How Insurers Can Heed the Voice of Customers, Rethink ...FILE/EY-Customer_Centricity_eBook.pdf ·...

Welcome to the Consumer RevolutionHow Insurers Can Heed the Voice of Customers, Rethink Relationships& Embrace Innovation to Drive Profitability & Market Leadership

Life-Annuity InsuranceKey Issues & Outlook 2013Welcome to the consumer revolution

More demanding –expecting morecustomization,personalization,flexibility and“me-tricity”

Mobile andtechnology-enabled

More sophisticatedin their financialservices needs

More diverse –global markets,empowered womenin the workforce

80%50 billionconnected devices globally

Have access tomobile telephony

60+%have smart phones orlow-cost tablet computers

Globalconsumers

in 2020

Source: Ernst & Young GlobalConsumer Insurance Survey, 2012

Listening to the voice of the customer

Welcome to the consumer revolution

The 2012 Ernst & Young Global Consumer Insurance Survey asked 24,000 consumers in 23 countries around the world howthey feel about their insurance needs and relationships with current carriers. The findings highlight the challenges andopportunities faced by insurers around the world – this is very much a “good news, bad news” story.

Consumers are generally confident in and satisfied with their carriers, but … . . . want them to work a little harder to keep the business.

Life and pensions. Customer confidence and satisfaction scores

85%79% 6.8

76% Asia-Pacific7.6

Americas7.0

Europe

Regional average Satisfaction scores (out of 10)Confidence scores (percentage very/fairlyconfident product is right for needs)

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

82%Europe

68%Asia-Pacific

75%Americas

Regional average Respondents that cited“little” or “none”

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

Asia-Pacific

46%

Europe

30%

Americas

24%

Regional averageRespondents who feltinsurer made a great orfair amount of effort

Source: Ernst & Young GlobalConsumer InsuranceSurvey, 2012

6.8Asia-Pacific

7.0Europe

7.5Americas

Regional average

Customer satisfaction ratings

Mean score out of 10

Insurance industry impacts: good news and bad news


First, the bad news: many insurers are not keeping up with today’s more informed, highly empowered,dynamic consumers – who may know as much about your company and your competitors as youknow about them.

Product transparency

Specifically, insurers need to improve along four dimensions:

Service quality Rewarding loyalty Communication

$ ! ?

Insurance industry impacts: good news and bad news


Now for the good newsThere is much to learn and many best practices to emulate from other industries.

Constant marketresearch and innovationfocus from consumerpackaged goods

Customer loyalty andrewards programs fromairlines, retail, bankingand other sectors

Robust analytics frombanking and

e-commerce

Personal touchfrom hospitality


More good news: growth opportunities with current base

There is opportunity for insurers that canmaster all the consumer interaction points.

37%Asia-Pacific

16%Americas

Consumers want to build long-term relationshipswith and are willing to purchase multiple productsfrom their carriers. They aren’t doing so today,however. A simple, transparent buying experience;clear and effective communications; and rewards forloyalty – these are the steps insurers must take toseize the growth opportunity.

Life and pensions. Customers who have bought another product fromthe same provider in the last five years

19%Europe

Regional average

Consumers who prefer to buy multipleproducts from the same provider

52%

Source: Ernst & Young GlobalConsumer InsuranceSurvey, 2012

The journey to customer centricityThe journey to customer centricity is not easy. But insurers that can move forward along the right strategiccourse will find many opportunities to drive growth, transform operations and seize competitive advantage.


TakeTake a realistic look at yourpropositions (solutions, not products)– what will it take to deliver whatcustomers want at a price they wantto pay, and still make money?

LearnLearn to be adaptive –use detailed customerinsight to test, learnand act quickly,accelerating theprocess withprototypes

StartStart to build aculture that puts thecustomer at thecenter and alignsobjectives, targets,rewards andrecognition withcustomer needs

FocusFocus on some key levers and buildmomentum throughout the organization

InvolveInvolve distributorsand, together, buildstronger partnerships

DefineDefine yourtarget customersand their needs

GenerateGenerate customerengagement acrossthe relationship lifecycle to build loyalty

Next step > operationalizing customer centricity

Get digitalMake friends with and followersout of your customers

Operationalizing customer centricityCustomer centricity is both a strategic mindset and a set of specific operational capabilities.


