The intense criticism that insurers receive is unfair when you consider the economics of selling personal insurance in the UK. New customers-only pricing is the sole way for insurers to secure customers via comparison websites who drive demand for lowest possible price. This means insurers lose money in the first year of the deal and try to recover the loss in later years, so loyal customers pay more.
How can the industry break out of this cycle of customer churn, provide value and engender loyalty across their customer bases?
Pegasystems commissioned YouGov to survey British insurance customers about their attitudes to insurance renewal and what solutions make them renew. The key findings were:
• When it comes to the renewal of an insurance policy, most consumers (62 percent) will invest the time to search for the best price from a range of providers
• However, despite this desire to “know what good looks like” consumers don’t like searching for a new policy. When asked to describe what best describes the process of hunting for a new policy at renewal, 30% of all GB adults with insurance surveyed said “frustrating” and 16 percent said it was “time-wasting”. Only nine percent described the process as “satisfying”
However, to avoid searching for new policies, there was a positive response for creative solutions by insurers:
• 73 percent of consumers said being given a quote comparison with equivalent insurers in the market to assure them the quote is reasonable would encourage them to renew with their current insurance provider.
• Sixty-nine percent said being offered a reasonable, fixed, three-year deal on insurance premiums with no increase in cost would make them likely to stay
• Making the renewal process simpler and personalised also ranked highly with over half of consumers (60 percent) saying this would be likely to make them renew with their existing insurer
Commenting on the findings from the YouGov study, Tony Tarquini, European Insurance Director, Pegasystems said: “The clear message from consumers is they find the quest for new deals at renewal frustrating and a waste of time. They want their time back, the work of crafting a better deal done for them, and to be confident that they are getting a reasonable deal. For insurers fighting to retain customers it is significant how consumers are willing to make a commitment back to the insurer who will give them that comfort through innovative offers and better, personalised service at renewal.”
“Re-imagining renewals to benefit everyone requires new digital and agile operating models, based on technology which can personalise the balance between making money and giving real long term value to the customer. At the heart of this technology must be AI and real time decisioning, pre-emptively helping customers to make good, informed decisions about where to place their business.”
“By doing this, insurers can break the vicious cycle forced on them of “new customers only” pricing, reward loyalty and kill off the loyalty tax stigma.”
YouGov surveyed over 1600 GB adults with insurance, 23-24th January 2018
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