Ernst & Young released today its Global Consumer Insurance Survey 2012, entitled, “Voice of the Customer: Time for Insurers to Rethink Their Relationships.” In it, E&Y addresses what it considers to be the top five myths perpetuated around the life insurance and annuities markets, and more specifically, the problems and opportunities carriers can expect there.
Ernst & Young surveyed more than 24,000 consumers of insurance products in 23 countries across seven global regions, making this body of research one of the largest surveys of consumer attitudes about the insurance industry ever conducted.
The broad conclusions from the survey are that insurance customers, particularly in the U.S., desire more personalized service, and for insurers to more richly reward customer loyalty. But more importantly, the survey addresses five key concerns long held by the life and annuity industry that are not necessarily true. Or, they are not as true as they once were.
Myth #1 is that customers have low confidence in the life and annuity industry. E&Y found that 35% of all consumers have either a very favorable or strongly favorable view of the insurance industry. And while that equates to 65% of consumers not having a favorable view, the numbers are not quite so grim. 37% of consumers have a neutral view of the industry, and only 23% have an unfavorable view.
In addition, consumers in the Americas have an average customer satisfaction rating of 7.7 out of 10.0. This compares favorable to Mexico (7.6), Brazil (7.5) and Canada (7.3). Customer satisfaction for the Amercias averages 7.5, compared to Europe (7.0) and Asia-Pacific (6.8).
Finally, 85% of customers in the Americas felt they were confident that they had the right life/annuity product to meet their needs.
“We asked people who they bought their products from now and who they were likely to buy from going forward, and the insurance carriers and agents and brokers had significant upticks,” said David Hollander, E&Y’s Global Insurance Advisory Leader. “When people looked ahead, they looked more to buying from traditional channels, less so from other financial service providers.”
The takeaway, Hollander said, is that the industry emerged from the financial crisis in a stronger position than other financial service sectors. Most companies remained in business, and remained viable, even though they may have pulled back some product offerings, particularly in the annuities sector.
Myth #2 is that life insurance is sold, not bought. While this maxim has long been held by life insurance agents, E&Y’s findings suggest that customers are becoming less passive and more likely to research products themselves, and identify their own needs more. Nearly one third of customers already reasearch their life insurance needs and solutions, E&Y found, and some two thirds of customers expect to do more such independent research in the future.
Where customers look to get their information remains varied, from friends and family or word of mouth (42%), online comparisons (40%), direct contact with a bank or an insurance company (36%) or by a bank or insurance company website (32%). Advice from an intermediary or agent remained the most popular choice, however (42%) – but equal to getting information by friends and family.
With this in mind, E&Y noted, insurers need to prioritize social media strategies. This is especially true in developing markets such as Brazil, where the individual life and annuity market is both growing rapidly, and where customers also relying heavily on recommendations from friends and family.