Ernst & Young released today its Global Consumer Insurance Survey 2012, entitled, "Voice of the Customer: Time for Insurers to Rethink Their Relationships." In it, E&Y addresses what it considers to be the top five myths perpetuated around the life insurance and annuities markets, and more specifically, the problems and opportunities carriers can expect there.
Ernst & Young surveyed more than 24,000 consumers of insurance products in 23 countries across seven global regions, making this body of research one of the largest surveys of consumer attitudes about the insurance industry ever conducted.
The broad conclusions from the survey are that insurance customers, particularly in the U.S., desire more personalized service, and for insurers to more richly reward customer loyalty. But more importantly, the survey addresses five key concerns long held by the life and annuity industry that are not necessarily true. Or, they are not as true as they once were.
Myth #1 is that customers have low confidence in the life and annuity industry. E&Y found that 35% of all consumers have either a very favorable or strongly favorable view of the insurance industry. And while that equates to 65% of consumers not having a favorable view, the numbers are not quite so grim. 37% of consumers have a neutral view of the industry, and only 23% have an unfavorable view.
In addition, consumers in the Americas have an average customer satisfaction rating of 7.7 out of 10.0. This compares favorable to Mexico (7.6), Brazil (7.5) and Canada (7.3). Customer satisfaction for the Amercias averages 7.5, compared to Europe (7.0) and Asia-Pacific (6.8).
Finally, 85% of customers in the Americas felt they were confident that they had the right life/annuity product to meet their needs.
"We asked people who they bought their products from now and who they were likely to buy from going forward, and the insurance carriers and agents and brokers had significant upticks," said David Hollander, E&Y's Global Insurance Advisory Leader. "When people looked ahead, they looked more to buying from traditional channels, less so from other financial service providers."
The takeaway, Hollander said, is that the industry emerged from the financial crisis in a stronger position than other financial service sectors. Most companies remained in business, and remained viable, even though they may have pulled back some product offerings, particularly in the annuities sector.
Myth #2 is that life insurance is sold, not bought. While this maxim has long been held by life insurance agents, E&Y's findings suggest that customers are becoming less passive and more likely to research products themselves, and identify their own needs more. Nearly one third of customers already reasearch their life insurance needs and solutions, E&Y found, and some two thirds of customers expect to do more such independent research in the future.
Where customers look to get their information remains varied, from friends and family or word of mouth (42%), online comparisons (40%), direct contact with a bank or an insurance company (36%) or by a bank or insurance company website (32%). Advice from an intermediary or agent remained the most popular choice, however (42%) - but equal to getting information by friends and family.
With this in mind, E&Y noted, insurers need to prioritize social media strategies. This is especially true in developing markets such as Brazil, where the individual life and annuity market is both growing rapidly, and where customers also relying heavily on recommendations from friends and family.
Myth #3 is that personal interaction is essential. While this remains largely the case, Hollander said, the research indicates that customers are becoming more self-directed, with some 11% of all consumers feeling they are sufficiently aware of their options and comfortable meeting their own needs as to buy without the help of any kind of sales professional.
While this 11% bears watching, especially as more consumers rely more heavily on doing their own research and buying through agentless media such as company websites and smartphone apps, some 82% of consumers still rate personal interaction as important when buying insurance or annuities.
A slim majority of consumers (52%) said they felt they needed expert assistance to make important financial decisions, while others (41%) felt that they did not know what products were best for their needs.
However, the negative image of sales remains; when asked their top reason for not wanting any personal interaction, 55% of customers said they wanted "to avoid pushy salespeople."
Myth #4 is that it is hard to cross-sell to existing customers. E&Y noted that cross-selling is generally low, and that in the United States, only 11% of consumers actually buy multiple products from the same carrier. Yet, when asked if they wanted to buy multiple products from the same carrier, more than 50% of consumers said yes. "This is a huge opportunity," Hollander said.
Myth #5 is that providers can't influence persistency. E&Y said that while the industry lives by a notion that it is difficult to influence loyalty among customers, the survey paints a different picture. In the Americas, only 24% of consumers felt that insurers made any significant effort to retain their business. This drops to a measly 12% in the United States, where consumers pointed out that often times, insurers made no effort to retain them when switching carriers, but if they had been contacted, they would not have switched.
On average, E&Y said, 35% would have reconsidered the decision to switch if their provider had offered them better terms on their existing product.
A market where there is a stark contrast is Brazil, where 64% consumers feel that insurers make a strong effort to retain their business.
For E&Y's results on the property & casualty sector, be sure to read PropertyCasualty360's story on it. You can find a copy here.