Customer loyalty and the Digical SM
transformation in P&C and life insurance:
Global edition 2014
This report was prepared by Gunther Schwarz, Henrik Naujoks, Harshveer Singh,
Andrew Schwedel, David Whelan and Camille Goossens, partners in Bain’s
Global Financial Services practice, and a team led by Tanja Brettel, a practice
area manager, and Shilpi Goel, a project leader at the Bain Capability Center. The
authors thank Bain partners and teams in each of the countries covered in the
report for their valuable input, and John Campbell for his editorial support.
Key contacts in Bain’s Global Financial Services practice:
Americas:
Antonio Rodrigues in Toronto (antonio.rodrigues@bain.com)
Diego Santamaria in Mexico City (diego.santamaria@bain.com)
Andrew Schwedel in New York (andrew.schwedel@bain.com)
David Whelan in Chicago (david.whelan@bain.com)
Asia-Pacific:
Peter Stumbles in Sydney (peter.stumbles@bain.com)
Jennifer Zeng in Beijing (jennifer.zeng@bain.com)
Sameer Chishty in Hong Kong (sameer.chishty@bain.com)
Thomas Olsen in Jakarta (thomas.olsen@bain.com)
Tomoya Hasebe in Tokyo (tomoya.hasebe@bain.com)
Harshveer Singh in Singapore (harshveer.singh@bain.com)
Youngsuh Cho in Seoul (youngsuh.cho@bain.com)
Sangwook Jin in Seoul (sangwook.jin@bain.com)
Europe,
Middle East
and Africa:
François Goffinet in Brussels (francois.goffinet@bain.com)
Camille Goossens in Paris (camille.goossens@bain.com)
Henrik Naujoks in Düsseldorf (henrik.naujoks@bain.com)
Gunther Schwarz in Düsseldorf (gunther.schwarz@bain.com)
Vincenzo Gringoli in Milan (vincenzo.gringoli@bain.com)
Bertrand Facq in Warsaw (bertrand.facq@bain.com)
João Soares in London, for Portugal (joao.soares@bain.com)
Antonio Martinez in Madrid (antonio.martinez@bain.com)
James Anderson in London (james.anderson@bain.com)
Andrew Carleton in London (andrew.carleton@bain.com)
Net Promoter® and NPS® are registered trademarks, and Net Promoter SystemSM and Net Promoter ScoreSM
are trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
DigicalSM is a trademark of Bain & Company, Inc.
Copyright © 2014 Bain & Company, Inc. All rights reserved.
Global insurance loyalty | Bain & Company, Inc.
Table of contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1
1.
Loyalty trends around the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 7
2.
P&C insurance: The battle for customers
3.
Life insurance: Delighting customers in a low-touch industry . . . . . . . . . . . pg. 23
4.
The shift to a Digical business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 29
Page i
. . . . . . . . . . . . . . . . . . . . . . . . pg. 15
Global insurance loyalty | Bain & Company, Inc.
Page ii
Global insurance loyalty | Bain & Company, Inc.
Executive summary
Customer loyalty has been tough to come by in the insurance industry, especially for life insurers that traditionally
have far fewer interactions with customers than, say, retail banks. Yet in most countries, for both the life and the
property and casualty (P&C) sectors, one or two insurance carriers manage to excel in earning their customers’
passion and advocacy.
Why dwell on loyalty? Because there’s ample evidence that loyalty improves a carrier’s economics and leads to
sustained, above-market growth. Customers who are loyal promoters of their insurers stay longer, buy more,
recommend the company to friends and family, and usually cost less to serve—with the mix of these forces dependent on the particular market and type of insurance. In the US, for instance, Bain & Company analysis shows
that a promoter’s lifetime value is worth, on average, nearly seven times that of a customer who’s a detractor of
the carrier and two to three times that of a passive customer.
Bain’s new survey of 158,422 consumers in 18 countries sheds light on how various customer segments perceive
their P&C and life carriers, what customers want from their carriers and how they behave, and how different
distribution and interaction channels influence loyalty. The research was conducted online over six months in 2013
and early 2014 through Research Now for the great majority of respondents and through Survey Sampling International (SSI) for additional respondents in Asia.
The survey measures loyalty by calculating the Net Promoter ScoreSM (NPS®) for each insurance company, derived
from responses to this question: On a zero-to-10 scale, how likely are you to recommend your insurer to a friend
or a colleague? Based on the scores they give, respondents are classified as promoters (9–10), passives (7–8) or
detractors (0–6). NPS is the percentage of promoters minus the percentage of detractors.
Many insurers appreciate the merits of loyalty, of course, and they collect and measure feedback from customers.
