Australians seem to trust insurers less than banks, want more engagement
Thursday, 13 November 2014 - Australian consumers seem to be some of the least trusting of insurance companies in the world, according to new research from EY.
- 53% of surveyed Australian consumers trust insurers, compared to 78% for supermarkets and 71% for banks
- Just because they leave you, doesn’t mean they don’t love you – traditional views on customer loyalty don’t apply
- 50% of consumers report no interactions with their insurer in the last 18 months
In the latest EY Global Consumer Insurance Survey, Reimagining customer relationships, Australia recorded one of the lowest levels of trust in insurers of the 30 countries included in the survey, at just 53% compared to a global average of 70%. The Australian results are on par with the UK and Germany, with only South Korea ranking lower on trust (at 47%).
The survey of approximately 24,000 life and general insurance customers across 30 countries, including Australia, was designed to find out what matters most in the relationship customers have with their insurers, how they want to interact and how satisfied they are with the range of offerings available.
EY’s Insurance Strategy & Customer Advisory Lead, Walter Poetscher said the survey findings highlighted the importance of insurers engaging with their customers in new ways, and with new value propositions, to deepen relationships and build trust.
“Australian insurers are facing an uphill battle when it comes to building loyalty and trust among their customers,” Poetscher said.
“This becomes even more important when you consider that some of the newer, less-traditional market participants come from sectors like supermarkets and banking which score much higher levels of trust among consumers (78% and 71% respectively). The insurance industry needs to rebuild trust among its customer base, or run the risk of losing market share to newer competitors and disruptors.”
“Customer retention is a problem that many insurers would be delighted to resolve, so balancing the changing expectations of consumers while finding new ways to increase loyalty and confidence is key,” Poetscher said.
Just because they leave you, doesn’t mean they don’t love you
EY’s survey also found that traditional views on advocacy and loyalty are not necessarily as clear cut within the insurance sector as they are in other industries.
“Insurance consumers appear to be refuting conventional wisdom about the characteristics of customer loyalty,” Poetscher said.
“Two-thirds of the customers surveyed globally said that they were either likely or very likely to recommend their insurance provider to friends and relatives, yet 38% of that group of advocates also reported having closed policies or switched providers within the previous 18 months. This means that many customers who choose to switch insurers still retain overall positive views of their former provider.”
“Given this, insurers need to take a fresh approach to loyalty and re-evaluate the metrics used to monitor the health of their customer relationships.”
Value for money matters, but make it easy for us too
The survey found that what matters most to consumers during their relationship with an insurer is value for money (64%), followed by the insurer being easy to deal with (57%) and easy to understand, clear communications (49%).
Cost or terms of the policy is the biggest reason for people closing or replacing their policy, with nearly three-quarters (74%) of Australian motor customers, 72% of Home insurance customers and 52% of life customers citing this as a top reason.
“Insurers have traditionally devoted a lot of attention to new customer sales. Insurers have in the last few years started to devote more attention to retaining, and deepening the relationship with, their existing customers, although more work still needs to be done in this space,” Poetscher said.
“This analysis suggests there is also an important third group that insurers need to focus on – the so called ‘alumni’ customer who left their insurer for a non-emotional reason, such as a high price point, may still hold them in high regard. This opens up opportunities for a savvy insurer to win back their business with relevant and timely propositions that meet their needs.”
Call me, maybe? Customers want more engagement
Consumers indicate that they want more frequent, meaningful and personalised communications, but at the moment very few insurers are getting this right. Nearly half (45%) of Australian consumers would like to receive policy updates more than once a year – but only 25% currently receive this. This “communications gap” applies to general information, special deals or promotions, and policy updates.
“We need to fundamentally rethink how the industry communicates. Insurers are relying on too few points of contact to build a trusted long-term relationship with their customers,” Poetscher said.
“Our survey found that interactions between insurers and consumers are currently occurring so rarely that any one point of contact can significantly shift the perception of insurers and brokers in the consumer’s mind.”
“Insurance providers ought to be ensuring that all their customers receive the attention and information they are asking for, regardless if they are served directly or through a distribution partner. With the rise of digital, insurers are increasingly better placed to do this – so the race is on to see who can do this most effectively and quickly,” Poetscher said.
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