Global Consumer Insurance Survey 2012 E&Y

8/2/2019 Global Consumer Insurance Survey 2012 E&Y

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Global overview

Voice of the customer

Time for insurers to

rethink their relationshipsGlobal Consumer Insurance Survey 2012

AmericasAsia-PacicEurope

IndiaJapanSouth AfricaUnited Arab Emirates


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Contents

Executive summary 2

Customers want to be able to buy with condence 5

The internet is changing the way customers engage with insurers,

but traditional channels remain important 7

Building long-term customer relationships 11

Diversity is driven by country-specic factors 15

Learning from the voice of the customer 18

A global perspective 19

Contacts 20


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Faced with the unprecedented challenges of troubled nancialmarkets, changing regulatory oversight and economicuncertainty, there is a risk that some insurers may not belistening and responding to the most important voice of all that of their customers. For any insurer hoping to navigatethrough this difcult time, understanding how customerbehaviors and attitudes are changing is critical. Previousassumptions and received wisdom about customers may nolonger be reliable, and those insurers who are able to respond

best to what customers want now are most likely to succeed.

24,000Global customers

7Global regions

23Countries

1

Global ConsumerInsurance Survey 2012 Global overview


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2

Executive summary

This is an exciting and challenging time for insurers.

Customer behavior is changing rapidly. Technology, and in particularthe growth of online and social media, is driving a fundamental shiftin customer expectations in terms of how products are marketed,priced, sold and serviced, and how companies are perceived. Pureinternet businesses have set new standards for customer-centricityand engagement that raise the performance bar for players in everyretail business sector.

At the same time, new geographic markets are growing in signicance as the pace of economicdevelopment creates an increasingly large and afuent middle class with money to invest and assets that

require protection.

To seize the opportunity that these changes present, we believe that insurers can no longer rely onreceived wisdom about what consumers think and how they behave. The challenge is to really understandwhat drives customer behavior today, not yesterday, in all the geographies, sectors and channels whereyou operate.

To help insurers rise to this challenge, Ernst & Young undertook a research project with the independentrm Ipsos to canvass the opinions of 24,000 consumers across seven regions around the world betweenAugust and October 2011. In this research, we set out to explore what drives consumer behavior in thelife and non-life sectors, covering the whole customer life cycle from initial research through purchase,servicing, repeat purchase, claims and termination.

The data, compiled from online and face-to-face interviews across a representative sample by age, income,location and product holding, has been analyzed by our insurance teams around the world.

This detailed research has enabled us to drive out both deep local insights and a global perspective onhow consumer views are changing and how companies need to evolve if they are to capture the growthopportunities now and after the global economic crisis settles.

Our global ndings are presented in this report and our deeper insights in the six accompanying regionaland country reports. We very much hope that the data and perspectives we offer will provide you withan opportunity to test your thinking, challenge your implicit assumptions and re-assess your customerstrategy. We also hope these reports will inform discussions about the opportunities you have to reshapeyour business to deliver consistent and protable growth.

Shaun CrawfordGlobal Insurance LeaderErnst & Young


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Our research reveals that, while ofcourse there are signicant variationsin customer attitudes and behaviorsaround the globe, driven by the diverseeconomic, demographic, competitiveand regulatory environments, thereare some underlying themes that areremarkably consistent.

Listen to the voice of the customer.


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5

One of the most striking and positive ndingsfrom our research is that the reputation of thelife insurance industry has not been tarnished bythe global crisis. The majority of customers still

have reasonably high satisfaction levels and arecondent that their products meet their needs.But there is no room for complacency: for asignicant minority of customers, insufcientinformation about product suitability is creatinga lack of condence that their product is rightfor their needs. Customers are looking for valueto be clearly demonstrated, reecting a balanceof price, product features and service tailored totheir needs. They also expect the buying processto be convenient and transparent, allowing themto buy with condence. Once they have made theirchoice and have an established relationship with an

insurance provider, customers expect the productand service to deliver against their expectations.

