Accenture’s insurance consumer research into the impact of digital and other innovation was recently mentioned in this Forbes article. Since this is something that is, or should be, on the top of every insurer’s mind, I wanted to explore some of these ideas further.

Most insurers are aware of the heightened competition in the industry. Indeed, many of the companies have been responding strategically with improved customer service, memorable marketing and ad campaigns, and at least a basic digital presence. These efforts have achieved a significant goal—making insurance companies appear more accessible.

Accenture has found that many customers are highly receptive to interacting with their insurers, or potential insurers, through online means. Our recent survey found that approximately 80 percent of 18 to 34-year-olds and 58 percent of those 55 and older are willing to purchase insurance online.

This is where the insurance industry still has room to develop. While many companies do provide websites with product information, quoting, and self-service, they still lack the level of personalization needed to drive customer loyalty. Tools to help make policy choices based on the customer’s unique situation, for example, are either unavailable or so general that they often don’t solve the customer’s problem. As a result, customers are faced with picking up the phone to talk with an agent or making a decision solely on price.

This situation has led to what Accenture refers to as the “switching economy.” Accenture believes that up to $400 billion in premiums are at risk of switching within the next year.

Switching economy explodes

The switching problem could get worse if companies outside the insurance industry enter the competition. In a recent survey, we found that consumers were willing to purchase policies from different types of organizations, including:

  • From banks—43 percent
  • From home service organizations—20 percent
  • From retailers – 14 percent
  • From car dealers—12 percent

Perhaps even more threatening are the 23 percent who are willing to meet their insurance needs through online service providers such as Google or Amazon. Not only do these organizations thrive on continuously providing a superior customer experience, they also can use big data to make the right offer at the right time.

Customer-centric imperative

As a result of this changing market landscape, insurers must move from a product mentality to customer-centric in their orientation. Although this involves changes throughout the organization, one tool that insurers can begin to use more effectively is social media.

In fact, Accenture found that 61 percent of younger customers prefer to get recommendations from those they know through social media. While these younger customers may be leading insurers to invest more heavily in their social media strategy, their demands are not new. After all, most people seek out the recommendations of friends or family, particularly when decisions are complex or unfamiliar. The younger generation is simply bringing that tendency to new channels.

Currently, many insurers are unprepared to meet this customer need through digital channels. Most insurers are following a typical path when it comes to social media activities. Right now, many are listening and a portion are engaging with customers through social channels.  However, those that are engaging are doing so in a reactionary and fragmented manner, often disconnected from the rest of the enterprise.  As their strategies mature, insurers will transition to more proactive and personalized customer engagement through social media which will require that they integrate social channels with their single view of the customer and customer insight engine.  They will also seek to greater leverage their influence network, turning loyal customers into advocates of their brand. This is where the incumbent market leaders have an advantage as their pool of potential brand advocates is largest, but only if they can create raving fans among their customer base.

As the switching economy takes hold, and potentially grows as a result of new market entrants, insurers will have to become even more creative and customer focused in attracting and keeping new customers. Evolving their social media approach from listening to personalized and proactive engagement and advocacy will help insurers to build the brand loyalty needed to elevate them above the switching economy—and their competition.

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