Almost three-quarters of consumers taking part in a Bain & Company Inc. survey say they would value a platform for providing services well beyond insurance coverage, opening the door for insurers to transform themselves from just sellers into solutions providers.
The survey of 164,421 consumers in 19 countries found that as connected insurance takes center stage, 70% of respondents report they would value a platform for providing services well beyond just insurance coverage.
Results of the research are detailed in Customer Behavior and Loyalty in Insurance: Creating Opportunities Beyond Basic Coverage.
The research, conducted by Research Now, suggests 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,” notes a company statement Monday.
The second biennial insurance loyalty study indicates that 50% to 80% 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,” reports the management consulting firm, which has 53 offices in 34 countries.
“In most countries surveyed, more than 70% of consumers said they are willing to share personal, health or other data with insurers to gain access to insurers; additional offerings,” the statement notes.
Survey findings further indicate frequent interactions with consumers contribute to loyalty in both the p&c and life sectors, though the level of contribution varies.
“The survey data shows that loyalty remains tough for many insurers to come by,” the report notes.
“One structural reason is that insurers have far fewer interactions with customers than, say, retail banks. In some markets, interactions are even dwindling with the rise of online aggregators,” it adds.
With fintechs and online aggregators upping the competition for traditional insurers by creating more direct interactions with providers via digital channels, “consumers have come to expect easy, fast, convenient websites and mobile apps,” Bain & Company reports.
The 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,” the statement notes.
“Insurance executives know that improving the long-term economics of the business will require interacting more and delivering more value to customers,” Henrik Naujoks, a report co-author who leads Bain & Company’s financial services practice in Europe, the Middle East and Africa, says in the statement.
Noting that customers are looking for insurers to provide more than just claims management, “the carriers who will win in this new consumer-led environment are those who can create an ecosystem of value-added services,” comments Andrew Schwedel, a report co-author and senior member of the financial services practice at Bain & Company.
Value-added services – everything from monitoring driving behaviour to making recommendations for a fitness plan – will serve to “connect more closely to their customers’ needs,” Schwedel continues.
“Interactions that are complex and attract more multichannel behaviour, such as getting advice and a quote on a life insurance product or initially ﬁling a claim, have the biggest potential to delight customers,” the report notes.
“But even raising the number of simple digital interactions can advance the cause of loyalty; as a bonus, each interaction allows an insurer to learn more about the individual consumer and to set the stage for customized future offerings,” it adds.
“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,” notes Harshveer Singh, a report co-author and partner in Bain & Company’s Financial Services practice in Asia-Pacific.
“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,” Singh points out.
That said, it is key to note that 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,” the company reports, citing findings in its 2015 Global Digital Insurance Benchmarking Report.
That survey found fewer than 50% of p&c providers and 35% of life carriers “track any customer buying signals using digital technologies, suggesting that insurers need to ramp up their digital capabilities and presence.”
But the latest research makes clear that insurers’ move to digital should not translate to losing the 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,” Bain & Company reports.
“While earning loyalty is necessary, it is insufficient for generating superior revenue growth. Insurers must also motivate customers to actively promote the company and learn to monetize loyalty,” states the report.
Based on survey findings, coupled with its client work, it offers the suggestions when building 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 who focus on building relationships with customers, as opposed to just selling products, gain a considerable advantage.
- earn greater customer loyalty – there is a significant gap between loyalty leaders and laggards across all of the countries analyzed;
- fix the basics and accelerate the mobile channel – the share of digitally active customers, online and mobile, is up everywhere over the past two years and mobile offers huge potential to create satisfied customers, especially for claims; and
- mastering customer switching in p&c – customers tend to engage in comparison shopping, heightening competition and crimping profitability, with aggregator platforms emerging in all markets and becoming the main channel for comparison shopping research in a few.
“A large share of consumers in our survey expressed interest in such services, and an even larger group would be willing to share their financial, health or other personal data with insurers,” the report states.
“These findings signal consumers’ trust in their carriers, opening the door to stronger relationships with customers,” it adds.
Bain & Company notes that capitalizing on the opportunity requires a full-ﬂedged system to analyze “customer feedback and take actions that will improve customers’ experience. Feedback that doesn’t lead to action is meaningless.”