This may sound obvious, but the survey shows thatthe customers perceptions are that the industry isfailing to deliver this in some key areas.

In non-life insurance, price is often the mainmeasure of value since products are morecomparable and frequency of purchase drivesgreater customer familiarity. But in someterritories, brand and reputation are moreimportant criteria. This may be a reection ofmarket structure (such as a recent history of pricetariffs) or it may be a more fundamental desirefrom consumers to nd a measure of quality theytrust. In highly competitive markets characterizedby price transparency, there is a tendency forprices to converge. This leads to non-pricefactors such as brand becoming more important

selection criteria as customers search for a way todifferentiate between providers.

Global overview

Customers want to beable to buy with condence

In both the non-life insurance and life and pensions sectors,

customers want products, and the purchasing process, to be simpleand transparent so they can understand what they are buying. Theywant to build long-term relationships with insurance providers basedon trust, and to have condence that the products they are buyingare right for them and meet their needs.

Life and pensions. Customer condence and satisfaction scores

82%

85%

93%

79%

51%

76%

7.9India

7.6Americas

7.0Europe

6.8Asia-Pacific

6.2Japan

Regional average Highest and lowest countries

Satisfaction scores (out of 10)

Condence scores (percentage very/fairly condentproduct is right for needs)


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6

Non-life insurance. Buying factors when making a purchase

0%

10%

20%

30%

40%

50%

60%

70%

80%

TurkeyAsia-Pacific Europe Americas Canada


Brand

Price

The need for clarity and transparency in thebuying process is not driven purely by customerpreferences. As a result of the nancial crisis,regulators around the globe are focusing onprotecting consumer interests more thanever before, with major new regulations beingintroduced in the EU and many other countries

around the world. Insurers that align themselvesto a customer-centric model will nd the transitionto the new regulatory environment less painful,and may gain competitive advantage compared tothose that continue to rely on outdated models thatfail to satisfy customers or regulators.

Global overview


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7

The customer-centric nature of pure internetbusinesses is inuencing customers expectations.These businesses are built on customer data,recognize each customer as a unique individual andare able to offer product and service suggestionsbased on customers past behavior and knownpreferences. Many also build in independent dataas part of the offering, inviting customers toreview what others thought of their purchases andmaking it easy for consumers to compare pricingand offerings. Other industries, ranging fromconsumer goods to airlines and hotels, have torespond to the widespread availability of internet

price comparisons and independent quality ratings,often compiled by their own customers.

These developments help customers buy withmore condence and set an expectation that allsectors, including insurance, have to meet. Thistransparent, information-rich environment hasfed an expectation among consumers that theywill be able to do more independent researchwhen buying insurance. While the level of actualinsurance purchase over the internet remainslow in many countries, its use varies considerablybetween countries in the survey. In every case wefound that customers intend to do more researchusing the internet, even if they ultimately rely onconventional channels for purchase.

The internet is changing the waycustomers engage with insurers, buttraditional channels remain important

There is strong evidence in our ndings that the way customers wantto interact with insurers is changing. The internet is transformingconsumer offerings in other retail industries and setting a newbenchmark for how businesses interact with consumers. In mostconsumer sectors, there is now far more information available toallow customers to compare products and prices and to obtainindependent opinions before purchasing.

Life and pensions. Historic use and intended use of research when making a purchase

0%

10%

20%

30%

40%

50%

60%

70%

80%

IndiaAsia-Pacific Americas Europe France


Respondents who aredoing a great deal/fairamount of researchbefore previous purchase

Intending to do beforenext purchase

Global overview


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Life and pensions. Importance of personal interaction when making a purchase

Life and pensions. Percentage of customers who are self-directed

Malaysia

95%

Asia-Pacific

89%

Netherlands

66%

Americas

83%

Europe

78%

Regional average

Highest and lowest countries

4%

Europe Asia-Pacific

SingaporeUK

20%

15%

Americas

10% 8%

Regional average


Respondents sayingpersonal interaction isessential/very/fairlyimportant when buying

