Building Trust in a Digital World

Addressing modern threats to trust requires modern solutions Tim Rozar and Robert Eaton


In the insurance industry, our product is a promise. While that product may carry names like “term life,” “long-term care” or “deferred annuity,” what customers actually are buying is the security and peace of mind that comes with knowing insurers will live up to their obligations when needed most. This relationship between insurers and consumers is unique. Consumers receive no tangible goods upon purchase, and insurers may not know their cost of goods sold for nearly a century after a sale is completed. To add even more complexity, these promises are made in the face of enormous uncertainty around the long-term biometric and macroeconomic experience factors upon which they are priced.

The lynchpin that facilitates such an unusual market is trust. Consumers and regulators must trust that insurance companies will treat people fairly and remain solvent to provide the benefits they have promised. In turn, insurance companies must trust that consumers and agents are acting in good faith when disclosing their risk profiles or filing claims. Without trust and the mechanisms that build and maintain it, the insurance market becomes unsustainable.

While not a new phenomenon, in recent years, trust has been beleaguered by the forces of the digital age. These threats have been accelerated by a global pandemic and a disconcerting struggle between science, public policy and politics. Actuaries have a responsibility to identify the threats to that trust and create enduring solutions to bridge the trust gap—with professionalism, integrity and empathy.

In an industry and profession where trust is critical, the statistics are discouraging. According to the 2021 Edelman Trust Barometer, the financial services industry holds the ignominious distinction of being among the least trusted industries “to do what is right,” although the trend over the past 10 years has improved somewhat. This lack of trust translates into a lack of customer engagement. Life Insurance Marketing and Research Association (LIMRA) research shows that the lack of trust for insurance companies and insurance agents is among the top reasons customers give for not buying insurance or annuities. It should not be surprising then that sales of most insurance products have been largely flat for the past decade.

While the pandemic may have prompted a renewed recognition of the fragility of life, the lasting impact on insurance sales—and on the interactions among business colleagues and actuaries—has yet to be determined. The impact of the pandemic overall will no doubt be influenced by the industry’s ability to reduce the trust gap among internal and external constituents.


Modern technology offers new opportunities to increase transparency and build trust, but it also creates additional threats to the trust the industry has built over more than a century. Most directly, the proliferation of the data exhaust we all emit has created a fundamental need to keep sensitive data secure from cybercriminals. It is equally important, however, that such data be used appropriately and ethically.

Trust is most clearly eroded when profit is put before purpose. The temptation to push the envelope in search of a competitive advantage may be amplified in an environment where investment returns are thin, biometric risks are increasingly uncertain and tech-savvy (and well-funded) new entrants are nipping at the heels of incumbents. While efforts, such as data-driven marketing and risk selection, often originate from an earnest desire to innovate and improve the customer experience, they may have disparate adverse impacts on those with the greatest need for insurance.

Another of the biggest trust derailers is misinformation. Despite its promise, social media often serves as a force multiplier for bad takes. Social media tends to feed on humans’ fundamental cognitive biases to seek information that confirms our own beliefs, leading us to retreat to the perceived safety of echo chambers with people who share our opinions. The more we engage, the more these platforms steer us toward the things we engage with, sending us deeper into these bubbles where we agree with a lot but learn very little.

In the digital information world, the line between opinion and fact is increasingly blurred. Naïve amateurs and pseudo-professionals can dramatically shape public opinion. In a profession where rigor, analytical nuance and professionalism are highly valued, the amplification of these voices is an ever-present threat.

Although technology has helped keep us all (virtually) connected during the pandemic, it also has enabled and accelerated a trend toward social isolation. While the convenience of working from home and shopping online undoubtedly has appeal, it is more difficult to build trust without authentic face-to-face interactions. As many workers settle into more permanent flexible work arrangements and companies look to continue to accelerate their digital direct-to-consumer business models, the challenge of building trusted relationships will continue to grow.


How can we facilitate trust in our daily relationships? We are more likely to meet a new business partner over a virtual conference call today than a phone call. These video calls provide a richer communication experience than a phone call or an email, but a virtual interface still leaves a lot to be desired. Even with crystal-clear eye contact, we are apt to miss many nonfacial but still physical cues: micro-expressions, the first impressions made with professional clothing and a friendly or firm handshake. Traditional personal relationship-building and the trust that is developed with it have taken a setback in 2020, and we are tasked with finding ways to overcome this new trust gap. How can we build back better relationships?

