Life insurance customers know what they want from their insurers—and they’re not always getting it.
Our survey research of over 7,000 global insurance customers conducted earlier this year indicates a “satisfaction gap” between what life insurance customers want from their insurers and what they think they are getting. What is more, life insurers fare less well than property and casualty personal lines insurers in terms of delivering on key attributes that customers are seeking.
Overall, life insurance customers are generally satisfied with their providers, but there are some differences in attitudes between life and P&C customers. For example, 42% of auto insurance customers said they were “very satisfied” with their insurance provider, compared to only 32% of life insurance customers; and 13% of life insurance customers described themselves as “not very satisfied” or “not at all satisfied,” compared with 9% of auto insurance customers.
Life insurance, with its long-term implications, is a “sticky” product, but 25% of life insurance customers surveyed said they were “somewhat likely” or “very likely” to stop doing business with one of their insurance providers in the next 12 months, with customers under 35 most likely to switch. A full 33% of customers in the under-35 age bracket said they were either very likely or somewhat likely to stop doing business with one of their insurance providers in the next 12 months.
Life insurance customers also have a poor understanding of their insurance policies. Almost two-thirds (65%) of customers said they either do not understand what payout they will get at the end of their contract term, or have only some understanding and need further information and clarity. Over three-quarters (76%) of respondents said they either did not understand or needed more information and clarity on the annual commission their insurance agent earns from their policy contract. And a similar number (77%) lacked a full understanding of how much they will pay in taxes when they surrender or close their policy.
Both life and P&C customers said they would be willing to switch to a new insurance provider that offered products and services that were easier and understand and compare. A large majority (70%) said they would be likely or certain to switch, while even more (76%) would be willing to switch to a new insurance provider that offered products and services that were more individualized and more relevant to their specific needs—again, with younger customers much more willing to switch to obtain easier-to-understand and more personalized products.
The research findings present significant opportunities for life insurers with the analytical skills, product development capabilities and distribution technology to customize and deliver such products. For example, many customers are interested in the possibility of mobile-enabled insurance services, especially if such services hold the potential for lowering insurance premiums.