Canadians some of the most loyal insurance customers

Price and more personalized service top reasons why customers do switch insurers: survey

Two-thirds (67%) of insurance customers would consider purchasing insurance products from organizations other than insurers, according to new research by Accenture.

According to a survey of more than 6,000 insurance customers in 11 countries, 23% of consumers would consider buying from online service providers such as Google and Amazon.

Read: Four keys to client retention

Forty-three percent of respondents, who could select multiple responses, said they would consider buying insurance from banks, almost one-quarter (23%) from online service providers, 20% from home service providers, such as telecommunication or home security companies, 14% from retailers and 12% from car dealers.

“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks but also from Internet giants,” said Michael Lyman, global managing director for management consulting within Accenture’s Insurance industry practice, in a press release.

“Overall, there is a significant switching risk and we estimate that up to $400 billion in insurance premiums could change hands within the insurance industry over the next 12 months. The switching risk is important in western markets but even more so in emerging countries such as China and Brazil, where insurance customers are even more likely to change providers.”

Read: Customer retention top priority for North American P&C insurers

The research shows that loyalty in insurance is a key issue, with 40% of consumers likely to switch to another automobile or home insurance provider over the next 12 months. However, the survey found that Canadians are some of the most loyal customers—only 23% of respondents said they are likely to switch in the next 12 months. Chinese, Brazilian and British insurance customers, on the other hand, are the consumers most likely to switch providers, with 81%, 75% and 57% of respondents, respectively.

Lower prices and more personalized service are the top reasons for consumers to switch to a new insurer, cited as important or very important in switching decisions by 87% and 80%, respectively, of the insurance customers surveyed. Forty-one percent of respondents said they were willing to pay more to get personalized advice when purchasing their insurance.

“The switching economy represents a huge opportunity for many insurers to gain market share,” said Lyman. “Personalization clearly emerges as a key driver in retaining existing customers and attracting new ones. Innovation in pricing strategy and the ability to make their customers feel that they are unique are thus critical to capturing share within the switching economy.”

Insurance customers are open to providing access to their personal data

The research also reveals that two-thirds (67%) of consumers are interested in mobile insurance services–such as sending pictures of their car to report a claim, or displaying their proof of insurance on their mobile phone–while less than half (46%) of the respondents that are mobile device owners have already used their tablets, and 37% their smartphones, to deal with their insurers.

Read: Online quoting systems: best practices for success

Also according to the survey, more than one-third (35%%) of insurance customers are open to provide access to their usage or behavior information – such as car-usage or lifestyle information – if this can give them better value for their insurance coverage.

Almost half (47%) of the respondents said it would depend on the information requested and only 18% were not comfortable doing so.

“While Internet access using personal computers or laptops was the first step in enabling customers to use digital channels, the real game-changer has been the growth in mobile,” said Lyman. “The mobile channel offers insurers the opportunity to take customer experience to the next level, enabling them to become partners of their customers’ everyday life by tailoring offers and interactions to the physical context, as location-based services can be highly relevant in insurance. For example, travel insurance-suggested offers can be sent to customers’ mobile phones when landing in an airport abroad, or a claim can be submitted from an accident scene with supporting photos. Also, as consumers become more open to providing access to their personal data, adoption of usage-based insurance enabled by telematics technology will accelerate.”

“Only those insurers with the digital capabilities and flexible operating model to adapt effectively to the changing demands of customers will be able to attract the large number of customers who are set to leave their less farsighted providers,” added Lyman. “Visionary insurers must also be prepared to conceptualize their business more broadly, building online communities and offering non-insurance services – such as USAA helping its customers buy cars – and be willing to create ecosystems of partners who together can provide the total, personalized and convenient experience today’s customers expect.”

Among the survey’s other findings:

  • More than two-thirds (71%) of consumers surveyed would be ready to buy insurance online, such as travel and assistance policies, extended warranty, home insurance or life insurance products.
  • More than half (54%) of respondents are interested in gaming solutions that insurers may offer to help them better manage risk coverage and lower premium rates.
  • Almost half (48%) of respondents said they would consider comments on social media in making their insurance-buying decisions.

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