The problem is that few act on the feedback in ways that put the customer’s perspective and priorities at the
center of the business. Feedback that doesn’t lead to action is meaningless. Truly customer-centered companies
analyze the feedback to identify patterns and take actions that will improve the customer’s experience, based on
how those actions will affect the economics of the business.
A customer-centered approach thus remains a radical departure from most insurers’ internally focused stance,
which assumes the agents are the customers. The traditional organization tends to focus on products and financial considerations, especially in-year measures.
In a business built around loyalty, by contrast, the salesforce serves end customers, whether they are new or existing.
Technology doesn’t just support and automate internal processes; rather, it’s deployed to accommodate customers’
priorities in ways that can actually delight them. Digital and physical channels fuse into a DigicalSM approach that
customers now demand. And firm economics improve not only through financial and technical engineering but
also through the financial benefits of loyalty.
A few insurers that have become loyalty leaders in their markets have moved well beyond surveying customers
to systematically looping back survey responses to frontline employees and managers. Based on that ongoing
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Global insurance loyalty | Bain & Company, Inc.
feedback loop, they’ve made significant changes to products and processes in order to improve the customer’s
experience at critical touchpoints and episodes.
In one of Allianz’s European life and health insurance operations, for instance, feedback revealed that customers
had to call back repeatedly about the status of payments and were expected to describe their medical conditions
again and again. An Allianz team figured out a process solution: On the initial call, a case manager would be
assigned to the policyholder and handle all contact until the claim was resolved. Any delay in the reimbursement
process would trigger a call or text message informing the policyholder of the claim’s status. Soon after implementing the new protocol, the claims unit saw a double-digit increase in its NPS and a significant rise in policy
renewal rates.
Putting customers at the center of the universe requires top management’s commitment to invest in redesigning
products, refining processes and consistently delivering on what the company promises customers. The customer
focus needs to become part of the organization’s very DNA, from the CEO’s agenda right through to frontline
employees and to third parties such as repair shops.
While earning goodwill among customers is necessary, it is insufficient for generating superior revenue growth.
Leaders must also motivate customers to actively promote the company. Bain’s research and client work suggest
four specific steps that are essential to succeeding with a customer-centered distribution and service model.
1. Decide where you must win and where you can afford to lose
Loyalty leaders know they can’t be all things to all people. They either started with a mandate to serve a narrow
segment of customers—as is the case with most mutual companies—or they decided to define a narrow segment
and put the needs of those customers first.
In the UK, for instance, Admiral’s in-vehicle telematics system, called LittleBox, aims to reduce auto insurance
premiums for young customers with safe driving habits. Sheilas’ Wheels targets safe female drivers, with lower
premiums and tailored branding messages. In Asia, a number of insurers have refined their offerings for affluent, high-value customers and wrapped them in premium services, including regular check-ins by agents or
financial advisers.
Other attractive new segments have been developed based on behaviors and interests rather than basic demographics. Discovery Holdings, a major insurer based in South Africa, has generated exceptional growth over the
past decade in part through its Vitality program, which appeals to people committed to healthy living. Vitality
members accrue points for demonstrating certain healthy, safe behaviors—reinforced through discounts on gym
memberships and healthy foods, as well as by installing tracking devices in cars—which they can redeem for
rewards from other vendors. Vitality has built a healthier book of business with a better risk profile and a lower
cost to serve, and has helped Discovery maintain a very loyal customer base.
2. Selectively invest in moments of truth
Being in touch regularly and in meaningful ways with customers builds loyalty both in P&C and life, Bain’s
survey shows. During moments of truth such as filing a claim, it’s vital to exceed customers’ expectations and
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Global insurance loyalty | Bain & Company, Inc.
deliver a level of service and support that leaves strong positive impressions. This does not mean simply offering
more generous payment policies; our survey results show that the initial filing of a claim often has a higher potential to delight than the subsequent payment.
Regular communication containing useful, relevant information reinforces those impressions. Affluent customers,
in particular, place a high value on regularly staying in touch. That’s a departure for some agents who live mainly
by commissions for new sales and thus have little incentive to nurture relationships with current customers.
Many carriers have underinvested in touchpoints where they communicate directly with customers relative to
those touchpoints handled by agents, so carriers will want to improve the functionality of their direct touchpoints.
In many Asian countries, for instance, there’s a trust deficit between younger customers and traditional agents,
who are perceived as being too mercenary in their interactions. Some challengers and incumbents in Asian markets, therefore, are betting on alternative channels such as direct (Lifeplanet, Kyobo’s joint venture with Lifenet
in South Korea) or bancassurance (AXA), a channel that has reached a roughly 40% market share in new business
volumes in certain Asian countries.
