88% of Insurance Consumers Demand More Personalization From Providers
Today’s consumers are used to receiving personalized offers and customized solutions to meet their needs. No matter the industry, a consumer expects to be known and communicated with accordingly. The insurance industry is certainly no exception. Eighty percent of insurance consumers are looking for personalized offers, messages, pricing and recommendations from their auto, home or life insurance providers (Accenture). Insurance providers must step up their game and adapt their strategies to keep up in this hyper-competitive marketplace.
Bundled Solutions Are Becoming More Innovative
The concept of bundling is not a new notion for insurers. A J.D. Power & Associates study found that customers were substantially more content when they purchased home and auto coverage from the same provider. According to the study, 46% of bundle customers say they “definitely will” renew with their provider vs. 28% of non-bundle policyholders.
While bundling has previously encouraged consumers to seek out packages based more on price, insurers now have an opportunity to realign their strategies to provide bundled packages to meet consumer demands for more personalization. Consumers are seeking more innovative packages and policies to meet their unique needs and circumstances. For example, 42% of consumers say they would buy a financial package or bundle that was customized for a specific time in life (Mintel).
Mintel’s research also suggests that the concept of cross-category bundling is appealing to many consumers and gaining in momentum, such as health companies offering ID protection or life companies offering a wellness product. A great example is Direct Assurance, who is offering “You Drive” which collects information from subscribers’ cars. Based on data collected, customers are provided with personalized driving advice through social media channels, as well as monthly scores that impact the cost of individual premiums. Vitality, a global wellness company and loyalty-based program, is working with various insurers to encourage policy holders to live healthy lifestyles and reward members based on data collected from wearables and other technology. The company also rewards healthy behaviors with discounts for travel, leisure and nutritious food purchases.
How Well Do You Personally Know Your Customers?
Delivering the level of personalization that consumers require must be based on a foundation of solid data insights. In addition to comprehensive demographic data, insurers must also utilize behavioral insights in order to develop a more comprehensive customer view.
According to Accenture’s study, “Many customers (77%) are willing to provide usage and behavior data in exchange for lower premiums, quicker claims settlement or insurance coverage recommendations. Historically, though, the insurance industry has not delivered these personalized services. One fifth (21%) of insurance customers say their providers do not tailor customer experiences at all.”
Furthermore, less than two thirds (61%) of insurers plan to offer non-insurance products and services and only 22% have launched personalized, real-time digital or mobile services to date such as:
- Offers based on customer needs and products that they already own.
- Messages that customers find relevant and that build on their relationship and previous interactions with the insurer.
- Pricing that dynamically considers customers’ behaviors, usage and loss-prevention measures taken.
- Recommendations and incentives to prevent losses or reduce loss severity.
Consumers Will Pay More for Personalized Services
Consumers are demanding more personalization from their insurance providers – and they’re willing to pay for it. A recent study by Mindtree surveyed banking/insurance companies across the U.S., Europe and Asia/Pacific, with at least 2000 employees. According to the results:
- 77% of banking and insurance consumers say that customized promotions encourage them to buy products and services they have never purchased before
- 68% of companies say that more targeted promotions are the key driver of improved online sales over the past 12 months
However, only 38% of decision-makers in banking and insurance say their organizations are investing significantly in personalization to improve their customers’ online buying experience.
With the right blend of personalization to enhance the customer experience, insurers can increase the rate of acquisition and reduce churn. 70% of buying experiences are based on how the customer feels they are treated after they become a customer, and 89% have stopped doing business with a company after a poor customer experience (McKinsey). Additional research by Ernst and Young indicates that a personalized customer experience can increase policyholder conversion by up to 20%.
In order to deliver highly personalized and positive experiences, insurance companies need to invest in the data, technology and analytics to understand and share customer preferences, interactions and other customer data across channels. They will also need to be able to understand customer behaviors to personalize interactions at any point in time and in any channel.
This must begin at the very beginning of a consumer’s path to purchase, such as offering discounts on policies relevant to search data and customizing online search results. And once a prospect becomes a customer, personalization is crucial for retention. For example, insurers should integrate technology platforms and data siloes to maintain a clear view of who the policy holder is and their preferences- whether the customer is interacting through billing, claims departments, customer service, or other departments.
By being more proactive in understanding consumers and their individual needs, insurers can ensure that they send targeted offers and services at the right time and across the right channels. Consumers are demanding this and will reward those insurers who can deliver.
Download our Insurance Marketing Strategy Guide for more tips and best practices on how to develop data-drives processes to retain and acquire profitable new policyholders.