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Customers not reporting high rate of positive experiences for digital interactions with insurers


February 26, 2014   by Canadian Underwriter


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The expense ratio of Canada’s non-life insurance industry increased from 2011 to 2012, due in part to the cost of upgrading and replacing legacy computer systems, while worldwide, customers “do not report a high rate of positive experience” when interacting with insurance carriers through “digital channels” rather than through agents, suggests a report released Wednesday.

New York City-based Capgemini and Efma published the World Insurance Report 2014, which looks at both the financial performance of insurers in various countries, and how customers in 30 markets perceive the quality of their interactions with carriers.

Capgemini is a consulting, technology and outsourcing firm while Paris-based Efma is a non-profit association of bankers and insurers. The first part of their report, on financial metrics, is based on data from 14 countries, including Canada. For each of those 14 countries, the report lists underwriting ratio, or the percentage of gross written premiums paid out in claims and expenses. In Canada that ratio was 93.7% in 2012, down from 97.9% in 2011. The claims ratio in non-life in Canada dropped from 68.9% in 2011 to 64.0% in 2012.

Canada “improved its profit performance” in 2012, “mostly on the strength of its claims ratio.”

Capgemini and Efma noted auto insurance reform in Ontario “helped rein in claims,” though the operational expense ratio increased from 10.9% in 2011 to 11.6% in 2012. This “reflects the high cost of upgrading and replacing legacy systems, as well as developing alternate distribution systems.”

The Canadian non-life insurance industry is the eighth-largest in the world, according the report.

The acquisition ratio in Canada is “one of the highest in the industry,” at 18.1% in both 2011 and 2012. By comparison, it was 16.3% in the United States and 10.3% in Germany in 2012.

The acquisition ratio was calculated by adding the total commissions and fees paid and dividing that by gross written premiums.

The World Insurance Report also includes details on customer experience, using a score known as Customer Experience Index or CEI. This is intended to provide a view of how customers “perceive the quality of their service interactions” for different products, different channels and at different stages of the life cycle, such as researching, getting quotes, buying policies and making claims.

More than 15,500 customers were surveyed in 30 markets.

Insurers in more than two-thirds of the countries improved their score in 2013, though in Canada the score dropped 0.4 points, from 74.1 in 2012 to 73.7 in 2013. The global average score was 67.5 in 2012 and 69.4 in 2013.

Across the 30 markets, Capgemini and Efma found the “highest rate of positive experience” was through the agent channel.

“Despite growing demand for digital channels, customers do not report a high rate of positive experience when using them,” according to the report, referring to Internet channels using both personal computers and mobile devices.

When analyzing how satisfied customers are when getting quotes, the report notes that “leading organizations” provide GPS locations of office or agent locations

“Firms doing the best job of proactively prospecting to customers are sending offers in real-time based on a person’s location,” according to the report, which also emphasizes the ability to process applications online.

“Once applications are in the pipeline, leading insurers are taking advantage of advanced document technologies to increase the speed of processing,” according to the report. “By using next generation signature technologies, such as digital signatures and biometrics, insurers can enable policy purchases on a near real-time basis.”


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