Each insurer will want to dig beneath the NPS averages to determine which touchpoints and episodes are most
effective at earning loyalty—and how to invest for the specific country and situation. In Italy, reputation plays a
prominent role in both life and P&C, whereas claims or advisory services matter more in many other countries.
In the UK, insurers lack a strong physical presence, which makes it more challenging to delight customers.
3. In P&C, acquire mostly through price, but retain through product and service innovation
A quandary: Today’s fierce battle for new customers in P&C is largely won by price, yet price-sensitive buyers
are more prone to switching later for a lower-priced offer. (For the life sector, price matters less than investment
returns, except for standardized products like term life, because there’s less price transparency.)
One way to deal with this problem is to avoid the most price-sensitive customers and use marketing that emphasizes other types of value, as Allstate has done in the US through advertising that focuses on peace of mind.
Even price-sensitive customers, though, can be converted to loyal promoters through differentiated products and
standout service. Indeed, Bain’s research shows that loyalty leaders in most countries, such as Liverpool Victoria
in the UK and Apia in Australia, excel on both price and service dimensions.
Some product and service innovations depend on digital technologies. In the US, MetroMile has launched an auto
policy that sets price by the number of miles driven, made possible by in-vehicle telematics.
Other innovations focus more on management of certain operations like the supplier network. HUK-Coburg, a
leading auto insurer in Germany, has assembled a network of 1,300 certified repair shops. Going through these
garages saves costs and thus reduces prices, while also providing high-quality repairs and a better claims experience—a combination that HUK-Coburg customers love.
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Global insurance loyalty | Bain & Company, Inc.
4. Accelerate the transformation to a Digical model
The migration of customers to digital channels started with music retailing, consumer electronics, airlines and
hotels. So the bar for insurance companies has been set high by accomplished digital leaders like Amazon in
online retailing.
Every country has a significant share of digitally active insurance customers, Bain’s survey shows. And digital usage
will increase over the next three to five years—but digital channels don’t replace physical channels. Customers
who use only digital channels give the lowest NPS, since they would still benefit from talking with a person when
dealing with complex insurance products or transactions. Multichannel customers give the highest NPS.
This shift in behavior and the attendant disruption present both an opportunity and a threat. Insurance companies
can significantly improve the customer experience if they act quickly yet thoughtfully to build out digital channels
for transactions and communications, transform their physical networks for higher-value services and redesign
their processes to seamlessly integrate their various channels.
Laggards, meanwhile, may get crushed by forward-looking competitors and upstarts that provide a better experience and better service at a lower cost. Consider China’s Internet giants Alibaba and Tencent, which recently
partnered with Ping An to offer online insurance.
As insurers make the transition to a Digical world, they should target investments in proportion to the value at
stake by, say, digitizing processes to both reduce costs and please customers. Case in point: AIA has issued iPads
to its agents throughout Asia so they can sit with customers, do a needs analysis and accept customers’ digital
signatures to allow straight-through processing.
•••
Every insurance company can benchmark against competitors in its home market and against the best performers
globally. The following sections explore customers’ behaviors and perceptions in life and P&C, with an eye toward
helping insurers understand the factors influencing loyalty.
Insurers that deliver the best customer experience advance against the competition, because they begin with
their target customers’ priorities and expectations. Earning loyalty figures prominently in their approach.
These leaders rely on a proven approach such as the Net Promoter SystemSM and listen regularly to customer feedback to determine what they’re doing right and wrong from the customer’s standpoint. They use fast feedback
loops so employees learn what customers want, and they harness employees’ discretionary efforts to adjust
products and customer experiences. Senior executives play a critical role by convincing employees in different
parts of the organization to work together and by ensuring that the organization has the tools for making
appropriate trade-offs when necessary.
The result, over time, is more promoters and fewer detractors—a powerful engine for sustainable, profitable
organic growth.
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Global insurance loyalty | Bain & Company, Inc.
Page 5
1.
Loyalty trends around
the world
• NPS among insurers varies substantially by country. Because local perceptions and market traits
account for some of that variation, it’s most useful
to compare firms within an individual country.
Within many national markets, NPS varies widely.
In Australia, for instance, top P&C performer
Apia has an NPS that is 57 points higher than the
worst performer and 32 points higher than the
country’s average.
• Loyalty flows through to a carrier’s economics.
Customers who are promoters of their carrier have
a far higher lifetime value than detractors.
• Loyalty leaders in each country tend to be locally
based and use a mutual model, whereas multinationals and other local business models have
lower NPS. Mutuals often have a customer-centered
mindset and experienced salesforces, and they
are able to offer lower prices than most other
traditional carriers.