Segment smarterFocus on multiple attributes, likepotential lifetime value and“switching” risk, not just channeland product, to identify andkeep the customers you want

Embrace analyticsRethink and reimagine thecustomer base and currentoperations by asking more andbetter questions of operationaland external data

Integrate channelsShare information and createconsistent experiences acrosschannels so customers canknock on any door they want

Reorient the cultureEstablish rewards for keepingexisting customers happy, notjust winning new business

AB C


Source: Ernst & Young

Education andawareness

Researchand decide

Purchase Use and service Loyalty

Targeted advertising —direct mail, telesales

Wordof mouth

Radio, TV, and print

Internet ads

Viral marketing

Blogs

Social media

Landing page

Comparison/thirdparty sites

Tools andcalculators

Intermediaryagent

Interactivechat

Interactive video

Call center

Website

Mobile/smartphone

Push alerts

Instantmessenger/chat

Email, paper

Call center

Rewards/incentivescommunication

Operationalizing customer centricityThe overall customer experience is influenced by customers’ direct and indirect interactions with an organization —both physical and digital touch points. Both must be managed effectively in order to maximize the experience.

Overcome the risk-averse culture common to many insurers� Drive culture change from top-down� Engage all associates to identify improvement opportunities� Reward collaboration across functions� Experiment, test and learn – open discovery centers and research labs

Shift to longer-term thinking and decision-making cycles�Don’t overlook the lifetime value of the in-force base in the chase for the

short-term rewards of new business� Unleash internal customer advocates to explore long-term relationship building

Explore disruptive growth strategies� Design “insurance as a service” models� Rethink core customer value propositions� Seek new partnerships across other industries

Driving customer centric innovationTrue customer centricity goes beyond operational matters. It’s about reorienting the culture, rethinking the meaning of risk andaltering behavioral patterns. In other words, strong executive leadership and effective organizational change management arecritical enablers. What must insurers do?


Driving growth through customer centric innovationTomorrow’s insurance leaders will leverage customer-centric innovation to differentiate themselvesand gain sustainable market leadership positions.

Welcome to the Consumer Revolution

Insuranceas a serviceand hybridmodels

Higher satisfaction,loyalty, retention

Market leadershipCompetitive advantage

Brand differentiation

The journey to maturity: achieving and sustaining customer centricity


Segmentation:Defined targets based on clearinsights into current andpotential value

Customer lifetimevalue management:Active involvement at key pointsincluding lapse, retirement andother milestones

Culture:Management by key metric (likecustomer lifetimevaluemanagement) with clear focus on meeting needs ofprofitablecustomers

Service delivery:Value-adding touch points –phone, onlineself-service toolsand information, distributors

Distributor management:Highly selective approach based on customerprofitability, with partnerships based oncustomer engagement

AB C

Brand and market position:High brand recognition and strong positiveassociations amongst target customers,based on real evidence and reputation forcustomer focus

Propositions:Focused offerings aligned to needs ofprofitable customers, with flexible design,transparent pricing and customer self-service.

Customer-centric organizations measure the maturity of their strategies and capabilities across a range ofdimensions. Choosing the right metrics provides a framework for measuring current performance and evaluatingoperations and for prioritizing investments and initiatives; they also help guide the ongoing journey to continuousimprovement, truly advanced capabilities and sustainable competitive advantage.


Start thecustomer centricconversation

Shona BurnsInsurance [email protected]+617 3011 3333

Christine DelanyGlobal Insurance [email protected]+44 020 7951 1733

Paul ClarkGlobal Insurance [email protected]+61 2 8295 6967

May KnightInsurance Advisory [email protected]+852 28499518

Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and anunwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young GlobalLimited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

© 2012 EYGM Limited.All Rights Reserved.

SCORE but the no. EG0122

1306-1089402 NYThis publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professionaljudgment. Neither EYGM Limited nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as aresult of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.

ED none

Kaenan HertzInsurance Advisory – Americas+1 212 [email protected]

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