We must place a renewed focus on personal and in-person interactions. This means treating all encounters with intimacy and earnestness and leaving phones far away to give our full attention to every conversation. Effective communication is based on understanding and adapting to the personality styles of our partners and resharpening this skill with new relationships.

We may expect to meet fewer people in person, as companies safeguard the health of their employees and enjoy reduced travel expenses. We should therefore make the most of virtual meetings, leveraging them for their relative strengths. Sharing tools have expanded in reach. We now can collaborate in real time during virtual meetings with applications like Google Docs and Microsoft SharePoint and Teams to virtually emulate the conference room. Increased transparency and engagement result from editing documents and models on the fly in front of a group. A sense of community is built with in-house teams and externally through more frequent, shorter contacts, which emulate hallway conversation and touchpoints.

But should business practices change permanently to facilitate this recent shift to more virtual interactions? In part, yes.

In actuaries’ daily work managing projects, more frequent (or scheduled and planned) task updates among business partners can become the norm, as companies wish to demonstrate that they are fulfilling promises as expected. Within virtual or remote teams, regular virtual conversations with group members may be helpful to make up for lost touchpoints and ensure everyone feels seen and appreciated.

If in-person communication is the best facilitator of human trust, then a push toward more virtual interactions forces companies and markets to adjust and capture that value, finding ways to reconstruct trust virtually. One component of capturing trust will be for companies to develop more transparent products and solutions—the time is ripe for such transparency.

Risk management, data and modeling experts can clear the fog of misinformation by using data and algorithms responsibly and transparently. The insurance community is absorbing and using new and more data than ever before. Actuaries and data scientists create predictive models, using machine learning algorithms and other artificial intelligence (AI), to better understand and act on the risks of their business.

The National Association of Insurance Commissioners (NAIC) has taken note, and in August 2020 adopted a set of five “principles on AI,”1 which includes transparency as one of the pillars, noting that “stakeholders … should have a way to inquire about … AI-driven insurance decisions.” The Society of Actuaries (SOA) is commissioning projects on related topics, including “Artificial Intelligence and Disparate Impact Discrimination,” stating its intent to “investigate ways that the U.S. insurance and retirement industries can actively avoid or mitigate the potential for AI applications to incorporate implicit biases.”

Data scientists and academics recognize the importance of this, noting in a paper on “Explainable AI”2 the importance for “researchers to understand how to achieve explainability for different types of AI models, assess the trade-off between prediction accuracy and explanation associated with different choices, and develop and deploy trustworthy AI systems that meet business and fairness objectives.”

Finally, there is hope that technological innovation can erect, rather than erode, trust. The advent of blockchain, a decentralized and distributed ledger, provides crowdsourced approval of ledger entries and assignment of events where all parties then recognize new interactions. Smart contracts also stand to facilitate more efficient and open interactions, with strong implications for financial products, such as insurance.

Insurance companies and startups have been founded based on the idea of peer-to-peer trust. When we move to a new city or visit a new place, we intrinsically seek input from our friend group. As individuals have created virtual affinity groups, which are used in part to verify and review companies and products and to provide advice and feedback among members, innovators have developed peer-to-peer insurance models to leverage this established trust. Social media in its finest hours can facilitate similar dialogues and bring people together to solve individual problems.


Actuaries are risk management stewards in industries that rely on trust. These trends (the good and the bad) portend shifts in the way insurers do business and serve customers. Trust lubricates the gears of insurance markets and the value chains that produce their products.

The pandemic and its fallout, and the emergence of a more digital society, may erode trust in institutions and in our relationships. Actuaries must take the opportunity before us to develop behaviors and tools that regenerate and instill trust, or we risk losing the foundations we have worked so hard to build.

Tim Rozar, FSA, CERA, is chief of staff at Reinsurance Group of America.
Robert Eaton, FSA, MAAA, is principal and consulting actuary at Milliman.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries or the respective authors’ employers.

Copyright © 2021 by the Society of Actuaries, Chicago, Illinois.