• Leaders also are often multiline providers. Customers generally give a higher NPS when they have
both life and P&C products with their main provider.
• Although insurance has fewer customer transactions
than some industries such as retail banking, being
in touch with customers has a large positive effect
on loyalty for both life and P&C. Insurers in developing markets tend to have more interactions
than do those in developed markets, even adjusting for the fact that their customer bases tend
to skew toward newer customers.
• Promoters beget promoters. NPS is higher for
people who primarily relied for their purchase
decision on a recommendation from someone they
know or from social media platforms, or who had
a prior relationship with the carrier.
Global insurance loyalty | Bain & Company, Inc.
Figure 1: Within each country, there’s a wide range of Net Promoter Scores for the P&C sector
NPS (P&C)
−100
−50
0
50
State Farm
Canada
Americas
100%
No clear leader
Mexico
USAA
US
Ethias
Belgium
MAIF
France
HUK-Coburg, HUK24
Europe
Germany
Genialloyd, Linear
Italy
Allianz
Poland
AXA
Portugal
Mutua Madrileña
Spain
Liverpool Victoria
UK
Apia
Australia
China Life P&C
Asia-Pacific
China
Asuransi Central Asia, Sinar Mas
Indonesia
Mitsui Direct, Sony
Japan
Singapore
NTUC Income
South Korea
Samsung
Minimum NPS
Maximum NPS
Average NPS
Note: Excludes markets with insufficient number of providers that have >100 respondents
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
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Global insurance loyalty | Bain & Company, Inc.
Figure 2: Within each country, there’s a wide range of Net Promoter Scores for the life sector
NPS (life)
−100
−50
0
AXA
Mexico
USAA
US
MAIF
France
CosmosDirekt, HUK-Coburg
Germany
Reale Mutua
Europe
Italy
Poland
Allianz
Portugal
BES-Vida
Mutua Madrileña
Spain
Aegon, Aviva, Scottish Widows
UK
No clear leader
Australia
PICC Life
China
Asia-Pacific
100%
RBC Insurance
Canada
Americas
50
Prudential UK
Hong Kong
Allianz Life, Prudential UK
Indonesia
Japan
Sony
Singapore
Great Eastern Life, Prudential UK
South Korea
Samsung, Shinhan
Minimum NPS
Maximum NPS
Average NPS
Note: Excludes markets with insufficient number of providers that have >100 respondents
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
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Global insurance loyalty | Bain & Company, Inc.
Figure 3: Insurance customers who are promoters of their carrier have a much higher lifetime value than that
of detractors
Customer lifetime value (NPV), promoter value indexed to detractors
Insurance
6x
Banking
Industrials
Telecommunications and technology
6.0
5.4
5.0
5.0
4.0
4
3.1
3.0
2.3
2
2.4
1.9
2.2
2.2
1.9
1.6
1.5
1.4
Source: Bain & Company client examples
Page 10
EMEA telecom
Wireless co.
Telecom
Electronics co.
Latin American airline
Utilities co.
Motorcycle co.
Retail bank
Asian bank
US bank
Asian insurance co.
N. American P&C co.
EMEA insurance co.
Asian life insurance co.
EMEA P&C co.
US P&C co.
0
Global insurance loyalty | Bain & Company, Inc.
Figure 4: Mutual companies earn higher loyalty scores than other models
P&C
US
Germany
Singapore
NPS by insurance provider category
50%
40
40
30
25
25
20
20%
10
10
0
Mutuals
(local)
Other local
providers
Multinationals
15
0%
0
–1
–10
–20
–10
Mutuals
(local)
Other local Multinationals
providers
–10
–20
–16
–30
–32
–40
Mutuals
(local)
Multinationals
Life
US
20%
Germany
Singapore
19
10
3
0%
0
–6
–10
Mutuals
(local)
Other local
providers
Multinationals
–10
0%
–7
–10
–18
–20
–30
–27
Other local
providers
Mutuals
(local)
Note: For Singapore, “other local providers” is not shown due to small sample sizes
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 11
Multinationals
–20
–30
–17
–20
Mutuals
(local)
Multinationals
Global insurance loyalty | Bain & Company, Inc.
