Accenture Financial Services’ Global Distribution & Marketing Consumer Survey gathered the views of nearly 33,000 insurance customers across 18 markets. The research provides invaluable insights about how customers want to interact with their insurers across the consumer journey.
We speak to Erik Sandquist, managing director in Accenture's Distribution and Marketing practice, about the shifts in consumer behavior and expectations highlighted in this report, and what they will mean for insurers as they rethink their distribution models in both the near and long term.
This survey is particularly interesting because it tells us, in the customer’s voice, what consumers want from their insurance providers. What is the single most important insight to be gleaned from the research?
The study shows that insurance customers remain price sensitive across the home, auto and life segments, yet they are increasingly open to more personalized services from their providers if these add value to their lives. In an age when demand for insurance remains subdued, insurers have an opportunity to use digital connectivity, the Internet of Things and cognitive computing to create services and products that stretch well beyond the traditional insurance value proposition, which centers around risk indemnification.
Given that insurance has become more commoditized, how can insurers defend their margins, differentiate themselves from competitors and improve their relevance?
While competitive pricing remains the primary driver for loyalty, consumers are telling us that they have a strong appetite for value-added services that make use of real-time data. Our research shows that many customers would appreciate advice that enables them to live safer and healthier lives every day—for example, while driving, at home, when managing their health or running a small business.
Many of these opportunities harness the Internet of Things for granular tracking of customers’ daily behavior to help them reduce risks and price for risk more accurately. But succeeding with this sort of offering demands that insurers collaborate with and obtain data from device owners and data partners.
The 2013 research showed that many insurance customers were willing to buy insurance from non-traditional providers. Is this trend gaining momentum?
Indeed, more insurance customers are willing to consider alternative distribution channels, whether that means buying policies from a bank, a supermarket or a digital platform company like Amazon or Facebook. Insurers must give serious thought to how they can achieve sustainable differentiation and retain their customers’ trust and loyalty.
They could partner with some of these companies as new distribution channels, or they could look at reinforcing their traditional agent or direct channels with digital capability, automation, and intelligent solutions to improve their customer experience. One thing is clear: They need to look at how they can leverage big data and real-time analytics to offer a more personalized—yet more simplified—purchasing, policy service and claims experience.
Some leading insurers are taking an ecosystem-focused approach to capitalize on consumers’ enthusiasm for high-value, real-time or high-frequency interactions that reduce their risk and help them lead healthier and safer lives.
Because they today interact with customers infrequently and lack the competencies required to deliver on these new value propositions, many insurers are likely to partner with other companies to deliver these services to consumers. The early movers have the opportunity to secure favorable relationships with partners and to play a leading role in defining the shape of the future ecosystem.
You mentioned the potential role of cognitive computing in new insurance products and experiences. But how open are consumers to getting advice from a computer?
The research indicates that 74 percent are very or somewhat willing to receive computer-generated advice about the type of insurance coverage to purchase. Many insurers will find this to be an appealing opportunity because of the high cost of brokers and human advisors.
This kind of advice is not just a play for the middle market; our research shows that consumers with the highest income levels are most willing to receive computer-generated advice, both with respect to insurance coverage and to retirement planning recommendations. Insurers can use data—digital, social, behavioral, or information provided by the customer—to target and acquire customers digitally and provide them with an outstanding customer experience.
The trends point the way toward insurers becoming "everyday insurers"—offering an experience that is highly personalized and relevant within the context of customers’ daily lives. But many fear putting their traditional revenues at risk. How should they manage their evolution to new business models?
We advocate a two-speed approach to innovation. While investing in and testing new models, insurers should continue to optimize the cost and efficiency of their current distribution network since it will remain both a core strength and a significant contributor to their cost base.
There is no doubt that customers are turning increasingly to digital and mobile channels to research their insurance options and request quotes. But it is just as clear that they continue to value human advice, and many prefer to buy their insurance from an agent or broker. An omni-channel distribution model that combines online and mobile channels with agents and contact centers therefore continues to have high potential.
It will enable them to strengthen the digital reach and quality of advice of their physical network, while promoting more convenient, lower-cost channel options for low-value interactions. We call this hybrid the "phygital" model. When it works effectively, customers transfer smoothly between channels, and physical channels are able to drive higher value, long-term advice-led relationships with their customers.