Cambridge, Mass. – Consumers have been known to be fickle—from the ease of using the remote to change television channels mid-program to toggling between credit card agreements to find one with the lowest APR. When it comes to insurance, however, consumers tend to be a bit more loyal. That’s the assessment made by Forrester Research Inc., a Cambridge, Mass., research firm that asked nearly 5,000 U.S. consumers about their intentions for doing business with 112 firms across these nine industries: banks, credit card providers, health plans, insurance firms, Internet service providers, investment firms, retailers, TV service providers and wireless carriers.

Forrester’s research, conducted in Q3 2007, reveals that health insurers are almost as popular as retailers, which the survey identified as having the most loyal consumers. Banks were shown to have the least. In fact, the net of respondents hesitant to switch retailers was 66%, while a net of 57% of respondents said they were unlikely to switch health plans.

Forrester’s Bruce Tempkin, VP and principal analyst, customer experience, notes that health insurance customers may appear loyal, but a more accurate assessment may be in the nature of how health insurance is sold.

“The fact that consumers were unlikely to switch health plans was driven by the difficulty consumers have in making those types of changes,” says Tempkin.

The health plan organizations examined for this part of the research included Aetna, Anthem (Blue Cross Blue Shield of California), CareFirst (Blue Cross Blue Shield), CIGNA, Highmark (Blue Cross Blue Shield), Kaiser, Medicaid, Medicare and United Healthcare. Those organizations with customers least likely to switch include Medicare, USAA, State Farm and an independent insurance agent.

Yet, although consumer loyalty differs across industries and companies, the research indicates that the bond between consumers and insurers across all lines of business is still strong. According to Forrester, consumers were more likely to repurchase from insurers. Of the total insurance companies studied for this report, (AAA, AIG, Allstate, independent agents, Farmer’s, GEICO, Liberty Mutual, MetLife, Nationwide, Progressive, State Farm, The Hartford Financial Services Group, Travelers and USAA), those organizations with customers most likely to repurchase included: USAA, Medicare, State Farm, Kaiser, The Hartford and an independent insurance agent.

“What companies should focus on is how loyal their customers are compared with their competitors,” notes Temkin.

Studying the competition, along with identifying ways to differentiate their business may be the key to building even more loyalty. Another study, "Surviving Climate Change in the Property and Casualty Industry by Growing Customer Advocacy," suggests that loyalty is derived by enhancing the policyholder’s experiences. Conducted by IBM, Armonk, N.Y., and reported last August in Insurance Networking News online, the report suggests carriers use technology such as data analytics to build a deeper understanding of the policyholder; design customer experiences based on known customer expectations and use in policy advocacy data to drive improvements; and using technology such as Web 2.0, communicate and transact with customers intelligently during key interactions, on a customer-by-customer basis.

Sources:  Forrester Research, INN archives

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