Digital-first consumers are driving change, but younger consumers are less willing to share personal data with insurance providers.
There appears to be an overwhelming preference towards purchasing home and motor insurance via digital channels, a new survey by Deloitte Ireland reveals.
When asked what their preferred channel to purchase home insurance was, 60% of respondents showed a preference for online, via mobile (23%) or computer (37%).
“While digital is now table stakes, it can’t be at the expense of customer relationships”
These results were echoed when respondents were prompted to give their preference for purchasing motor insurance, with 57% stating online channels as their top preference, via mobile (22%) or computer (35%). In addition to online channels, phone remains a popular choice with 31% of respondents citing it as their first choice when purchasing home insurance, and 29% for motor insurance.
Personal data concerns
Irish customers have a somewhat conservative view in relation to the level to which they are willing to share more sensitive personal data with insurers to enable value adding or other data-based services, even if there is a potential cost reduction involved.
In terms of data types, respondents were most reluctant to share data associated with their social media history (20%) and previous spending patterns (24%). The survey of 516 participants carried out found that this resistance was less obvious for information such as insurance history (61%), car (56%) and home usage (46%).
“Clearly, insurance companies must continue to offer the channels most favoured by their customers, and ensure the services are tailored and personalised,” said Ciara Regan, Partner and Insurance, Deloitte Ireland.
“While digital is now table stakes, it can’t be at the expense of customer relationships. Almost a third of consumers across all age groups prefer to buy home insurance over the phone. Possible reasons for this could include an appreciation for personalised customer service and experience, as well as the belief that negotiating over the phone can yield a better price.
“While the research does demonstrate a clear preference for digital interactions, some methods of communications such as ‘online account notifications’ are of little interest – with only 5% favouring them. This shows how cognisant insurance companies need to be about how they engage through digital channels. The survey shows that younger people (18-24) are more averse to sharing personal data with motor insurers than their older counterparts,” continued Regan.
“This could be because younger consumers are more aware of the dangers of data and identity theft. Whatever the case may be, the survey results suggest that insurers face a steep hill to climb if they are targeting data-dependent features at the younger market.”
Simplicity, flexibility, and transparency
Customers want products that are simple, easy to purchase and use, respondents favouring the “basic” product as it is “convenient, cost effective and easy to engage with”.
Customers also demonstrated a preference towards having the ability to adjust their insurance as their financial and life circumstances change, respondents stating that “paying according to your needs and affordability”, is a key driver in their preference towards the “self-controlled & adjustable” product.
This is unsurprising, given that 50% of respondents stated they have been working from home since the outbreak of the Covid 19 pandemic, as well as 60% of respondents stating that they have driven their vehicle less in the last two years.
“It is therefore important that insurers strike the right balance when designing and delivering new products and propositions to their customers,” said Regan.
“They need to meet customer expectations in terms of offering them new and interesting features that differentiate them in the market but these need to be underpinned by clear and tailored messaging as well as seamless experiences that customers find easy to engage with.”
Value and ease of purchase ranks higher than brand
The way consumers are purchasing their insurance is changing, and as a result reduced levels of brand recognition were evidenced across both home and motor products. Insurers need to have a clear strategy with the right capabilities to deliver differentiated experiences.
A previous Central Bank of Ireland survey showed that 79% of respondents cited price as their top purchasing decision factor, followed by cover/ benefits (53%) and ease of purchase (33%); brand and reputation of the insurance provider rated among the lowest in terms of primary consideration for consumers.
From a home perspective, when asked to identify their insurance provider, 60% of home insurance policy holders stated the name of their insurance company, with 22% stating the name of a retail intermediary such as their bank. 18% of respondents did not recall the name of their home insurance provider when prompted.
These results are echoed from a motor insurance perspective, although better recognition was observed for some of the leading brands, with 73% of respondents naming their insurance provider, 21% referencing a retail intermediary and the remaining 6% not naming any provider.
Open to new purchasing channels
When asked the level of desirability towards different purchasing options, respondents showed they were open to new purchasing channels through point-of-sale models such as car manufacturers, motor dealers as well as through mortgage lenders.
Almost four in ten (39%) of those surveyed would consider buying home insurance through their mortgage lender while almost two thirds agreed it was either – extremely (11%), very (25%) or somewhat (31%) – desirable to be able to purchase motor insurance through their car dealer.
“Insurers must have a clear strategy of who they want to target, leveraging the right data insights to deliver relevant value propositions to their chosen segments as and when they need them,” Regan said. Those that are winning the market are differentiating themselves by maximising the touchpoints they have with customers, creating new and more meaningful opportunities to drive engagement while enabling end to end experiences, underpinned by digital.”