As Euro ’16 plays out (that’s a soccer competition for those over The Pond) in France, The Protection Review Syndicate have published their annual research report on Insurance*. This article commentates on the research, about how the insurance industry is scoring too many own-goals and their fan base is unhappy. It’s a game of two halves so in the next blog we give some recommendations for how the insurance industry can improve their score and go on to become champions.
Pre-Match Team Talk
The insurance sector is highly regulated, has the challenge of additional market forces such as insurance aggregators and brokers and is understandably risk averse. With these forces at play, the insurance sector has evolved over time placing the policy at the centre of the relationship with its customers, not the customer themselves.
“I was lectured by a very senior actuary that ‘Insurers don’t have customers they have policyholders. Retailers have customers!”
Peter Le Beau
Top insurance pundit Peter Le Beau, co-Chairman of the Protection Review highlights this: “Early in my career, I was lectured by a very senior actuary that ‘Insurers don’t have customers they have policyholders. Retailers have customers!’ This implied to me that there was something different about the relationship between an insurer and its policyholders and other less esteemed businesses whose clients had not reached the elevated status that policyholders had. The reality is that the relationship we have with the people who buy our products should be very similar to that of retailers and their customers. This is a big challenge for insurers to replicate that situation when we have so few actual contacts with customers. This is very probably both a problem as well as an opportunity for the protection industry.”
Furthermore, in order to remain competitive and profitable insurers have naturally focused on adopting operational efficiencies as their competitive strategy, where cost is driven out of every internal process, and more is done with less.
Any attempt at communication has become generic, frequently irrelevant and usually poorly timed. Insurers are not able to communicate the unique and relevant value which their brand, product or service could bring to those customers.
Insurance brands need to control the pace by not playing the aggregator’s ‘price’ game but instead put ‘value’ back at the centre of their match strategy.
Customers have been analysing the video replays and expect more from insurers. Customers now operate in digital communities, review sites and on recommendation platforms. They are time poor and attention spans are shorter than ever. At the same time they are more empowered and can shout louder than ever when things go wrong. Insurers have struggled to keep up. We call the difference between customers’ expectations and what the business delivers the “Engagement Gap”.
Insurance providers are in the relegation zone and losing fans fast. Over half (51%) wouldn’t consider themselves a loyal customer of their insurance provider.
FOUL! (The sound of the insurance customer engagement gap)
Don’t shoot the messenger…In the research the fans have spoken and their chant isn’t pretty. The voices of insurance customers coming out of the research chime with Woody Allen’s quip: “There are worst things than death. Have you ever spent an evening with a life insurance salesman?”
Customer Indifference: The research shows that the biggest challenge facing the insurance industry is the fact that the majority of consumers have become indifferent to insurance providers. 45% of consumers in said they just wouldn’t buy insurance at all.
Customers are closing their eyes because they can’t watch anymore. They don’t want to hear from insurance companies, even those who are customers. Customers might hear from their insurance companies once a year (35% hadn’t heard from their insurers in the past 2 years, and the majority (77%) of those that hadn’t heard from their insurer didn’t want to.)
Consumers do not trust insurers. Consumers don’t believe that insurance providers will be there for them in their moment of need and pay their claim.
Customers don’t see the value. Consumers do not understand or perceive the value of insurance. Aggregators and price comparison sites have helped drive a ‘price obsession’ among consumers.
Customers are not loyal to insurance providers. Loyalty is a strong indicator of customer engagement. The more engaged a customer is with a brand then the more loyal they are. From a protection insurance perspective this means they are more likely renew and less likely to lapse, they are more likely to forgive a poor experience and more likely to recommend and be an advocate. The research says 51% were not loyal. Over half of those interviewed do not have meaningful relationships with their insurance providers. They have little or no trust with their providers and only look at their insurance products from a price perspective, not the value it or the brand brings to them. It’s no surprise then that after five years two thirds of insurance policies lapse.
Insurance companies do not know and are not listening to their customers. Insurance providers do not know their customers so they can’t use insights to deliver any value in day-to-day activities with customers. When customers are contacted by insurance companies they do not feel confident that they are aware of their previous dealings and interactions with them. Only 11% of people feel they are very confident that their insurance company are aware of previous conversations and communications. Nearly 90% felt that their insurance company could have been more aware of previous conversations be them online, via the phone, face-to-face and direct mail to name a few of those common channels. Overall the majority of customers feel left out, ignored. They are not recognised and not being remembered.
When insurance companies do communicate with customers it’s not relevant. Insurance companies are not providing customers with offers and services that are relevant to them individually. Only 9% of people reported that they regularly receive offers and services that are relevant to them. Over 90% felt that they do not receive relevant offers and services, nearly two thirds have a reduced opinion of insurance providers when they receive irrelevant communications.
Penalties: Crunch Time for Insurers!
Insurance companies might be kicking the ball, but it’s clearly going very wide of the net. If they don’t change something soon then it’ll be too late.
Closing the gap with past and present customers is always going to be a challenge. However, there is a ray of hope for insurers in the form of younger audiences who – the report reveals – are less sceptical about protection products than older generations. Building a one-to-one relationship with young consumers is the biggest opportunity for insurers – one they can’t afford to miss.
If you want to turn the tide in this losing game and celebrate to the resounding cheers of arduous fans then it’s time you got your team into the dressing room, reviewed your 4-4-2 formation and make customer engagement your signing of the season.
Next: The customer engagement opportunity for insurance providers.
Download The Protection Review's 2016 The Syndicate Insurance ResearchDownload Report
*Source: The Protection Review The Syndicate Research, March 2016, 2002 UK consumer adults. http://protectionreview.co.uk/