In my last series of blogs, I speculated at some length about the opportunities (mostly unappreciated as yet) that a focus on consumers could open up for insurers. In this new series I want to look at this issue from another angle. My thoughts are based on the data contained in Accenture’s interesting new Consumer-Driven Innovation Survey. Read the full report.
The survey’s name gives you the angle: the idea that the innovations a company contemplates should not be driven by what it thinks would be good, but by what consumers actually want. Too often, innovation is unidirectional: the company spends a lot of time and money coming up with innovations based on its data, and then presents them to the market. And too often the innovations just happen to be ones that suit the insurer—ones that reduce its costs or streamline its processes (so improving margins).
All with the best intentions in the world, I’m sure, but it’s hard to see anything through someone else’s eyes. (This is a problem that car designers also have—so many features that one never wants to use!)
But this monocular vision isn’t really tenable anymore in any industry, and industry is no exception. Innovation has to become bi-directional now because the nature of our customers (and consumers generally) has changed—and changed radically.
All the consumer research I have seen recently is saying that they are more demanding these days; insurance customers are consumers too and thus are no exception. This is in part at least fueled by heightened expectations derived from other industries (telcos, retailers, car manufacturers, fashion brands and so on) and the kind of “mass personalization” enabled by the Internet and mobile devices.
Based on our research, here’s how all this translates into customer behavior in insurance:
- Insurance customers are more likely to switch providers to get what they want. The churn potential in P&C is a stunning 40 percent. While lower in life, it’s still 10 percent. Switching is most likely to take place at renewal/ purchase time—and 72 percent of existing customers fall into this category.
- Driving this willingness to switch is apparently the desire to find an insurance provider that provides personalized service. Eighty percent said personalized service was very or somewhat important in their decision to stop doing business with their current provider/ switching to another. This is mirrored in the finding that 92 percent want their insurance providers to help them manage risk (and not just insure it).
- Almost half of all respondents (48 percent) rely on comments made on social media to make their insurance-buying decisions. This is highly significant because not only does it mean that customers are sharing information, but they are more informed generally. They might even be more informed than your agents!
In fact, one could argue that customers are starting to realize that they in fact are in the driving seat. What’s also apparent is that insurers are battling to come to terms with this new set of circumstances, and what it means.
Next time, I’ll look at some other interesting customer dynamics in the insurance ecosystem when consider just who your customers might be. As always, I welcome the opportunity to debate the ideas in my blogs.