A WAKE-UP CALL FOR INSURERS: MORE CUSTOMERS VALUE INSURANCE BEYOND JUST BASIC COVERAGE
New Bain & Company research suggests that insurers have an untapped opportunity to offer additional products that could transform them into solutions providers, not just sellers.
New York – Sept. 19, 2016 – As connected insurance takes center stage, a new Bain & Company survey of more than 164,000 consumers in 19 countries, Customer Behavior and Loyalty in Insurance: Creating Opportunities Beyond Basic Coverage, finds that approximately 70 percent of respondents in some countries surveyed said they would value a platform for providing services well beyond just insurance coverage. Among that group, nearly 70 percent said they would look to carriers to provide those expanded services.
This finding suggests property & casualty (P&C) and life insurers have an untapped opportunity to generate sales of additional products and transform from sellers into solutions providers, helping to boost the industry’s traditionally low rates of customer engagement and loyalty.
According to Bain’s second biennial insurance loyalty study, conducted with Research Now, about 50-80 percent of customers view their primary insurers as potential platform providers for other insurance products, such as vehicle anti-theft services, home monitoring services, health advice and even estate planning. In most countries surveyed, more than 70 percent of consumers said they are willing to share personal, health or other data with insurers to gain access to insurers’ additional offerings. Carriers that are able to capitalize on this willingness stand to further strengthen their relationship with customers.
“Insurance executives know that improving the long-term economics of the business will require interacting more and delivering more value to customers,” said Henrik Naujoks, who leads Bain’s Financial Services Practice in Europe, the Middle East and Africa and co-authored the report. “Our new research sheds light on how various customer segments perceive their P&C and life carriers, what customers want from their carriers and how they behave, and how different distribution and interaction channels influence loyalty.”
In addition to offering a more encompassing suite of services, Bain found that frequent interactions with consumers contribute to loyalty in both the P&C and life sectors, though the level of contribution varies. China, Indonesia and Malaysia experience high levels of engagement, while France and Spain are much lower.
“Customers are looking for insurers to provide more than just claims management,” said Andrew Schwedel, a senior member of Bain’s Financial Services practice and one of the report’s co-authors. “The carriers who will win in this new consumer-led environment are those who can create an ecosystem of value added services – everything from monitoring driving behavior to making recommendations for a fitness plan – that connect more closely to their customers’ needs.”
Fintechs and online aggregators have upped the competition for traditional insurers in this way by creating more direct interactions with providers via digital channels. As a result, consumers have come to expect easy, fast, convenient websites and mobile apps. Bain’s research shows one-third to two-thirds of customers use digital channels when purchasing a P&C product. China, Brazil and Mexico have seen the greatest growth in digital usage, while mobile usage is coming on strong across much of Asia.
While current digital tools have the potential to help insurers connect with customers faster and with more precision, few have been able to design digital tools that meet these expectations – an industry impediment Bain addressed in its 2015 Global Digital Insurance Benchmarking Report. This survey found fewer than 50 percent of P&C providers and 35 percent of life carriers track any customer buying signals using digital technologies, suggesting that insurers need to ramp up their digital capabilities and presence.
“Mobile offers huge potential to create satisfied insurance customers, but companies have to get it right to reap huge benefits in terms of customer loyalty and retention,” said Harshveer Singh, a partner in Bain’s Financial Services practice in Asia-Pacific and a co-author of the report. “Customers want more than just a flashy tool. In our research, some of the best apps are those that also excel at the basics – accuracy, reliability and ease of use.”
The study also advises that amid the wave of digital adoption, insurers cannot afford lose their ‘human touch.’ Across nearly every market surveyed, customers increasingly use a hybrid mix of channels – digital, phone and in-person – to interact with their carrier. From 2014 to 2016, the share of P&C customers using multiple channels has increased in China, Singapore, the U.S., and Spain.
Bain’s analysis, together with client work, suggest four overall themes for insurers to keep in mind as they build out a customer-centered distribution and service model:
- Capture a greater share of wallet. Improvements in cross-selling can generate huge value in both P&C and life, and those that take a needs-based approach, focused on building relationships with customers – not just selling products – gain a considerable advantage. There is a massive gap between cross-selling leaders and laggards in each country, within P&C and life and multiline insurers. Leaders sell up to roughly two times as many products as laggards. The gap between multiline insurers is greatest in Hong Kong, the U.S. and France, and is narrowest in Australia, Mexico and Switzerland.
- Earn greater customer loyalty. Across all of the countries analyzed, there is a significant gap between loyalty leaders and laggards. Most of the 2014 leaders held on to their lead, including Liverpool Victoria in the UK and HUK-Coburg in Germany for the P&C sector; in the life sector, USAA in the U.S., and Prudential (UK) in some Asian markets. However, Bain noted a significant jump in loyalty among others. AIA Malaysia, for example, previously lagged behind its competitors but is now the number three loyalty leader in the market.
- Fix the basics and accelerate the mobile channel. Customers are increasingly embracing digital channels, both online and mobile, for their insurance interactions. The share of digitally active customers has increased everywhere over the past two years, though the rate of change varies by country. Mobile offers huge potential to create satisfied customers, especially for claims.
- Mastering the customer switching game in P&C. Customers tend to engage in comparison shopping, which heightens competition and crimps profitability. Aggregator platforms have emerged in all markets and have become the main channel for comparison shopping research in a few markets such as Japan, Germany and the UK, which has by far the highest switching rates.
Editor’s Note: To schedule an interview with Mr. Naujoks, Mr. Schwedel and Mr. Singh, please contact: Dan Pinkney at email@example.com or +1 646 562 8102
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