A week ago I summarised my take on the Global findings from Ernst & Young’s “Voice of the Customer, Time for Insurers to Rethink Their Relationships 2012″. And I promised to take a look specifically at the European customer and the European market. This series of posts honors that promise – staring today with the first post (Part I). Please note that I am only looking into and sharing non-life insurance and the related customer needs/behaviour. Let’s get started.
An introduction to the survey
The basis of the European findings is survey of 8,532 consumers of life and non-life insurance products between August and October 2011. The survey covered the following countries: France, Germany, Italy, the Netherlands, Poland, Spain, Turkey and the UK. As you can see that whilst these countries are relatively wealth in comparison to other countries, there are considerable differences in wealth and demographics between these countries.
What Are The Key Findings for non-life insurance?
The survey addresses the following five “key myths”:The future is online; it is only about price;good claims experience builds loyalty; customers don’t respond to cross-selling; and insurers can’t influence customer retention.
The conclusion? According to E&Y: “While there is some truth in the myths around how non-life insurance products are bought and sold, the reality is more complex.” That accords with my experience – the gold, the insight, the levers for effective action are in the details. Today, let’s dig one level deeper for each of the myths to learn what E&Y has to say.
Myth 1: The future is online
Accepted wisdom: use of the internet (online channel) is growing rapidly and in the future online will be the dominant channel for both research and transactions.
Research suggests / E&Y position: use of online channels is growing rapidly and customers want access to offline channels; insurers need to put in place an integrated channel strategy to accommodate customer needs & behaviour over the customer life-cycle (from research through to renewal).
Myth 2: It is only about price
Accepted wisdom: non-life insurance products are commoditised and therefore customers buy only on price – this one factor swamps everything.
Research suggests / E&Y position: Price is an important component of value but it’s not the only one. Many customers also consider and differentiate between provider on the basis of brand (trustworthy?), product features and previous experience. The importance of price varies both by geographical market and by the type of insurance product that is being bought. For example, when it comes to private healthcare insurance, customers look for ‘indicators suggesting quality’.
Myth 3: Good claims experience builds loyalty
Accepted wisdom: a good claims experience generates customer delight and automatically leads to higher customer loyalty and brand value
Research suggests / E&Y position: customers expect a good claims experience and do not necessarily reward it; they do punish a bad claims experience.
Myth 4: Customers don’t respond to cross-selling
Accepted wisdom: customers resent insurers selling them more products – they don’t enjoy the sales process.
Research suggests / E&Y position: customers are willing to buy multiple products from insurers provided this is done in a certain way that creates value for customers.
Myth 5: Insurers can’t influence customer retention
Accepted wisdom: insurers feel they have little influence / control over retaining customers
Research suggests / E&Y position: customers are not keen on switching as it is inconvenient; insurers can keep more of their customers if they take the right actions at the right times – in particular during the ownership stage.
In Part II, I will be talking a deeper look at both Myth 1. Specifically, what is the reality when it customer needs and behaviour when it comes to channels. And spell out the issues and implications for insurers(as identified by EY).