Respondents sayingpersonal interaction notvery/not at all importantwhen buying

Global overview


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Life and pension customers continue to have ahigh preference for personal interaction to actuallycomplete the purchase, with the main reasonbeing the need for expert assistance becausethe products are too complex. Customers wouldactually prefer products to be simpler and moretransparent, making it easier for them to make

an informed choice. A minority of the customers,mainly in developed countries, would prefer makingpurchases completely independently withoutusing an adviser. This has implications for the roleof insurance intermediaries if customers aredoing more research themselves and taking moreresponsibility for the product choice, what is thevalue-added of the intermediary and what shouldthey be remunerated for? In an industry wheremargins are coming under increasing pressure,insurers need to choose where they invest acrossthe value chain to avoid adding extra cost while stillpaying intermediaries for services customers mayprefer to do themselves.

Non-life insurance lends itself more to internetpurchase than life and pensions, given the highercustomer familiarity and comparability of theproducts. In all countries we found a growingtrend to use the internet to research non-lifeproducts, although levels of actual purchasevary considerably between countries. The highlydeveloped UK internet aggregator channel,representing 29% of motor sales, is an outlier in

this area. We found that most other countries havea continued preference for more conventionalchannels to complete the purchase, includingagents/brokers and direct channels. But giventhe increasing use of the internet as a researchchannel, purchasing may follow if distributors makeit easy for customers to compare prices and buy

with condence.

The degree of use of online by customers alsovaries by type of transaction; some customersare happy to use the internet to make a purchasebut not to deal with a claim. In all locations wefound an emerging group of customers who hada preference for a wholly online experience, butmost respondents still wanted a mix of online andpersonal contact.

As we have seen in other industries, the emergenceof new technology does not mean that existingchannels become obsolete. It is clear that success

requires nding a way to integrate new technologywith existing channels. Therefore, seeingintermediaries develop strong internet propositionsor build comparison sites should not be a surprise.

The challenge for insurers is that undertakingthis integration to ensure that customers can

contact them by any channel and get a seamlessand consistent response will require a signicantchange effort for many.

Non-life insurance. Importance of the internet in researching and purchasing

0%

10%

20%

30%

40%

50%

60%

70%

IndonesiaAsia-Pacific Americas Europe South Africa

Regional average Highest and lowest countrie

Respondents whoconsidered using

comparison site Respondents thatactually bought throughcomparison site

Global overview


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Global overview


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11

In the life and pensions sector, the inherentlymore complex nature of the products and the

dependence on intermediated distribution makes itharder for providers to move to a customer-centricmodel. However, our research shows that insurersare failing to capture potential customer lifetimevalue through repeat sales and improved customerretention. Customers want to build relationshipswith providers they trust and who make itconvenient for them. Insurers must except thischallenge and adjust to live up to this expectation.

We found that the level of repeat purchase is verylow, and with a few exceptions, customers perceivethat life companies make very little effort to retain

them at the point of lapse. Another reason forswitching providers is that the provider is unable torespond to their changing needs.

In the non-life insurance sector, our survey showsthat consumers are more likely to renew if insurersmake more effort to retain their business, but that

in many territories customers perception is thatinsurers fail to make this effort. Conversely, we

found that one area where many insurers believethey can differentiate themselves is claims service,but this does not actually make that much of adifference in building loyalty. Poor claims serviceis denitely linked to low renewal rates, but goodclaims service is largely regarded as a given (thatswhat I paid for), rather than a reason to renew.

Another key area where insurers can encourage

longer-term relationships is through rewardingloyalty. In most territories, consumers perceivethe life and non-life insurance industry as laggingbehind other consumer industries on this measure.

There is a strong sense among consumers thatinsurers could do more to earn their trust andloyalty and to reward them for participating in long-term relationships. Consumers are used to manyother industries rewarding their loyalty, such assupermarkets, airlines or hotels, and they expectthe same from insurers.

