Whilst half (49%) of policyholders across Europe have been with the same motor insurer for the last three years or more, shifts in behaviour could see this fall by about one-third to 32% in the next five years. In the UK, 14 million private car policies – roughly half of the UK market – could change provider each year during this time. From now until 2020, Deloitte’s analysis suggests between 60 to 67 million* European policies could be swapped each year.
Deloitte’s findings suggest the European motor insurance market is heading towards a less stable environment where customer behaviours will be more volatile and regulation is shifting how products are priced and sold.
Alex Poracchia, insurance partner at Deloitte, said:
“Motor insurance is at a tipping point, despite being the biggest selling general insurance product in Europe. Demand for new cars is back, with 2014 the first year since the financial crisis to see an increase in private car sales across Europe. Sales grew by 5.4%, compared with an average annual fall of 3.8% in the previous years since 2007**. Even though we’re in a better economic state, there is still pressure on households’ disposable income. This means that customers are looking for new and better products, particularly through price comparison websites, that offer greater value for money.”
Deloitte’s research shows cultural differences affect how motorists buy their insurance. In the UK and Ireland, for example, more than half of drivers research insurance policies online, and price remains the most quoted reason for switching. By comparison, drivers in Italy, Poland and Spain are most influenced by the recommendations of friends and family.
Poracchia commented: “Price is still a critical factor. However, since most insurers are able to offer competitive policies, the real challenge is to understand what matters next to customers after price. Understanding cultural differences is going to be key for insurers, as we see interesting trends between countries. For example, despite being digitally savvy, one-third of customers in the UK and Ireland buy their policy on the phone directly from their insurers. In comparison, more than half of customers in the other six countries purchase their policies face-to-face, and the remainder are split between online buying and phone calls to insurers and intermediaries. Based on this, it’s easy to see how an insurer’s interaction can influence a customer to stay or not. The quality of service and experience, as well as tailoring, is going to be more important for customers in future.
“The winners will be the insurers that demonstrate agility in customer experience, and provide them with personalised solutions rather than products. There is no ‘one size fits all’ and insurers should tailor their approach to maximise the impact on loyal customers they are looking to attract and retain. This approach will be especially important as insurers respond to the increased regulatory focus on customer protection, rights to transparency, freedom of choice at the point of sale, and compensation to claimants. These will all put pressure on insurance premiums, which will make it even more important for insurers to have a customer-centric approach to their business strategy in order to move away from a pure price play.”
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