Traditional insurers risk losing customers in the digital age, says PwC research
Published at 00:01 AM on 07 July 2014
Traditional insurers face a growing threat of losing out to new entrants in the battle for customers as people are increasingly using the internet to hunt out cheaper policies and a more tailored service, according to PwC’s new report – Insurance 2020: The digital prize – Taking customer connection to a new level.
PwC’s research with nearly 10,000 people in 16 countries (1,500 UK adults) reveals that half already buy their insurance policies online and many would be open to buying their policy from a new entrant such as, an internet search provider (18%), major retail brand (18%) or online retailer (15%).
This shift is being driven by UK consumers’ focus on price and their experience with online retailers where they are used to receiving a more simple and tailored service. The findings reveal that 86% of UK adults do some form of online research before buying an insurance policy and 50% policies are bought online. This compares to only a quarter (26%) globally. British customers are also the most price conscious of all their global counterparts, with 74% saying it is the most important factor they consider when choosing their insurer. Only 20% said brand is important.
Michael Spiteri, digital insurance partner at PwC, said:
“When it comes to buying general insurance products the customer has all the power. They have the ability to access and compare information based on their own criteria and many are using this to track down better deals. Traditional insurers are struggling to build a compelling and engaging customer experience that creates loyalty in what is a highly price conscious and high-switching UK market. Our research shows that the average UK adult switches their insurer every four years, which is much lower than the global average.
“Insurers cannot ignore new entrants such as search engines or online retailers. If traditional insurers fail to provide customers with what they want they will buy from the brands they trust and which deliver the experience they demand.”
PwC’s research shows that customers are beginning to expect more from their insurer and would be prepared to provide additional personal and lifestyle information to get the best deal and service. Nearly two thirds (62%) would be prepared to have a sensor in their home or car, for example a device which records driving behaviour and adjusts insurance premiums accordingly. 37% would be willing to give additional data to help them reduce their premium.
Michael Spiteri, digital insurance partner, said:
“If insurers want to hold on to their existing customers and attract new ones they need to keep pace with customer expectations. Our research shows customers are willing to hand over their data in exchange for a better service. This is a real opportunity for insurers to use digital to access a broader set of behavioural data from customers and use this to deliver a personalised service, and one that should not be wasted. Insurers can not only price risk more precisely, but offer more informed advice on how it can be reduced and mitigated.
“While the move to digital is compelling, customers still like the opportunity to interact with an individual. Web chat, co-browsing and video chat provide ways to enhance the digital experience and help to customers in their hours of need. Customers expect and demand a consistent experience, regardless.
Notes to Editors
To download a copy of Insurance 2020: The digital prize – Taking customer connection to a new level, please visit https://www.pwc.com/insurance/digital-non-life
Katherine Howbrook, PwC media relations, Tel: 020 7212 2711, Email: [email protected]
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