Cost is ‘dominant focus’ of North American consumers on auto, home insurance: EY

More than 50% of consumers surveyed in North America said cost or terms were a top reason for closing their home or auto insurance policies, Ernst & Young (EY) Global Ltd. suggested in a recent report.

EY released the findings of its global consumer insurance survey and broke them down by region. In the survey, 24,000 consumers in 30 countries were asked 50 questions about both life and non-life insurance.

“Participants were asked about the most important factors across the relationship life cycle – from initial shopping activities, through common service- oriented tasks and claims-related inquiries, to renewals and increasing coverage – and about their current satisfaction levels with these factors,” EY stated in the report, titled Reimagining customer relationships.

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EY also published a detailed snapshot of its findings for the Americas region, which covers mature markets in North America (the United States and Canada) and developing markets in Latin America (Brazil and Mexico).

“Generally speaking, customers from the Americas close or replace policies for the same reasons as global consumers,” EY stated. “Cost and policy benefits rank as the top two reasons for policy closure across life, auto and home policies.”

In auto, cost and terms was a top reason for 73% of respondents in North America and 57% globally. For home insurance, cost and terms was a top reason for 54% in North America and 59% worldwide.

In North America, 30% cited policy benefits/coverage as a top reason for closing their auto policy, while 18% cited “research I conducted.” About one in eight (12%) cited level of service received while 16% cited “recommended by broker, friends.” In auto, all other reasons were cited by fewer than 10%. For example, “did not like the way a claim was handled” was 4% and “brand reputation” was 9%.

In home, nearly one in four (24%) cited policy benefits/coverage as a top reason for closing their policy, while 14% each cited “recommended by broker, friends” and “policy did not align to my life circumstances” while 13% cited level of service received.

Fewer than one in 10 (8% for auto, 9% for home) cited customer loyalty benefits as a top reason for closing their policies.

“North America bucks the global trend quite dramatically in non-life, where communications and service levels are not reported as significant factors, reflecting this market’s dominant focus on cost,” EY said in the report.”

One implication of the survey results is that “communications and closing the value gap are priorities,” EY stated. EY advises insurers to “understand how price sensitivity impacts different customer groups” and to “apply this knowledge in segmentation and marketing efforts.” EY is also advising insurers to add information and advice on topics (such as household safety) into communications.