The rise of big tech and other nontraditional players have helped shrink growth and increase churn for traditional insurers. Andrew Schwedel, a partner with Bain's Financial Services practice, and Henrik Naujoks, who leads Bain's Financial Services practice in Asia-Pacific, explain how connected devices can help insurers interact with customers more deeply, resulting in more consistent and loyal customers.
Read the Bain Report: Insurers: How to Lead in the New Era of Connectivity
Read the transcript below.
ANDREW SCHWEDEL: Insurers around the world are facing slow growth and increased churn as they battle for customers. The rise of digital platforms and the increased price transparency and ease of switching behavior that they provide has helped drive this churn.
HENRIK NAUJOKS: Big techs, retailers, OEMs are gaining in importance, especially in emerging markets where you even observe that big tech companies are often more trusted than the insurer. And obviously this is a big, big challenge because insurers risk to lose the customer relationship and the customer interface.
ANDREW SCHWEDEL: Smart insurers can differentiate themselves and avoid this fate by taking a cue from their own customers, who increasingly use connected devices to monitor their homes, their cars and their health.
HENRIK NAUJOKS: More than 30 percent of all consumers have connected devices, and the interesting notion is that those customers are interacting five times more with an insurer than those without any connected device. The penetration of this will increase massively.
ANDREW SCHWEDEL: Insurers can help provide increased value for customers through using these devices to provide better pricing linked to behaviors-- in the case of auto insurance, for safe driving; in the case of life and health insurance, for healthy eating and fitness behaviors; in the case of homeowners insurance, for use of burglar and smoke alarms. So there's a huge opportunity to engage with customers in this way, and the good news is that customers increasingly see the insurance company as a logical point of contact to monitor and support these connected devices.
Our research shows that customers place high value on providers who can have simple, digital and relevant offerings, and insurers who get this right will create loyal customers-- customers who buy more, stay longer, provide positive referrals and switch less often-- in turn, growing faster and more profitably.