Other parts of this series:
Accenture’s Erik Sandquist looks at how insurers can hold their prices while driving loyalty as risk coaches.
Unlike retailers, insurance carriers don’t have seasonal price reductions. First, there’s no inventory to shed at bargain-basement prices. And while the market does play a role in pricing, carriers must adhere to filed rates and underwriting guidelines, so discretion is limited. Few insurers would consider competing on price to be a sound, long-term strategy.
This would be fine, except for one thing: Customers don’t necessarily agree.
In fact, competitive pricing is the top loyalty driver for auto (52%) and home insurance (50%), according to Accenture’s global Distribution & Marketing Consumer Study. And it’s a significant driver (38%) for life insurance customers as well. But our research shows that many consumers also strongly value personalized, real-time interactions that improve their health or safety. For example, 76% said they were interested in insurers helping them or their aging relatives live longer safely in their homes. Insurers can successfully defend their brand and their price by providing these kinds of desired services.
Embracing the Internet of Things and tracking customers’ behavior at a granular level allows insurers to help consumers reduce their risks. At the same time, it enables carriers to price those risks more accurately. It will likely involve partnerships and collaboration with device owners and data partners. I’ve written extensively on the increasing willingness of consumers to exchange data for real benefits—which is now up to 57% of respondents. In fact, 64% would share their data specifically in exchange for personalized advice. Savvy insurers should look to offering useful, personalized services as an opportunity to forge stronger ties with their customers while actually improving their underwriting.
We are already deep into an era of personalization. Drivers, for example, routinely depend on interactive devices that not only map their routes but warn of delays and suggest alternative routes. Forward looking insurance companies will position themselves on the data value chain to have troves of useful data that can be used to create new or more valuable alerts and insights for customers. This will help them gain increased customer loyalty and move beyond price.
Next week I will continue to discuss this study and how insurers can profit from disruption.
- Download the Accenture report, “The Voice of the Customer: Identifying Disruptive Opportunities in Insurance Distribution”
- For more about the study and its implications, read the first post in this series “My Insurance Advisor is a Robot”