Australian insurers left playing catch up as consumer online research soars
- 70% of Australian consumers intend to proactively research their options when shopping for their next insurance purchase, more than double those who researched their last purchase.
- The use of websites and online resources to research insurance products is set to more than double.
- Over 80% of Australian consumers who had switched insurance providers in the last five years felt their insurer had made little or no effort to retain their business.
Wednesday 22 February 2012 — New research from Ernst & Young’s Global Insurance Customer Survey has found that a combination of increasing expectations and accessible technology has the Australian insurance industry facing far more active, demanding and better informed customers than ever before.
The survey of 24,000 insurance customers across 23 countries, including over 1,000 in Australia, highlights that suppliers who fail to move rapidly towards a more consumer-friendly business model risk being left behind.
Andrew Taggart, Ernst & Young’s Customer Advisory Leader for Insurance in Australia says, “The expectations of consumers are constantly evolving and the insurance industry has not always managed to keep pace.
“Our survey found that, while of course there are variations in customer attitudes and behaviours around the globe, there are some remarkably consistent underlying themes about what consumers want and where they expect more from insurers.”
Consumers are now proactively researching their options
“In line with global trends, Australian consumers are taking a much more proactive approach to educating themselves about their insurance needs and product options, and there is frustration with the industry’s apparent complexity,” Taggart says.
In Australia, over two-thirds of consumers say they will proactively research options when shopping for their next insurance purchase, more than double those who researched their last purchase. The use of online resources to research insurance products is also set in increase dramatically over the next few years, more than doubling across both general insurance and life and wealth.
“Consumers have traditionally turned to family members and personal financial advisers for third party validation, but the survey findings highlight a global trend towards supplementing these with independent research using online sources. Today’s consumers are also using social media to expand the base for their referral information,” Taggart says.
“However, the rise of online technology does not mean that existing channels will become obsolete. Consumers will expect a seamless, consistent response from insurers and all channels will need to be integrated effectively. The role of traditional channels such as call centres will change as they deal with less volume of traffic, but from more informed customers seeking more sophisticated interactions.
“Unless the industry addresses these issues quickly, we expect switching rates to increase in the next decade and non-traditional providers with better service platforms could use the opportunity to take market share.”
Insurers may have a perception problem, but are still trusted...
The survey results show that, despite the global financial crisis, Australian consumers have not lost faith in insurers. They trust the industry and overall satisfaction levels are high, averaging 7/10. However the survey also shows that more than half of Australians view the insurance industry unfavourably. Despite this, most are confident that the products purchased are the right ones for their need.
More effort needed to keep customers
Consumers are reluctant to change provider, but insurers are losing them through inaction. Around 80% of Australian consumers reported a lack of contact from their existing provider at the point at which they were due to renew their general insurance, with over 60% reporting that they received no contact at all. Additionally, just 11% of consumers who had switched life insurance providers in the last five years felt their insurer had made a great or fair amount of effort to retain their business.
“In Australia, the increasing level of churn in both life and general Insurance can’t be ignored. A change of mind-set is needed, both in relation to interaction with customers and to services provided.
“The largest reason for consumers changing life insurance provider, affecting a third of respondents, was that their advisor recommended the change. Australian life insurers are clearly failing to anticipate and address the changing needs of their customers in advance of advisers prompting customers to switch. The challenge for insurers is to take this information and turn it to their advantage as they manage advisors and their customers,” Taggart says.
Greater transparency and simpler products will be a deal breaker in the future
Across the globe, Ernst & Young’s research also found that consumers would like to see more simple and transparent life and wealth insurance products. This is reflected in the Australian market, with well over a third of consumers surveyed saying they find the existing life and wealth products available too complicated.
Taggart says, “The need for clarity and transparency in the buying process is not driven purely by customer preferences. As a result of the financial crisis, regulators around the globe are focusing on protecting consumer interests more than ever before, with major new regulations being introduced in the EU and many other markets around the world.
“Insurers that align themselves to a truly customer centric model will find the transition to the new regulatory environment less painful, and will gain competitive advantage.”
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