Figure 5: When customers have both life and P&C products with one carrier, they give higher loyalty scores
US life carrier with some P&C business
US P&C carrier with some life business
NPS (life)
NPS (P&C)
60%
54
30%
20
20
10
40
37
20
8
0
0
Own only life products
with carrier
Own life and P&C products
with carrier
91%
9%
Share of
respondents
Own only P&C products
with carrier
Own P&C and life products
with carrier
89%
11%
Share of
respondents
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 6: Being in touch contributes to loyalty, and carriers interact with customers more frequently in
developing markets
Percentage point difference in NPS for customers who had/did not have an interaction in the past 12 months
60%
40
20
Canada
Australia
South Korea
UK
Japan
Italy
France
Life
Spain
US
Germany
Singapore
Mexico
Hong Kong
Portugal
Poland
Indonesia
China
0
39
54
49
59
71
74
33
54
45
50
71
67
54
65
P&C
% of respondents with interaction in the past 12 months
Life
P&C
82
91
84
83
67
76
51
65
75
72
70
72
62
60
52
57
37
58
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 12
55
60
Global insurance loyalty | Bain & Company, Inc.
Figure 7: Promoters foster promoters, as purchasing decisions based mainly on referrals or prior experiences
with a carrier lead to higher loyalty scores
NPS by major reason for purchasing (P&C)
US
UK
Own research
37
Existing relationship
−4
41
Recommendation via
agent/broker
18
32
Recommendation via friends/
family or social media
−2
44
0
50%
15
−20
0
Germany
Australia
13
Own research
20%
16
Existing relationship
16
Recommendation via
agent/broker
27
6
6
Recommendation via friends/
family or social media
15
19
0
30%
0
30%
NPS by major reason for purchasing (life)
US
UK
24
Own research
−5
29
Existing relationship
Recommendation via
agent/broker
1
25
Recommendation via friends/
family or social media
−12
28
0
3
50%
−20
0
Germany
Own research
Australia
0
−15
11
Existing relationship
Recommendation via
agent/broker
−10
5
Recommendation via friends/
family or social media
−19
10
0
20%
−10
30%
−30
Note: NPS only for customers who purchased a first policy with their main P&C or life insurance provider in the past year
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 13
0
2.
• In every country, price stands as the most important
purchasing criterion, just ahead of having the right
product for one’s needs. Price-sensitive buyers,
however, give the lowest NPS in the first year after
signing up. To reduce churn, companies will need
to engage in more meaningful interactions.
P&C insurance: The
battle for customers
• Low prices don’t necessarily conflict with good
service. Loyalty leaders, such as Liverpool Victoria
in the UK and HUK-Coburg in Germany, excel at
both price and performance on touchpoints, as
perceived by customers.
• The battle for scarce customers is most pronounced
in developed markets, where the majority of a
carrier’s new customers actually switched from
another carrier.
• Retention of customers correlates strongly with
their NPS for both auto and home categories, with
USAA ahead of the pack in the US. And retention
has a strong influence on creating lifetime value.
• The importance of cross-selling and referrals depends on the country and the provider. Crossselling, for instance, weights more heavily in China
and Indonesia.
• Customer experience at touchpoints, as well as
price, have the greatest influence on loyalty in
most countries.
• Excellent claims handling, especially around
claims filing and third-party interactions, is critical
to delight customers and avoid creating detractors.
Even though few customers have a claim at any
given time, the experience makes an enormous
impression on them. Interactions with repair garages,
doctors and other third parties stand out as flash
points for frustration.
Global insurance loyalty | Bain & Company, Inc.
Figure 8: Price is the strongest purchasing criterion across countries, followed closely by the right product
for one’s needs
Share of P&C customers for whom the criterion had a major influence on their purchasing decision
80%
64
59
60
48
48
44
40
38
40
20
0
Fair and
competitive
prices
Right products
Ease of
purchasing
Favorable
reputation
Asia-Pacific
Europe
Excellent
customer
service
Americas
High quality
of advice
Reliable partner
in claims
processing
Average
Note: Includes only customers who purchased a first policy with their main P&C insurance provider in the past year
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 9: New price-sensitive buyers give lower Net Promoter Scores than those who buy for other reasons
NPS by major reason for purchasing (P&C)
US
Australia
Price
31
Product
9
36
General service
15
45
Claims
28
46
Reputation
29
44
0
50%
32
0
50%
Germany
Price
9
Product
9
UK
−10
−3
13
16
General service
17
Claims
8
21
Reputation
0
18
30%
−20
Note: Includes only customers who purchased a first policy with their main P&C insurance provider in the past year
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 16
0
20%
Global insurance loyalty | Bain & Company, Inc.
