Last week, I introduced the Accenture High Performance Insurer study. Over the course of this six-part series, I will go into more detail about the results of the survey. This week, I will discuss two of the five challenges facing insurers today: tougher economics and more demanding customers.
Adjusting to the new normal is much more than learning how to play by new rules. The game itself is much more complicated, requiring a balance of managing higher costs and lower returns while rebuilding lost capital. The result is that market cycles are very different than they have been in years past.
Previously successful product and customer strategies need to be revised. Some products and product strategies have been rendered obsolete. Entire sections of the industry—small businesses, in particular—have left the market. Consumers are also recovering, and many are on tighter budget than they have been in the past. Previously successful strategies simply won’t yield the same returns.
Ultimately, market demand will recover, but the abundant profits from previous years are unlikely to return.
More demanding customers
According to a global consumer attitude survey commissioned by Accenture, consumer loyalty and confidence in the insurance industry is the lowest of the 13 business sectors surveyed. Further, the survey found that:
- 25 percent of consumers switched insurance providers in the last 12 months, and
- 20 percent of consumers expect to switch insurance providers in the next six to 12 months.
Clearly, insurers have work to do if they are to acquire and retain customers for the long term.
Not only are customers more willing to switch providers, they also expect much more from providers. While affordability is a key consideration, value and service are also important. Finally, the emergence of online technology—and customers’ expectations to interact online—requires insurers to develop strategies to harness these distribution channels.
Next week, I’ll discuss three more challenges facing insurers today: evolving technologies, altered global market structure and competitive forces.
Download the Accenture High Performance Insurer study.
How does your business address these challenges? Have you adapted old strategies or devised entirely new ones?