Global overview

Building long-termcustomer relationships

A common nding across both life and non-life sectors is that consumers

are willing and indeed prefer to buy more products from companiesthat they trust and that can make the purchase experience easy andconvenient for them. Customers expect companies to contact them atproduct renewal or maturity, and as their needs change over their lifecycle. By doing so, insurers will demonstrate an interest in retaining theirbusiness and to make relevant and appropriate suggestions about otherproducts that would be appropriate to their needs.

Life and pensions. Customers who have bought another product from the sameprovider in last ve years

37%Asia-Pacific

16%Americas

52%China

19%Europe

11%UK 11%US

Regional average



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Life and pensions. Customer view of reward for loyalty versus other industries

Life and pensions. Effort made by existing provider to retain customer

Life and pensions. Top reason for switching providers

My needs changed and myprevious provider couldntmeet my needs

India

77%

Asia-Pacific

46%

Europe

30%

Americas

24%

Australia

11%


Respondents who feltinsurer made a great orfair amount of effort

Indonesia

61%

Asia-Pacific

34%

Europe

25%

Americas

24%

Netherlands

19%


Europe

Asia-Pacific

Americas

Poland

Japan

52%

41%

35%

29%

14%

Regional average


Net percentage customers agreeing (i.e., balance of thoseagreeing less those disagreeing) with the statement Thelife industry is behind others in rewarding loyal customers

Global overview


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Non-life insurance. Lack of effort made by insurer at renewal

82%Europe 68%Asia-Pacific

91%Netherlands

75%Americas

28%South Africa

Regional average


Americas Japan India Asia-Pacific Europe UAE

0%

10%

20%

30%

40%

50%

60%

70%

80%

Non-life insurance. Percentage unlikely to change insurer

Respondents that citedlittle or none

No claim

Bad claim

Good claim

Global overview


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It is not surprising that a country like Japan, with ahighly developed economy and a rapidly aging andshrinking population, has different characteristics

than Brazil and Mexico. Similarly, in some markets,pension saving is to varying degrees compulsory,driving very different behaviors to those marketswhere it is optional.

In a number of Asia-Pacic markets, some non-life products remain governed by price tariffsor have only recently removed tariffs, leadingto competition focusing on non-price factors.Regulation plays an important role in distributionmodels, with some countries, such as France,requiring a compulsory duty to advise for alllife policies. Countries like China have highly

concentrated insurance markets with a high level ofstate ownership, giving customers a limited choicewhen selecting providers, whereas others likethe US have much broader competition betweenprivate sector players.

It would be a mistake to characterize countriesbased on simplistic metrics like economicdevelopment. In South Africa, for example, the use

of tracker technology in motor insurance is routine.This helps to reduce crime and claims and is leadingto a fast-developing telematics market, somethinga number of more developed markets arestruggling with. Turkish life companies have highlydeveloped retention units compared to some moremature countries. These were mainly developedin response to the 2008 nancial crisis that ledto a signicant outow of funds from recentlyintroduced personal pension policies. The individualregional and country reports develop this country-specic analysis in more detail, as it is essentialto understand local factors to appreciate how the

insurance markets operate in the various countriescovered in the survey.

Diversity is driven bycountry-specic factors

Theanalysis on previous pages highlights the common factors

identied by the survey in customer attitudes and behavior. Inseveral important respects customers have common motivations,allowing broad conclusions to be drawn. The survey also revealssignicant variations between different countries, driven by arange of factors, including economic development, demographics,competitive and regulatory factors.

Global overview


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We believe that by gettingthe customer interaction right,there is opportunity in everymarket to do a better job ofattracting customers andstrengthening relationshipsin order to drive growth.


