New global research finds that as many as two-thirds (67 percent) of insurance customers would consider purchasing insurance products from organizations other than insurers, including 23 percent who would consider buying from online service providers such as Google and Amazon.
The research by Accenture, which is based on a survey of more than 6,000 insurance customers in 11 countries, found that 43 percent of respondents, who could select multiple responses, said they would consider buying insurance from banks, almost one-quarter (23 percent) from online service providers, 20 percent from home service providers, such as telecommunication or home security companies, 14 percent from retailers and 12 percent from car dealers.
“Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks but also from Internet giants,” said Michael Lyman, global managing director for management consulting within Accenture’s Insurance industry practice.
He said that overall there is a “significant switching risk” and it is possible that up to $400 billion in insurance premiums could change hands within the insurance industry over the next 12 months.
“The switching risk is important in western markets but even more so in emerging countries such as China and Brazil, where insurance customers are even more likely to change providers,” Lyman said.
The research shows that loyalty in insurance is a key issue, with 40 percent of consumers likely to switch to another automobile or home insurance provider over the next 12 months. In the life insurance market, one-quarter (25 percent) of respondents said they were likely to cancel an existing contract and more than one-third (35 percent) said they were likely to take out a new contract with a new provider in the next 12 months.
Lower prices and more personalized service are the top reasons for consumers to switch to a new insurer, cited as important or very important in switching decisions by 87 percent and 80 percent, respectively, of the insurance customers surveyed. Forty-one percent of respondents said they were willing to pay more to get personalized advice when purchasing their insurance.
“The switching economy represents a huge opportunity for many insurers to gain market share,” said Lyman.
“Personalization clearly emerges as a key driver in retaining existing customers and attracting new ones. Innovation in pricing strategy and the ability to make their customers feel that they are unique are thus critical to capturing share within the switching economy.”
Among the survey’s other findings:
- More than two-thirds (71 percent) of consumers surveyed would be ready to buy insurance online, such as travel and assistance policies, extended warranty, home insurance or life insurance products.
- More than half (54 percent) of respondents are interested in gaming solutions that insurers may offer to help them better manage risk coverage and lower premium rates.
- Almost half (48 percent) of respondents said they would consider comments on social media in making their insurance-buying decisions.
The research also reveals that two-thirds (67 percent) of consumers are interested in mobile insurance services – such as sending pictures of their car to report a claim, or displaying their proof of insurance on their mobile phone – while less than half (46 percent) of the respondents that are mobile device owners have already used their tablets, and 37 percent their smartphones, to deal with their insurers.
Also according to the survey, more than one-third (35 percent) of insurance customers are open to provide access to their usage or behavior information – such as car-usage or lifestyle information – if this can give them better value for their insurance coverage.
“While Internet access using personal computers or laptops was the first step in enabling customers to use digital channels, the real game-changer has been the growth in mobile,” said Lyman.
Visionary insurers must be prepared to conceptualize their business more broadly, building online communities and offering non-insurance services and be willing to create ecosystems of partners who together can provide the total, personalized and convenient experience today’s customers expect, said Lyman.
Accenture commissioned a survey of 6,135 owners of life and/or auto and home insurance policies in 11 countries. The online survey, designed by Accenture, was conducted by Lightspeed Research in July 2013.