the global financial crunch of 2008, the economy is still reeling from
aftermath of the tumultuous breakdown. The crisis hit the financial
institutions and organizations dealing with monetary deliverables to have
suffered the worst impact, within which the insurance sector is one of the most
affected segments of the economy. This, coupled with the stringent policies
introduced by the insurance sector further exacerbated the situation, whereby
the consumers felt betrayed by having to suffer further in the economic crisis,
subsequently resulting in higher claims for insurance coverage, defaulting on
the payments and thereby enhancing the psychological distance. This
psychological distance is exemplified through the level of distrust that the
consumers feel which essentially transpires into their actions of inflated
claims and defaulted payments and now, more predominantly, under coverage which
leads to the consumers not being able to revive their economic status after a
The Proposed Research
proposed research intends to contribute to two envisioned outcomes;
Critically analyse the concept of trust within the digital service encounter
and the factors in play that contribute to the psychological distance, and
allow for identification of measures that can in turn be incorporated by the
insurance sector to enhance their performance through bridging the gap between
the psychological distance and the needs of the consumers.
The research is
essentially in line with the current essential requirements of the market
sector, where the insurance sector is struggling to rebuild their credibility
and relationship with the consumers. The research involves a comparison of two
distinct markets: The French economy and the British economy, and therefore
will towards the end provide a varying context to identify through means of
experiments based on temporal distance (time), social distance (interpersonal
distance, familiarity, similarity), spatial distances (geographical or physical
space), thereby allowing the researcher to delve into the construal level
theory to understand the psychological distance.
previous research has identified various challenges that are predominant in
implementation of a multi-channel strategy which include, change management,
budgetary constraints, technological challenges, complexity of the service
provided amongst various others, there has been no distinct way forward to
identify the ways in which digital service encounters can be used for reducing
the psychological distance1.
the course of the research, the research may identify various insurance
providers throughout United Kingdom and France predominantly involved in the
communication and distribution of the service. One preliminary finding from
literature review illustrates that most insurance companies are implementing
multiple-channel approach for digital service encounters restricted to pre-purchase
and purchase rather than drawing a focus on post purchase, which is the most
incumbent in developing consumer trust and reducing the psychological distance2.
the complexity arises due to the nature of the service provided, which is
and therefore cannot be subjectively measured, which is further crippled by the
lack of capacity of the agents to embrace the multi-channel strategies
deviating from the traditional distribution approach.
insurance sector is further experiencing a higher aggregate of psychological
distance in light of the recent scandals, where financial institutions began
selling PPI policies to customers with the loans, credit cards and mortgages,
resulting in the scam unfolding nearly a decade later to be identified as
profitable for the banking industry but inherently ineffective and inefficient
for the consumers4. The
misconduct of the banking sector through the PPI scam resulted in over 37.3
billion pounds loss5. In
a more recent scandal where the insurance sector initiated automatic renewal of
car insurances resulting in damage to over 6 million automotive insurance
customers causing a loss of 700 million pounds every year6.
Post these scandals, the Nottingham University’s Business School conducted the
Trust Index score, which lead to the lowest score in 2009 by the banking
sector, exemplifying the underwhelming perceptions of the consumers within the
financial service industry7.
Moreover, the recent suspicions by the Financial Conduct Authority, the
financial watchdog of Britain, over five insurance brokers for releasing
sensitive information to the aviation insurance/reinsurance sector puts the
insurance sectors in further perils8.
through the proposed research, the researcher will highlight the various
factors that have contributed to the psychological distance by the consumers
and provide a platform or a procedure through which the practitioners may address
these concerns to reinvent their image and consumer trust. The collection and
processing of primary data is expected to provide significant opportunities for
the researcher to suggest applicable real business strategies on trust-building
process, which will could potentially contribute to the development of global
insurance industry as well as individual insurers and professional bodies.
Henner; Huber, Johannes; and Sarikaya, Serkan, “CUSTOMER SATISFACTION IN
DIGITAL SERVICE ENCOUNTERS: THE ROLE OF MEDIA RICHNESS, SOCIAL PRESENCE, AND
CULTURAL DISTANCE” (2016). Research Papers. 91. http://aisel.aisnet.org/ecis2016_rp/91.
2 Pozza, Dalla., Texier, Lionel.
Managing multichannel strategies in the service sector: the example of the
French insurance industry. 2014. Available at: https://www.ipag.fr/wp-content/uploads/recherche/WP/IPAG_WP_2014_059.pdf.
J. and van der Heijden, H., 2016. Senior Management Perceptions of
Aspirational Groups: a Study of the UK General Insurance Market. Journal
of Business Research, 69 (8), pp. 2731-2738.
4 Graeme, Wearden. How the PPI Scandal
unfolded. 2011. The guardian. Available at: https://www.theguardian.com/business/2011/may/05/how-ppi-scandal-unfolded.
5 Jill, Treanor. Misconduct has cost
UK’s banks £53 bn over 15 years. 2016. The Guardian. Available at: https://www.theguardian.com/money/2016/apr/11/misconduct-has-cost-uks-banks-53bn-over-15-years-ppi.
6 Andrew, Twambley. A2J urges new
government to get priorities right and act on auto renewals scandal. 2016.
Available at: http://accesstojusticeactiongroup.co.uk/auto-renewals-scandal/.
7 Carolyn Cohn and Vaish, Esha.
Britain investigates five insurance brokers over aviation business. 2017.
Reuters. Available at: http://uk.reuters.com/article/uk-britain-investigation-jardine-lloyd-idUKKBN17N0Q4.
Axling, Ida. Major brokers caught up in FCA aviation probe. 2017. Available at: