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 findings were the result of new research by Accenture based on a survey of more than 6,000 insurance customers in 11 countries.
Accenture estimates a high amount of “switching risk” this year, estimating that up to $400 billion in insurance premiums could change hands within the insurance industry over the next 12 months, considering both property/casualty and life insurance.
The research shows that 40 percent of consumers are likely to switch to another automobile or home insurance provider over the next 12 months. The switching figures are lower in the life insurance market, but 25 percent of respondents said they were likely to cancel an existing life 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.
The survey respondents were allowed to select multiple responses from a list of possible providers they might buy insurance from.
In addition to the online service providers, garnering a positive response from 23 percent of those surveyed:
- 43 percent said they would consider buying insurance from banks.
- One-fifth said they would buy insurance from home service providers, such as telecommunication or home security companies
- Retailers were selected by 14 percent
- Car dealers were among the selected potential insurance sellers for 12 percent.
Michael Lyman, global managing director for management consulting within Accenture’s Insurance industry practice, said switching risk is important in western markets, but even greater in emerging countries such as China and Brazil, where Accenture believes insurance customers are even more likely to change providers.
What would prompt consumers to switch?
- Lower price is “important” or “very important” to 87 percent.
- 80 percent said personalized service is important or very important.
- 41 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.”
The survey also investigates consumer willingness to provide access to car-usage or lifestyle information, and interest in mobile services—such as sending pictures of their car to report a claim, or displaying their proof of insurance on their mobile phone.
The research reveals that two-thirds of consumers are interested in the mobile insurance services;
35 percent are open to sharing personal information as long as they get better value for their insurance coverage. Almost half, however, said it would depend on the information requested.
Loyalty by Country
The research indicates that Chinese and Brazilian insurance customers are the least loyal and the most interested in digital services:
- Chinese, Brazilian and British insurance customers are the consumers most likely to switch providers, with 81 percent, 75 percent and 57 percent of respondents, respectively, saying they are likely to switch to another automobile or home insurer over the next 12 months.
- At the other end of the spectrum, Canadians (23 percent), Japanese (24 percent) and French (24 percent) are the most loyal customers.
- Chinese, Brazilian and British insurance customers are also the most interested in purchasing insurance online, with 93 percent, 83 percent and 81 percent, respectively, of respondents expressing such interest.
- Chinese, Brazilian and South African consumers have the most appetite for new mobile-enabled insurance services, with 94 percent, 88 percent and 85 percent, respectively, of respondents saying they are interested in new mobile services that their insurers might offer.
- Chinese, Brazilian and South African consumers are paying the most attention to comments and recommendations posted on social media before selecting insurance providers, with 86 percent, 82 percent and 60 percent of respondents saying that they would consider these comments in making their insurance-buying decisions.
- Chinese, Japanese and Brazilian customers are the most open to give access to their usage or behavior information to optimize their insurance coverage, with 94 percent, 89 percent and 87 percent, respectively, of respondents saying so.
Accenture cites several examples of insurers that are taking advantage of digital innovation to offer customers better prices and more relevant services, including services outside of their traditional business:
- Progressive’s “Name Your Price” online tool that collects basic information from prospective customers, including their auto insurance budget and recommends a package that matches this budget, then allowing customer to add or remove features to adjust the price.
- UK online carrier Insurethebox, which allows customers buy miles of coverage in advance. The customers allow their car usage to be monitored by an onboard device, and top up their insurance when their miles run low. Other features include bonus mile rewards for safe driving.
- USAA, which helps its members buy cars, and guarantees lowest prices by refunding members the difference if they find the car at a lower price within four days of purchase.
Accenture commissioned a survey of 6,135 owners of life and/or auto and home insurance policies in 11 countries. The online survey was designed by Accenture and conducted by Lightspeed Research in July 2013. The 6,135 respondents included 1,012 from the U.S., 520 from Italy, 516 from Brazil, 512 from Japan, 511 each from the UK, France, Spain, Canada and South Africa, and 510 each from Germany and China.
Accenture is a global management consulting, technology services and outsourcing company, with approximately 281,000 people serving clients in more than 120 countries.