A recent Deloitte survey aimed at discovering what customers want, and how COVID-19 has shifted their needs, highlighted that customers favour simplicity. This was the primary finding of a survey of 8 000 customers from eight countries around the globe. “Insurers need to simplify how customers perceive and interact with basic products and demonstrate their value clearly,” according to the report.
Deloitte surveyed customers from Australia, Canada, China, Germany, Italy, Japan, the United Kingdom and United States. Although South Africa was not included in the study, many of the results are in line with the industry’s Treating Customer Fairly (TCF) outcomes that should already be entrenched within an FSP.
Five main findings emerge from the survey:
|1.||Customers favour simplicity; they want products that are easy to understand, purchase and use, they also want to be confident that they are paying a fair price, and trust that claims will be paid fairly; with this insight, insurers can use a human-centred approach to redesign products and exceed customers’ expectations.|
|2.||Interest in insurance embedded into other services and in new product designs is strong in some customer segments, but varies considerably by country.|
|3.||Internet-connected offerings, such as motor telematics and home insurance linked to home sensors, cause apprehension among many customers; they do not feel comfortable sharing data from car and home sensors with insurers.|
|4.||The COVID-19 pandemic is increasing demand for adjustable cover and pushing people towards transacting via online channels; this behaviour is unlikely to revert to pre-crisis norms for many people.|
|5.||The survey suggests three opportunities to fuel growth: simplify how customers perceive and interact with products; tap into strong demand for parametric home insurance; and target carefully delineated segments with new services.|
What is behind the results?
The survey shows that many respondents like simple products because they are quick and easy to understand, purchase and use. At the same time, simple products engender confidence concerning what is covered, an issue that has risen in prominence due to COVID-19. Many of those surveyed queried how their policies would respond to changes brought about by lockdown. One customer summed up this sentiment by saying that he preferred the basic product because, “It’s a set and forget.” Others said that they liked basic cover the most because it is “easy to understand” and “easy to deal with.”
Adjustability and comparability have also risen in importance in the minds of the customer because of the disruption of COVID-19. As a result, many customers want the ability to adjust their cover based on what they need and can afford.
Many younger customers, particularly in China and the UK, compare insurers to find and switch to the cheapest policy each year. Across the eight countries surveyed, a quarter of motor insurance customers and a fifth of home insurance customers report having switched in the past 12 months.
Data privacy is a huge concern for most customers and therefore they do not like to share personal data with insurers without a compelling reason. The survey results indicate that only 54 per cent would voluntarily share their credit history with an insurer in return for a lower premium and coverage more tailored to their needs. Many seek to avoid sharing data that might trigger a rise in their premiums; others do not like the feeling of privacy invasion. “I think it is easier to keep these essential services [such as motor insurance] somewhat equal to all groups in society by not requiring [extra] information,” one respondent said.
Based on the data and responses gathered, it is clear that products designed, marketed and delivered which are based on customer preferences for simplicity, data privacy and adjustability will succeed – facts that are 100% aligned with TCF Outcome 2: Products and services in the retail market which are sold and marketed are designed according to the needs of the customers identified and targeted accordingly.
It is very clear that this is not a case of business as usual – those who are prepared to adapt to changing client needs will be handsomely rewarded. In the wake of the negative publicity the industry experienced as a result of its failure to pay business interruption claims, this could be a lifeline to connect positively with clients.
Click here to download the Deloitte research that also identifies the specific segments for new products and services, and highlights the strong demand for parametric type home insurance products.