Figure 10: Overall, loyalty leaders complement price leadership with service excellence
Number of promoters’ positive price comments (vertical axis) and touchpoint comments (horizontal axis) per 100 responses (P&C)
US
Australia
30
30
USAA
20
20
10
10
0
Apia
0
0
10
20
30
40
0
50
10
20
Germany
40
UK
30
20
Liverpool Victoria
HUK24
15
20
HUK-Coburg
10
10
0
30
5
0
10
20
30
40
0
0
10
20
30
Note: “Touchpoints” include advice, purchasing, claims, service and distribution channels
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 11: In mature markets such as the US, most new customers have switched from another carrier
US auto insurance
US home insurance
Change in number of customers in the past year,
indexed to beginning of year
Change in number of customers in the past year,
indexed to beginning of year
125
125
9
9
100
101
100
100
–8
104
100
–5
75
75
50
50
Beginning of
the year
Acquisition
Defection
End of
the year
Beginning of
the year
Switched from another insurer
Source: Bain/Research Now US P&C insurance survey, 2014
Page 17
New to market
Acquisition
Defection
End of
the year
Global insurance loyalty | Bain & Company, Inc.
Figure 12: Insurers with higher Net Promoter Scores have lower defection rates
US customer loss index (P&C)
R²=0.58
2.0
1.5
1.0
0.5
0
−20
0
20
40
60
80%
NPS
US insurance company
Source: Bain/Research Now US P&C insurance survey, 2014
Figure 13: Retention has a strong influence on creating lifetime value
Estimated US customer lifetime value,
indexed to passive (P&C)
300
15
270
Referrals
Promoter
22
133
200
Share of
wallet
47
100
10
3
100
Referrals
Passive
Size of
wallet
40
0
Detractor
Retention
Cross-sell
Note: All products are assumed to be of equal value to the insurer
Source: Bain/Research Now US P&C insurance survey, 2014
Page 18
Retention
Cross-sell
Global insurance loyalty | Bain & Company, Inc.
Figure 14: Cross-selling is more prevalent in some developing markets
Share of promoters who own more than one product, indexed to share of detractors (P&C)
2.9
3.0
2.0
1.9
1.7
1.7
1.5
1.5
1.5
1.4
1.4
1.4
1.3
1.3
1.3
1.3
1.3
1.2
1.2
1.1
1.0
0
China
Japan
Indonesia
US
Singapore
Spain
UK
Poland
Portugal
Italy
Mexico
Developing markets
South Korea
France
Belgium
Australia
Germany
Canada
Hong Kong
Developed markets
Note: Numbers are rounded
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 15: Customers’ experiences at touchpoints, as well as price, have the greatest influence on loyalty
in most countries
Factors influencing promoters
Factors influencing detractors
Share of positive mentions from promoters (P&C)
Share of negative mentions from detractors (P&C)
100%
100%
80
80
60
60
40
40
20
20
0
0
Canada
US
Germany
Italy
UK
Australia
Singapore
Touchpoints
Price
Canada
Reputation
US
Product
Germany
Italy
UK
Australia
Singapore
Other
Note: “Touchpoints” include advice, purchasing, claims, service and distribution channels; “other“ includes emotional responses, loyalty responses, responses indicating little
familiarity with the provider
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 19
Global insurance loyalty | Bain & Company, Inc.
Figure 16: Claims interactions, though infrequent, have the greatest effect on loyalty
US respondents (P&C)
High
Interacting with third
parties involved in
my claim
Likelihood to annoy
Getting status updates
and questions answered
Receiving
correspondence
from insurer
Receiving
payment for
my claim
Paying
my bill
Renewing
my policy
Initially filing
a claim
Getting a quote
on a product
Adding or
changing
a policy
One
interaction
per year per
respondent
Getting information
about a product
Likelihood to delight
Low
High
Service moments
Buying moments
Claims moments
Note: Respondents were asked about the effect that a recent interaction had on their likelihood to recommend their insurer; numbers are rounded
Source: Bain US Auto Insurer Moments of Truth Survey, 2013
Figure 17: A positive claims experience has a strong positive effect on loyalty
Percentage point difference in NPS (P&C) of customers satisfied with their claims experience vs. all other customers
50%
44
40
40
40
36
35
35
35
34
34
32
32
30
30
29
28
28
28
19
20
14
10
0
Portugal
Hong Kong
Indonesia
% of customers
with claims
experience in
past 12 months
18%
34%
22%
20%
UK
China
Germany
Spain
29%
23%
Singapore
France
8%
25%
South Korea
Belgium
15%
Source: Bain/Research Now and Bain/SSI Global NPS survey 2013/2014
Page 20
18%
Italy
Poland
34%
18%
15%
Mexico
US
Australia
14%
Canada
15%
13%
Japan
21%
14%
Global insurance loyalty | Bain & Company, Inc.
Page 21
3.
Life insurance:
Delighting customers
in a low-touch industry
• Across countries, most customers buying life insurance say product attributes are a major factor
influencing their decision, closely followed by
price and reputation.
