Hi, and welcome to my first blog post on the Accenture Insurance blog.
Over the months to come, I’m looking forward to using this space to talk about some of the biggest challenges and opportunities we see for P&C insurers in the UK and Europe. I’m going to kick off with one of the thorniest issues facing many P&C insurers: retaining customers and increasing their lifetime value.
Consumers today are savvier about their P&C insurance options and it’s easier than ever for them to compare prices. What’s more, with regulations in many European countries that prevent automatic renewal of policies and standard no-penalty cancellations, insurance customers are more predisposed than ever to switch providers.
In fact, the 2013 Accenture Consumer-Driven Innovation Survey found that as many as 40 percent of P&C customers surveyed across 11 countries considered themselves likely to switch providers in the next year. With customer loyalty levels this low and a market that has yet to fully recover from the financial crisis, P&C insurers can no longer continue to pretend that it is business as usual.
While some persist with the same defensive strategies that make it so tempting and easy for customers to switch providers for lower premiums, I believe that the leading P&C insurers in Europe will increasingly become more aggressive in using digital innovations to grow the lifetime value of their customers and make their services stickier to prevent churn.
How exactly do they achieve that, given that most insurers interact with customers only when they pay premiums or make a claim? It is my contention that insurers need to learn from banks, telecom operators, retailers and other consumer-facing industries that have become so good at cross-selling and up-selling to customers at every point of contact.
In most businesses, when you buy a product, you’ll be offered more goods and services at check-out, often wrapped in a loyalty programme that keeps you coming back for more. I believe that the same can be true of P&C insurance, provided insurers start to look for ways to add value to the customer’s life every day.
Just one example of how this may work in practice: an auto insurance carrier allows customers to buy kilometres of coverage in advance. These customers also agree to allow their car usage to be monitored via telematics. They’re rewarded with bonus kilometres for safe driving and with goods from retailers in the insurer’s ecosystem of business partners.
Suddenly, the consumer is thinking about insurance nearly every time he or she gets behind the wheel of the car, rather than just when it’s time to renew the policy or claim. And the loyalty rewards help to keep the customer invested in the insurer’s ecosystem for the longer term.
This is just the start, since insurers could use this relationship with the customer for more effective cross- and up-selling of their own products, or products and services from other companies in their ecosystems.
A mobile app could be the customer’s window into this everyday relationship with the insurer. This is a theme that I’m planning to explore in my next post in two weeks’ time.