The parallel research referred to in my previous blog is the 2013 Accenture Global Consumer Pulse Research (GCPR), the latest iteration of nearly a decade of surveying consumers across multiple industries. This year, one of those sectors was P&C insurance.
The GCPR shows that the tendency to switch providers is growing across all sectors. Even more eye-catching, the researchers used their research data to quantify just how much business was in play for the coming year: and their total was a jaw-dropping $5.9 trillion.
Unfortunately, this year’s GCPR research did not cover the life industry, something we hope to rectify next year. Meanwhile, though, having the Customer-Driven Innovation research to hand, which did cover both sectors, we were able to apply a similar methodology to come up with a quantification of the total insurance premiums that are in danger of being switched from one provider to another.
After a great deal of discussion with our team at Accenture Research—I won’t bore you with the details—we were able to establish that up to $400 billion-worth of insurance premiums across personal-lines life, property and casualty insurers are at risk of being switched.
As one of my marketing team said, “That’s worth getting out of bed for!”
Of course, a figure like that is a great headline, but it only represents the potential amount of business that might be switched. The main point isn’t the number, but the fact that a large number of insurance customers are ready to change providers.
The size of this switching economy is a wake-up call for all insurers. Customers that switch are a disaster from a number of points of view:
- They are people who have tasted what you are offering and yet are still tempted by the siren songs of your competitors. What are you not doing right?
- They represent a marketing and servicing investment that you have already made, and will need to re-spend in order to replace them. It’s always better to keep customers than have to find new ones.
- Just to drive home the point: existing customers are usually the most profitable because the acquisition costs have already been incurred, and the provider is best placed to build up a solid base of customer information to be used for deepening loyalty and cross- and up-selling.
I’ll continue this series of blogs with a look at some of the reasons that insurance customers are so ready to switch.