Report

Insurance Report 2014

Loyal customers are worth their weight in gold in the digital age.

By Dr. Henrik Naujoks, Dr. Gunther Schwarz and Dr. Tanja Brettel

First published on setembro 08, 2014
min read


Please note: This study is also available in German. Loyal customers buy more products, remain true to their insurance companies for longer and are more likely to recommend them to others. Over the entire length of a contractual relationship their economic value is as much as seven times higher. These are the results unveiled by Bain & Company in a global survey carried out among nearly 160,000 insurance customers, a good 10,000 of whom in Germany. Despite this, many companies still ascribe insufficient significance to the issue of a customer-centered organization. In Germany satisfied and unsatisfied customers just about hold the balance in non-life insurance while the number of critics is actually in the majority in the life insurance segment. But some companies already manage to incite enthusiasm in their customers by clearly defining their service pledge and offering a thoroughly convincing range of products. The strength of these loyalty leaders generally lies in their ability to interact with customers and in their pricing. In life insurance, reputation and attractive products also play a crucial role. Competent and regular interaction proves to be a key factor in customer loyalty over the entire globe. Customer satisfaction rises noticeably if there has been some form of contact between customer and insurer within the last twelve months – whether in the form of advice, contractual dealings or a damages claim. So insurers are indeed clearly skilled in the art of convincing through dialogue. But far too rarely do they actually play out this strength. Customers want to use both analogue as well as digital access channels When it comes to interaction, insurers are faced with a further challenge: a radical change in the rules of the game in the digital age. First, the companies have to integrate new communication channels and second, customers clearly hold more sway. The customers meanwhile decide themselves when and in what form they take up contact with their insurance companies. And the possibility of using both analogue and digital channels at all times goes without saying. Regardless of the growing popularity of the digital means of contact, a good 80 percent of insureds still wish to use the established channels such as agencies, brokers or call centers. These hybrid customers are especially attractive: they are generally younger than pure offline or online users and they also earn more. Their measurable loyalty also exceeds that of other customer groups. To address hybrid customers, analogue and digital products must be interlinked – which inevitably calls for the development of an omni channel business model. This not only requires extensive restructuring of IT. More importantly, the insurers must consistently transform their organization structure into a customer-centered organization. This study has identified four important steps to achieve this: Prioritize customer segments and business fields Focus on key customer interaction Bond customers with innovative products and outstanding service Accelerate digitalization of the business model By making changes of this kind, insurers will acknowledge the radically altering behavior of their customers in the digital age. At the same time they will strengthen the loyalty of their customer base. Hybrid business models thus form a solid foundation for insurance companies to survive in the digital age against competition from established as well as new suppliers and to expand their own market position. Download PDF

Please note: This study is also available in German.

Loyal customers buy more products, remain true to their insurance companies for longer and are more likely to recommend them to others. Over the entire length of a contractual relationship their economic value is as much as seven times higher. These are the results unveiled by Bain & Company in a global survey carried out among nearly 160,000 insurance customers, a good 10,000 of whom in Germany. Despite this, many companies still ascribe insufficient significance to the issue of a customer-centered organization. In Germany satisfied and unsatisfied customers just about hold the balance in non-life insurance while the number of critics is actually in the majority in the life insurance segment. But some companies already manage to incite enthusiasm in their customers by clearly defining their service pledge and offering a thoroughly convincing range of products. The strength of these loyalty leaders generally lies in their ability to interact with customers and in their pricing. In life insurance, reputation and attractive products also play a crucial role. Competent and regular interaction proves to be a key factor in customer loyalty over the entire globe. Customer satisfaction rises noticeably if there has been some form of contact between customer and insurer within the last twelve months – whether in the form of advice, contractual dealings or a damages claim. So insurers are indeed clearly skilled in the art of convincing through dialogue. But far too rarely do they actually play out this strength.

Customers want to use both analogue as well as digital access channels

When it comes to interaction, insurers are faced with a further challenge: a radical change in the rules of the game in the digital age. First, the companies have to integrate new communication channels and second, customers clearly hold more sway. The customers meanwhile decide themselves when and in what form they take up contact with their insurance companies. And the possibility of using both analogue and digital channels at all times goes without saying. Regardless of the growing popularity of the digital means of contact, a good 80 percent of insureds still wish to use the established channels such as agencies, brokers or call centers. These hybrid customers are especially attractive: they are generally younger than pure offline or online users and they also earn more. Their measurable loyalty also exceeds that of other customer groups. To address hybrid customers, analogue and digital products must be interlinked – which inevitably calls for the development of an omni channel business model. This not only requires extensive restructuring of IT. More importantly, the insurers must consistently transform their organization structure into a customer-centered organization. This study has identified four important steps to achieve this:

Prioritize customer segments and business fields
Focus on key customer interaction
Bond customers with innovative products and outstanding service
Accelerate digitalization of the business model

By making changes of this kind, insurers will acknowledge the radically altering behavior of their customers in the digital age. At the same time they will strengthen the loyalty of their customer base. Hybrid business models thus form a solid foundation for insurance companies to survive in the digital age against competition from established as well as new suppliers and to expand their own market position.

Download PDF