Global top performers in the high-churn personal insurance industry win over customers with consistent outreach that relies on multiple channels for customers to connect including phone, internet or face-to-face.  However, insurers that overemphasize digital channels at the expense of traditional methods stand to alienate customers, even as demand for digital access dramatically rises, warns an industry consultant in a new report.

Bain & Co. canvassed opinions of 158,000 policyholders in 18 countries in Europe, the Americas and Asia for its report, “Global Insurance Customer Loyalty, 2014.”  The researchers mapped customer sentiment based on Net Promoter Score (NPS), a ratio that measures customer loyalty by comparing a company’s promoters to its detractors.

The survey found that greater customer contact improves a carrier’s score without exception, and insurers that lead in providing hybrid, multichannel methods for customers to interact experienced an additional boost.

The survey found that the share of digitally active customers is as high as 75 percent in some countries and is expected to increase sharply over the next three to five years – a finding that underscores the need for a flexible, hybrid “Digical” service offering, according to Bain.  In greatest demand among digital services are claims service or claims status check, product purchasing and a personal self-service portal, all available online or via an app.

Among other select findings:

  • By country, the percentage of digitally active customers is lowest in Belgium and Japan, at 25-30 percent, and highest in the U.K., at 65-75 percent.  In three to five years, digitally-active customers in the U.K. will be over 90 percent, and will exceed 60 percent even among today’s country laggards.
  • In the United States, for example, USAA, the runaway leader in NPS scores among both property/casualty and life insurers, also had the greatest share of digitally active life insurance customers and was in the top three for digital customers among P/C insurers.
  • Digital-only interactions consistently deliver lower NPS than multichannel interactions. In Germany, for example, NPS for digital-only activity was 5, but 19 for digital combined with in-person or phone contact. In Australia, NPS scores in those categories were 3 and 19, respectively.

“Digital channels do not replace physical channels, because managing complex insurance products or transactions still benefits from speaking to someone over the phone or in person,” said Gunther Schwarz, Bain partner based in Dusseldorf and lead author of the report.   Schwarz is the head of Bain’s Insurance Practice in the EMEA region.

“But the rapid and pronounced shift to a ‘digical,’ multichannel customer offering is a disruption that insurers must act quickly to address.  They need to focus on building out digital channels for transactions and communications, restructuring physical communications networks to focus on higher-value services, and redesigning overall processes to integrate all these channels seamlessly.”

Besides emphasizing the multichannel offering, Bain’s research additionally recommends to insurers the following steps to retain and win over customers:

  • Decide where to compete – and where not to: Firms with the greatest customer success know to focus on and have a clear understanding of their target customers based on demographics, behaviors or interests.
  • Selectively invest in critical touchpoints: Carriers must exceed customers’ expectations at certain “moments of truth,” such as filing a claim.  Bain’s survey showed that the filing experience has higher potential to “wow” customers than the actual subsequent payment.
  • In P/C, acquire through price, retain through innovation: P/C insurers can woo customers on convenience and peace of mind, or seek to compete on price, retaining more fickle price-conscious customers with standout service or innovative offerings, such as policies based on actual driver behavior as determined from vehicle telematics.

Source: Bain & Co.