One of the important findings of the 2013 Accenture Consumer-Driven Innovation Survey was the extent to which consumers would be prepared to buy insurance from non-insurers. When looking at the data specifically for the life industry it’s clear that banks remain the greatest competitors of pure-play insurers—49 percent of respondents would consider buying from them. But it’s also worth noting the extent to which they would be prepared to buy from online service providers like Amazon or Google (21 percent) or providers offering home services (18 percent). This group would include, for example, security providers. Thirteen percent would consider buying from retailers.
Consumers’ willingness to buy what is traditionally considered a fairly complex product from a non-insurance company has received a lot of media attention over the past several months. Most of the media attention seems to be focused on the potential threat posed by the online companies, perhaps because they have already disrupted so many established industries (think of publishing and music, to name just two). The secret of their success lies in their ability to offer consumers a highly personalized experience because they have got so good at using consumer data continually to refine their offers. Delivery mastery is another element of their winning formula.
They also have, as is well known, extremely deep pockets.
Expanding the discussion a little, I think we should not lose sight of the banks, home service providers and retailers. Taken together, I think the data strongly suggests that consumers are tending to see insurance within the context of their total lifestyles, and not so much as a separate transaction.
So, many people view life insurance as part of their broader financial affairs, thus making purchase from a bank logical.
The threat posed by the online companies, home service providers and retailers is perhaps even more worrying. Willingness to purchase life insurance from these types of company might suggest that life insurance, or certain types of life insurance, is increasingly liable to be seen as a commodity. It’s easy to see how this could be in the home or auto insurance sectors, where certain products are standard and linked to something like an automobile, but life is—or should be—a more complex purchase decision.
This is a very multi-faceted issue that I will revisit in subsequent blog series, but I just wanted to make the point here. I believe that life insurers need to think very carefully about how they position themselves in this much more nuanced competitor landscape. My feeling is that the answer will lie in making it much easier for consumers to access life insurers’ deep understanding of the complexities of long-term financial planning, and to tailor customer engagements much more tightly.
In my next blog, a look at the impact of regulation on the search for profitable growth.