• Once customers are on board, however, the life
insurance business depends on relationships. Interactions with a personal adviser tend to raise NPS,
more so when complemented by interactions
through other channels. In the US, for example,
NPS for customers who interacted with an adviser
and used digital channels is 34 points higher
than for customers who used a call center and/or
digital channels.
• The experience at critical touchpoints and episodes,
including those involving an adviser, has the
greatest propensity to delight or annoy customers.
On the positive side, US and German loyalty
leaders excel at delighting customers through touchpoints as well as with their products or reputation.
• In Asia, affluent customers give far higher NPS
than do other customers. By contrast, in the mature
and highly competitive markets of Australia, the
UK and Canada, affluent customers give lowerthan-average NPS.
• Investing to improve advocacy pays handsomely.
In developed markets, referrals from an existing
customer to other potential customers play the
biggest role in building customer lifetime value. In
developing markets, cross-selling creates more
value, because penetration there is low.
Global insurance loyalty | Bain & Company, Inc.
Figure 18: Across countries, product is the strongest reason for purchasing, followed by competitive
prices and a company’s reputation
Share of life customers for whom the criterion strongly influenced their purchasing decision
60%
52
47
49
42
42
42
Excellent
customer service
Ease of
purchasing
High quality
of advice
40
20
0
Right products
Fair and
competitive prices
Favorable
reputation
Asia-Pacific
Europe
Americas
Average
Note: Includes only customers who purchased a first policy with their main life insurance provider in the past year
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 19: Customers who interact with their personal adviser and use other channels tend to give higher
Net Promoter Scores
NPS for customers who interacted in the past 12 months (life)
60%
50
40
28
20
16
16
11
5
6
5
3
0
–3
–9
–9
–13
–20
–17
–19
US
Canada
Germany
Australia
Singapore
Channels used*
Personal adviser and digital channels
Personal adviser only
*Interaction with personal adviser can be via phone or in person
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 24
Call center and/or digital channels
Global insurance loyalty | Bain & Company, Inc.
Figure 20: Touchpoints have the greatest influence on both delighting and annoying customers
Factors influencing promoters
Factors influencing detractors
Share of positive mentions by promoters (life)
Share of negative mentions by detractors (life)
100%
100%
80
80
60
60
40
40
20
20
0
0
Canada
US
Germany
Italy
UK
Canada
Australia
Singapore
Touchpoints
Reputation
Product
US
Germany
Price
Italy
UK
Australia
Singapore
Other
Note: “Touchpoints” include advice, purchasing, claims, service and distribution channels; “other” includes emotional responses, loyalty responses, responses indicating little
familiarity with the provider
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 21: Loyalty leaders in the US and Germany delight customers on touchpoints and either product
or reputation
German life insurance
US life insurance
Number of positive comments by promoters (per 100 respondents)
35
35
30
30
25
USAA
25
20
HUK-Coburg
-
15
CosmosDirekt
20
CosmosDirekt
10
USAA
15
HUK-Coburg
-
10
5
5
0
0
Touchpoints
Product
Touchpoints
Reputation
Loyalty
leader
Highest provider
Lowest provider
Note: Germany has two loyalty leaders; “Touchpoints” include advice, purchasing, claims, service and distribution channels
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 25
Product
Reputation
Global insurance loyalty | Bain & Company, Inc.
Figure 22: Agent interactions often comprise the most important touchpoints
Touchpoint's importance to customer loyalty (Asian life carrier)
Higher
Lower
A
B
C
D
Customer
service
Agent
E
Product
F
G
Reputation
H
Sales,
marketing, policy
application
I
J
Customerinitiated policy
administration
K
Insurerinitiated policy
administration
Note: Importance to customer loyalty is calculated as the coefficient of correlation between the satisfaction score at each touchpoint and overall NPS
Source: Bain & Company NPS survey for client
Figure 23: Affluent customers give relatively high loyalty scores in Asia and some developing markets, but
low scores in several developed markets
Percentage point difference between NPS of affluent and nonaffluent customers with less than three years' tenure (life)
20%
18
18
16
15
15
13
10
6
4
0
–1
–3
–3
–5
–5
–10
Note: Countries with a sample size of less than 100 affluent customers have been excluded from the analysis
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 26
Canada
Australia
UK
Spain
Italy
US
South Korea
France
Poland
Indonesia
Hong Kong
Japan
Singapore
Mexico
–20
–9
Global insurance loyalty | Bain & Company, Inc.
