Beyond Premiums: What Really Drives Customer Loyalty? | Insurance blog

Personal lines insurance is very price sensitive. As previously discussed, maintaining a 20+% expense ratio. it is not feasible for insurers. Beyond pricing, what really drives customer loyalty and how can insurers compete to increase market share?

In this blog, I explore strategies to improve customer loyalty and retention, provide predictions on the evolving risk landscape for auto and home insurance, and discuss Accenture’s predictions for how personal insurance buying behaviors may change change in the next decade.

The changing landscape of personal lines risks

Personal lines insurance has evolved from a specialty product to a digital commodity. Originally traded manually, it has now become a globally traded digital product. With approximately 4 billion vehicles and homes worldwide, personal lines insurance is both a global commodity and an ever-evolving risk.

The risk landscape varies significantly between auto and home insurance. Car insurance covers a homogeneous risk profile with around 600 common vehicle models globally. The rise of electric and autonomous vehicles is changing road regulations and vehicle repair processes and introducing new risks that require product liability and cyber coverage.

In contrast, home insurance covers a heterogeneous risk profile with a myriad of home types and construction standards. Home base risk is significantly affected by extreme weather that affects both the frequency and severity of damage. It’s fair to predict that extreme weather will not only affect ratings, but also building codes, which would provide additional pricing variables.

While home and auto insurance are key areas for personal lines insurance, consumers are also facing the impact of large-scale disruptions – a volatile economic environment, the residual impacts of the COVID-19 pandemic and the ongoing technology revolution developments have significantly changed the global dynamics. . Today, consumers’ perceived need for insurance is high, and the risk areas that concern them most are changing. We found that the rising cost of living and climate change were the top two areas where consumers felt concerned about risk, but also the least protected.

Generational changes in purchasing insurance

The core consumers of insurance are changing. Millennials, the first generation of digital natives, are entering their prime insurance buying years. Insurers must meet the unique needs of this demographic. Across all demographics, there is a demand for more, better and faster services. Consumers want their unique needs met quickly and easily, and are willing to share their data in exchange for a better experience and tangible product.

Strategic areas for increasing the value proposition

1. Brand identity in customer interactions: Ensure brand identity is palpable in every customer interaction, creating a consistent and recognizable brand experience across all touchpoints.
2. Employees with AI: Instead of focusing on implementing AI solutions, focus on augmenting employees with AI to deliver more personalized and empathetic interactions, ensuring customers feel deeply understood. This is a good but critical nuance.
3. Compelling digital experiences: Create digital experiences that foster emotional connections. For example, in travel insurance, providing dynamic updates on extreme weather, top tourist attractions and local health advisories can significantly improve customer engagement. Traditional de-risking notices do not foster emotional connections with the customer.
4. Real benefits for digital adoption: Ensure that customers recognize the tangible benefits of adopting digital channels, such as significantly faster resolution times and personalized digital interactions, that make the digital shift worthwhile.

Creating compelling digital experiences for customers is key to building customer loyalty. We recently worked with an insurer to address low agent-customer engagement, insufficient customer information and a lack of visibility into lead management. The insurer and Accenture implemented an AI-enabled application for their clients; the app was incredibly intuitive and built using a scalable design for market adoption in Asia. The solution offered automated customer relationship management, marketing content recommendations, best action recommendations, customer insights, 360-degree customer insights and agent performance management.

The results? 424% premium growth and 671% pipeline generated, proving that compelling digital experiences are worth their weight in gold.

Changes in consumer buying channels

Traditional methods of purchasing insurance through brokers and agents are expected to decline in favor of direct sales and embedded insurance models. Munich RE said embedded insurance will grow at a CAGR of 25% through 2030, potentially accounting for more than $500 billion in gross written premiums globally by 2030 for P&C lines.

Consumers are increasingly interested in integrated insurance offers, where risk protection is integrated into their purchase. For example, the share of consumers likely to buy auto insurance from a car dealer increased from 32% to 42% in 2018. Consumers also want solutions beyond the traditional auto and home insurance bundle, such as full services home buying and home monitoring services.

Areas of interest for insurers

1. Performance and efficiency: Develop the best features and products.
2. Experience and convenience: Delight customers with exceptional service.
3. The solution, not the sale: Play a relevant role in customers’ lives while creating value for all.

As the insurance landscape evolves, we must continue to harness the power of AI to turn challenges into opportunities. By empowering companies with AI-based solutions, we don’t just create tools, we turn possibilities into measurable success. On this journey of innovation, we are redefining what is possible, ensuring that the future of insurance is not just anticipated, but actively shaped.