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Life and pensions insurance

In the life and pensions insurance sectorthis means improving consumer trust and

condence by:

Putting the customer, rather than theintermediary, at the center of the businessmodel, and using customer data to develop deepinsight into their needs and to offer the rightproduct, at the right time, to the right customer,and to follow through with service that respondsto their changing needs

Working with intermediary channels to besure that they focus on (and are remuneratedappropriately for) where they really add value tothe customer. Build stronger direct relationships

with customers to anticipate and meet theirneeds particularly during the product life cycle

Providing a suite of simple and transparentproducts, tailored to lifestage needs, thatcustomers can understand and buywith condence

Making it easy to access relevant products andinformation throughout the product life cycle,particularly online, but supported by trustedpersonal interaction where necessary

Building trust by delivering a great customerexperience and anticipating and responding to

customers changing needs

Rewarding customers loyalty with incentivesthat recognize multiple purchasing and value ofthe overall relationship

Improving customer retention by addressing theunderlying causes of lapses and being better atmeeting their changing needs and expectationsover the life cycle

Non-life insurance

In the non-life insurance sector this meansdelivering convenience and value by:

Integrating online and ofine channelsseamlessly to meet changing customers needsover the product life cycle

Making sales and renewal simple and convenientfor customers across whichever channel ormedium they chose

Understanding how to personalize service andshow customers they are valued, particularly inan ever more digital environment

Analyzing the cost to serve of the manycustomer micro segments to understand how

service expectations and protability differparticularly for managing risk selection andretention effort

Developing and managing insurance brand(s) toensure they support the key value messages andcommunicate this effectively in the digital world

Global overview

Learning from thevoice of the customer

Our research suggests that there is a lot that insurance companies

can do to improve their businesses by listening to the voice of thecustomer, as revealed by our survey. We believe that by getting thecustomer interaction right, there is opportunity in every market to doa better job of attracting customers and strengthening relationshipsin order to drive growth.

These are clearly not easy actions to implement, particularly in mature economies whereinsurers have extensive legacy operations. The challenge is how to transition from existingproduct and intermediary-centric models to one that delivers what customers are sayingthey really want today and in the near future.


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Global overview

A global perspective

To provide deeper insights into consumers behavior and get a better

sense of what drives their decision-making, you can review our sixdetailed regional reports.

The reports are available in hard copy from your current Ernst &Young contact or can be viewed or downloaded as pdfs from:www.ey.com/insurance. Each report explores current customerexpectations across the product life cycle providing a clear contrastbetween received industry wisdom and current consumer thinking.

We are condent that you will nd these reports of interest and thatthey will provide a useful resource to help you test your assumptionsabout customers and a fresh lens through which to review the growthagenda for your business.

Regional and country insights

Americas

Asia-Pacic

Europe

Japan

UAE

India
http://www.ey.com/insurancehttp://www.ey.com/insurancehttp://www.ey.com/insurance


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Ernst & Young is a global leader in professional services andhas signicant experience providing a broad range of servicesto the insurance industry. Our reputation is built on assemblingmultidisciplinary insurance teams from around the world to delivera range of services, including: performance improvement; nancial

management and control; change management; regulatoryreporting; risk management; information technology; productdesign; tax; transactions; actuarial; corporate advisory; and auditservices. This means you get a clear perspective of your marketand the options available to you. Its how Ernst & Young makesa difference.

How Ernst & Young can help

Shaun CrawfordGlobal Insurance LeaderErnst & YoungEmail: [email protected] Tel: +44 207 951 2172

Paul ClarkAsia-Pacic Insurance Leader, Asean Financial ServicesErnst & Young Advisory Pte. Ltd.Email: [email protected] Tel: +61 2 9248 5555

Christine DelanySenior Manager, Global Insurance AdvisoryErnst & YoungEmail: [email protected] Tel: +44 207 951 1733

Adam WaltonExecutive Director, EMEIA Insurance AdvisoryErnst & Young LLPEmail: [email protected] Tel: +44 207 951 7728

John CooperSenior Manager, EMEIA Insurance Sector

Ernst & Young LLPEmail:[email protected] Tel: +44 7810 647343

Robin SojcherDirector of Marketing, Global Insurance CenterErnst & YoungEmail: [email protected] Tel: +1 212 773 0384

Find out how we can help at www.ey.com/insurance, or contact a member of our team.
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