Competition from non-insurance firms on the rise

Two-thirds of insurance customers would consider purchasing insurance products from companies other than insurers, according to a survey by management consultancy Accenture.

The global survey of more than 6,000 insurance customers in 11 countries found that 43% of respondents would consider buying insurance from banks, 23% from online service providers such as Google and Amazon, 20% from home service providers such as telecommunication or home security companies, 14% from retailers and 12% from car dealers.

Accenture Insurance global managing director Michael Lyman said: “Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks but also from internet giants.

“Overall, there is a significant switching risk and we estimate that up to $400bn in insurance premiums could change hands within the insurance industry over the next 12 months. The switching risk is important in western markets but even more so in emerging countries such as China and Brazil, where insurance customers are even more likely to change providers.”

Forty percent of those surveyed said they would be likely to switch auto or home auto insurers over the next year and 35% said they would be likely to take out a new contract with a new provider in the next 12 months.

The top two reasons consumers would switch, Accenture said, are lower prices, cited by 87%, and more personalised service, cited by 80%.

“Personalisation clearly emerges as a key driver in retaining existing customers and attracting new ones,” Lyman said. “Innovation in pricing strategy and the ability to make their customers feel that they are unique are thus critical to capturing share within the switching economy,” which offers opportunities for insurers to gain market share.

App assistance

Most insurance customers, 67%, said they are interested in using mobile services to report a claim or displaying proof of insurance. Some 46% of mobile device owners have used tablets, and 37% have used smartphones, to communicate with their insurers.

“While internet access using personal computers or laptops was the first step in enabling customers to use digital channels, the real game-changer has been the growth in mobile,” Lyman said.

“The mobile channel offers insurers the opportunity to take customer experience to the next level, enabling them to become partners of their customers’ everyday life by tailoring offers and interactions to the physical context, as location-based services can be highly relevant in insurance. For example, travel insurance-suggested offers can be sent to customers’ mobile phones when landing in an airport abroad, or a claim can be submitted from an accident scene with supporting photos. Also, as consumers become more open to providing access to their personal data, adoption of usage-based insurance enabled by telematics technology will accelerate.”

Other highlights from the report:

• 71% said they are ready to purchase travel and assistance policies, extended warranty, home insurance or life insurance products online.
• 54% are interested in gaming solutions to help them better manage risk coverage and lower premium rates.
• 48% said they would consider comments on social media in making their insurance-buying decisions.