Insurance product bundling must come with customer experience improvements

“Bundle and save” is a tried and true sales tool. Buy two, get one free. Sign up for internet, save on your TV package. And, when it comes to the insurance industry, combine home and auto policies for big discounts. It shouldn’t come as much of a surprise that it’s an effective strategy. But after insurance policy holders make a multi-pronged commitment, are they satisfied with their choice?

It appears so, at least initially, according to the J.D. Power 2019 U.S. Auto Insurance Study and 2019 U.S. Home Insurance Study.

Customer satisfaction among bundlers has, indeed, always exceeded that of mono-line customers. What’s more, they have higher renewal rates, are less likely to shop their policies to other insurers, and even tend to be greater advocates for the brand. Even after inevitable premium increases, bundlers still tend to have slightly higher customer satisfaction, and roughly 16% greater intent to renew. Overall, among auto insurance customers, 65% bundle property (home or rent); 20% have property coverage, but do not bundle with auto; another 15% don’t have property coverage (e.g., rent and don’t have renters, etc.).

However, as we examine customer expectations and evolving preferences, it’s clear that the increased satisfaction many carriers experience from bundlers begins to dwindle as customers increasingly demand a consistent experience across all product lines.

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Entrant Manfred Schweri and a guest sit inside a 1954 Fiat Chrysler Automobiles NV 8V automobile at the 2018 Concorso D'Eleganza at Villa d'Este in Cernobbio, Italy, on Saturday, May 26, 2018. The annual Concorso D'Eleganza is held at the Grand Hotel Villa d’Este, on the shores of the stunning Lake Como in northern Italy. Historic cars are vying for the coveted “Best of Show” prize, awarded to automobiles expressing beauty, passion, and uniqueness. This year’s event motto is “Hollywood on the Lake”. Photographer: Alberto Bernasconi/Bloomberg

After all, insurers can’t get by on discounts forever, and the data show that. Customers’ satisfaction with their price of their auto premiums is slightly lower among bundlers, which suggests that either auto premium increases in the past few years have diminished initial savings, or customers simply expect the discount for bundling and no longer credit their insurer for that benefit.

It begs the question: Is there more to a happy bundled customer than a simple discount?

The recent acquisition of American Strategic Insurance (ASI) by Progressive shined some light on this matter. With ASI now under the Progressive umbrella, customers have the ability to receive bundled online quotes. But, for example, once existing ASI customers sign up to bundle with Progressive, they still have two separate access points for their accounts.

That’s a problem that’s not exclusive to ASI/Progressive, but it’s still an issue, most notably among younger customers. That demographic has an inherent expectation of convenience, and they anticipate a far easier experience from one-stop shopping than they have been receiving. That puts those that pose as a single brand experience, but in reality, have different process by product, at far greater risk for lower satisfaction scorers and customer retention.

It isn’t just Millennials who are frustrated by this apparent lack of a seamless experience. Among bundlers, 48% of the Boomer+ segment said combining policies was important in selecting an insurer; only 29% of Gen Y/Z bundlers said the same. Instead, the Gen Y/Z bundlers said they selected their brand for the product/experience itself: the only category more popular among these younger customers compared to the Boomer+ segment.

That’s not a good harbinger for insurers, because many customers who bundled do indicate lower satisfaction related to the combined experience. Specifically, many billing and payment best practices – such as combined statements and the ability to select or match payment due dates – are being missed at a higher rate among bundlers than non-bundlers. If insurers are going to amend this problem, the first step is ensuring the customer-view of the process is seamless.

Multiple legacy systems are fine, so long as the backend can be modified in such a way the systems can talk to each other and present a single view/user experience to the customer. As carriers move forward, it will be the insurers that provide a high quality, integrated digital experiences that are going to have a distinct advantage in meeting their expectations for the ease of doing business. And it’s in that ease of use – not in discounts alone – where current customers will remain future customers.

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