack of frequent, meaningful and personalised communications.
So with already such low trust levels from consumers, can insurance brands such as AIA afford such incidents on its reputation?
According to Brian West, managing director, reputation management APAC & global chair crisis management at FleishmanHillard Singapore explained that AIA now needs to remember, as it defends its court case, is to make it a point to recommit to its core values, vision, strategy, its corporate culture and positioning internally and externally.
“AIA needs to earn the right to talk about the future and it needs its allies and supporters to endorse the ethical standards and integrity of AIA. If they do not address this, there will be an authenticity gap,” West said. He added that the reputation from this case alone can overwhelm the brand and what AIA says about itself.
“There will be a gap between people’s expectations and their actual experience, trust has been destroyed,” West said. AIA needs to take its story to its key stakeholders and those who matter.
While there is always a hit in the short-term to a company’s reputation in a situation like this, West added that the key for management is to not destroy trust in the company, thereby institutionalising long term reputational damage.
“The need for AIA’s management therefore is to think, plan and act with a medium to long term perspective: Be as you wish to be seen,” he added.
Lars Voedisch, founder of Precious Communications, said that in any case where big brands and especially financial institutions are brought to court for alleged negligence, there needs to be a balance between being seen humane and looking out for their customers. At the same time the companies in question need to be firm in not setting a precedence that will hurt their business through possible abuse.
“As any such court case has a possibly negative impact on their reputations. Financial institutions would usually try to settle out of court and or get the case dismissed in the first place. Once it is in court – it is kind of a lose-lose situation as it’s easily seen as a David versus Goliath situation – where the wider public easily sides with the allegedly mistreated customer.”