Insurance isn’t the first business that comes to mind when someone says “dynamic financial services,” but a recent
Two-thirds of insurance customers would consider purchasing insurance products from organizations other than insurers, including 23 percent who would consider buying from online service providers such as
Last year, Alibaba, the Chinese e-commerce giant, and Tencent, one of the leading social network groups in China, launched a joint venture with the country’s second largest insurance group Ping An, to sell property insurance online exclusively. In Europe, Google has launched a car insurance comparison tool.
Insurance is an industry without a lot of loyalty, the survey suggests — 43 percent of consumers would consider buy insurance from banks, 23 percent from online service provides and 20 percent from home service providers such as telecommunications firms and home security companies. Fourteen percent said they would buy insurance from retailers (they were allowed more than one choice) and 12 percent would buy from car dealers. Car dealers?
All the money carriers and agencies spend on imposing offices and consumers would buy from car dealers? Although, come to think of it, a lot of new dealerships are fancier than insurance headquarters.
“Overall, there is a significant switching risk,” said Michael Lyman, a global managing director within Accenture’s insurance practice. “We estimate that up to $400 billion in insurance premiums could change hands within the insurance industry over the next 12 months.”
The research shows that loyalty, or more accurately the lack of it, in insurance is a key issue. Forty percent of consumers are likely to switch to another automobile or home insurance provider over the next 12 months while in life insurance, 25 percent said they were likely to cancel an existing contract and 35 percent said they were likely to take out a new contract with a new provider in the next 12 months. Life insurance! What’s less likely to be comparison-shopped than life insurance? Yeah, replace your mobile every two years, but your life insurance policy?
Lyman said that insurance is getting compared to other consumer experiences and it isn’t doing well. Take Google, for example.
“Google has a strong brand,” he said. “but what would allow them to be competitive is that they thrive on their ability to continually enhance the customer experience.” Not to mention that their mastery of big data provides the ability to tailor insurance services and price them at scale.
Accenture sees insurance following other financial services providers in moving from a product view of business to a customer view, and then trying to sell an expanded range of products and services to customers they hope to understand in depth.
“This is an industry in which to a large degree most players were product-driven. The real shift we are seeing is from product, which you can imitate fairly easily in insurance, to a customer-centric organization. If I have the loyalty of the customer and unique insight into their needs, that allows me to think more broadly about what I can serve them. We are looking for a shift to a heavy emphasis around service.”
USAA, as usual, is a leader in understanding their consumers, which the company call members, and delivering appropriate services to them — banking, wealth management, insurance and even wedding rings — a useful provision for members who are stationed around the world in the armed forces.
Insurance clients want to buy online
Echoes of Bill Murray in Groundhog day, most people would rather purchase insurance online than through a salesman. The choice of online is highest among the 18-34year olds, around 80 percent, but it remains a majority among the 55-plus age group where 58 percent prefer online. The younger consumers are more interested in getting recommendations from friends and family through social media (61 percent) than their elders where only 27 percent are interested in social media for insurance.
“The trend is still moving around digital for everybody, but at a different pace.”
Erik Sandquist, a managing director within Accenture’s insurance practice in North America, said the younger generation is looking for advice through social channels.
“It is an opportunity for the industry to engage in those social channels. How are they relevant and how are they using friends and family to be advocates on behalf of their brand where they do have strong brand loyalty.”
Insurance is largely absent from social media, said Lyman, or at least the carriers are going unnoticed.
“The survey told us that 60 percent of the customers don’t know what insurers are doing in social media. A number of insurers are in advanced pilots, but they are not there yet.”
The industry does have a reputation for moving slowly, when it does
Sandquist said the industry is moving along a well-formed path in using social media.
“We look at a maturity curve in social media — transitioning to more active engagement and then move into advocacy. A lot of insurance companies are in the listen and engage aspects of that journey. Insurance companies have greater opportunities to optimize their social channels.”
Lyman said that successful players in insurance will be the companies who are alert to consumer driven innovation.
“Whoever can best understand and tailor to the customer segment needs is likely to have a good chance of winning.”
One big surprise in the survey is that people, including young people, (54 percent) are willing to pay for personalized advice while only 27 percent of those 55 and over were ready to pay.
“Those are interesting dynamics on how to work with a segment,” Lyman commented.
