More than half (53%) of consumers in Brazil, France, Germany, Italy, Spain and the United Kingdom are considering switching to a new insurance provider over the next 12 months, and a rapidly growing number plan to buy insurance online, according to a new survey released today.
Ireland-based technology consultancy Accenture conducted the survey in December 2009 and January 2010, which targeted more than 3,500 consumers in those countries, and revealed that insurance customers are highly inclined to shop around.
"Consumers are actively seeking better deals, have more options to choose from and are empowered by new Web-driven tools to be more selective," said Serge Callet, global managing director of Accenture's insurance practice. "For insurance companies willing to take a bolder approach to pricing and distribution, and to tailor and target their sales channels more precisely to customer needs, current customer loyalty weakness is a strategic growth opportunity."
Asked whether they plan to renew or purchase insurance products with their current providers, 53% of respondents said that they did not or that they were unsure and "plan to look around."
According to the survey, insurance Web sites and aggregators are gaining ground in all the countries surveyed
The survey also indicates that the Internet is gaining significant ground on banks and insurance agents as the preferred channel for buying insurance. While most respondents said they had purchased at least one of their current policies through an agent or bank (59% and 33%, respectively), a much lower percentage of buyers are planning to do so over the next 12 months (49% and 27%, respectively). Meanwhile, a substantial minority (34%) of consumers has purchased at least one policy online—via insurers' Web sites or price-comparison sites—and an even greater percentage (43%) plan to do so over the next 12 months.
"Seventy-percent of the UK consumers surveyed plan to purchase their policies online over the next 12 months," Callet said. "This confirms the dominance of insurance Web sites and aggregators in the UK. But our survey also revealed surprisingly strong online growth in France, Germany, Italy, Spain and Brazil, where the number of consumers planning to buy policies online in the next 12 months is 10 percentage points, on average, greater than those who had done so previously."
According to the survey, the most important criteria consumers use when choosing an insurance provider are speed of problem-resolution, transparent pricing and the availability of products that match their needs (cited by 75%, 70% and 64% of respondents, respectively). Insurance agents are perceived as the best at solving problems in a timely manner, and at offering products and services that fit their customers' needs. Insurers' Web sites and aggregators are seen as the channels that have the most transparent pricing, offer the lowest price, are the most accessible when needed and provide the best level of information on the insurance products sold.
"The submission of a claim is the moment of truth in the relationship between insurers and policyholders, and this is validated by our research," added Callet. "For consumers, finding the lowest-priced coverage is simply not enough. Quality of service at the first notice of loss, and the ability of the insurer to provide prompt claims settlements are pivotal to customer loyalty and satisfaction."
The survey also raised questions about the outlook for bancassurance—the sale of insurance products through banks. Although banks are clearly losing ground to online insurance sales channels, banks hold considerable advantages over insurers, according to the survey.
A strong majority of consumers (60%) see banks as a preferred "one-stop shop" for financial services products, and nearly half (47%) think of banks as a preferred financial advisor. Consumers also see banks as more accessible than insurers, and they are three times as likely to have weekly or monthly contact with them, according to the survey. Yet the survey results raise questions as to whether banks will be able to further capitalize on the relationship, with only 15% of respondents saying they are "sure" they will purchase more insurance products from their bank. Twenty three percent of respondents said they were undecided.
"Bancassurance was widely adopted in Europe over the last few decades, but is now facing significant changes in the wake of the financial crisis—with several banks being forced to divest their insurance operations, and others in certain countries facing potential structural changes related to Solvency II and Basel III," said Callet. "This presents new revenue challenges across the industry. Since insurance sales commissions can ensure a stable source of revenue, it will be critical for the industry to redefine a winning bancassurance model—through innovative online strategies, further strategic alliances, tactical divestments, and other means—in order to achieve profitable growth."
In other findings as regards consumers surveyed:
• Nearly one-third (35%) of consumers are ready to pay more to get personalized advice or assistance when they are purchasing insurance products
• Consumers prefer to purchase property/casualty insurance though online channels and agents (mentioned by 40% of respondents), while they favor banks as the channel for purchasing life insurance (mentioned by 32% of respondents)
• Online sales channels are gaining popularity in both life insurance and property/ casualty: 12% of respondents said they have purchased a life insurance product through an insurance Web site or an aggregator, and 21% plan to purchase online in the next 12 months
• Bancassurance is the most popular in Brazil, where more than half of respondents (54%) said they expect to purchase or renew their insurance policy through a bank over the next 12 months
• Customers in France, Italy and Spain are the most loyal to their insurance providers, with 64% of respondents in France, 61% in Italy and 58% in Spain planning to with continue doing business with their current provider the next time they purchase or renew an insurance policy
• UK and German insurance customers have the least "loyalty" to their current providers with 71% either not planning to purchase their insurance policy with their current provider or unsure and planning to look around
• Three-quarters (73%) of respondents said they are "not very interested" or "not interested at all" in purchasing banking products through an insurance company
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