Figure 24: Referrals tend to create the most value in mature markets, while cross-selling creates greater
value in developing markets
Carrier in developed Asian markets
Carrier in developing Asian markets
Customer lifetime value, detractor indexed to 100 (life)
600
600
400
400
200
200
0
0
Detractor
Cross-sell
Retention
Referrals
Promoter
Detractor
Cross-sell
Retention
Referrals
Promoter
Source: Bain & Company analysis for client
Figure 25: Referrals are more readily generated by promoters in mature markets, while cross-selling works
better with promoters in some developing markets
Referrals
Cross-sell
Share of promoters who recommended their carrier, indexed to share
of detractors (life)
Share of promoters who own more than one product, indexed to share
of detractors (life)
10
3
7.8
2.1
2
1.8 1.7
6
5.0
4.5
4
4.2 4.2
3.6
3.3 3.3 3.3
2.9 2.8 2.7 2.7 2.7
1.6 1.6 1.6
1.5 1.5 1.5 1.4
1.4 1.3 1.3
1.2 1.2 1.2
1
2.4
2
1.5
Developed markets
Australia
UK
Canada
Japan
Singapore
Poland
US
Germany
Mexico
France
South Korea
China
Italy
Developing markets
Note: Numbers are rounded; Excludes countries with a sample size of less than 100 in any comparison group
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 27
Hong Kong
Indonesia
Italy
Indonesia
Mexico
Poland
Hong Kong
China
Germany
South Korea
France
Australia
Spain
Singapore
US
UK
Canada
0
Japan
0
Spain
8
4.
The shift to a
Digical business
• All countries have a significant share of customers
who do research or interact digitally with their
insurer, and their ranks will grow over the next three
to five years. Digital usage will grow to become the
dominant channel for prepurchase research in many
countries. For the actual purchase, however, most customers still use mainly phone or in-person meetings.
• Digital interactions thus need to be complemented
with offline interactions in order to delight customers. In fact, digital-only interactions result in the
lowest NPS in most countries.
• Hybrid customers merit extra attention, given that
they have higher incomes than customers who don’t
go online. And the hybrid share of the total market
is large and growing.
• Insurance markets across the globe fall into three
broad categories of channel usage: Traditional
relationship markets include Canada, Spain and
Japan. These will likely evolve to relationship 2.0
markets, which currently include Mexico, China,
Singapore and Hong Kong. In addition, Germany,
Italy and the US have started down this path.
Finally, there are two transactional markets—the
UK and Australia—where relationships have far
less importance.
• These different markets require different short-term
and midterm approaches by insurers. Omnichannel
in the UK means mainly digital and call-center telephony; in the US it means integrating in-person,
phone and digital channels.
• Customers do not expect or want exclusively digital insurers. Among all types of interactions, the
strongest demand for digital tools comes in purchasing online and handling claims.
• For most interactions, Asian customers show the
highest demand for digital tools. Strengthening
security and user-friendliness would increase digital demand in most countries.
Global insurance loyalty | Bain & Company, Inc.
Figure 26: The share of digitally active customers ranges from 35% to 70%, with a sharp increase expected
over the next three to five years
Share of digitally active insurance customers* (P&C and life combined)
100%
91
87
82
82
80
80
80
79
78
77
76
76
74
73
71
69
69
67
64
60
40
Next 3−5 years
Hong Kong
Belgium
Portugal
Japan
Mexico
Spain
France
South Korea
Italy
Canada
Germany
Poland
Singapore
US
Indonesia
China
Australia
0
UK
20
Today
*Respondents who used digital channels for their last insurance-related information research and most important interactions with their insurance providers (to learn about the
provider or product, get advice, make a purchase, obtain service or pursue a claim) in the past 12 months; maximum of three responses allowed for choosing channels
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 27: Most digitally active customers will be hybrid, using phones and in-person meetings as well
Share of digitally active insurance customers in next three to five years (P&C and life combined)
100%
80
80
79
78
77
76
76
74
73
71
69
69
67
Belgium
82
Portugal
82
Japan
80
87
Digital-only
customers
91
64
40
20
Hybrid customers
60
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 30
Hong Kong
Mexico
Spain
France
South Korea
Italy
Canada
Germany
Poland
Singapore
US
Indonesia
China
Australia
UK
0
Global insurance loyalty | Bain & Company, Inc.
Figure 28: Digital-only interactions yield lower Net Promoter Scores than multichannel interactions
NPS for customers who interacted in the past 12 months (P&C)
60%
43
39
40
40
28
21
19
20
13
19
14
11
5
3
0
−1
−4
−20
−19 −18
US
Germany
Australia
Single channel
Digital only
Singapore
Multichannel
In-person or phone only
In-person and phone
Digital and in-person and/or phone
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 29: Hybrid customers in most countries have higher incomes than those who use only phone or
in-person channels
Percentage difference between average household income of hybrid and offline customers (P&C and life combined)
20%
13
12
11
11
10
9
9
8
8
7
6
6
5
4
3
3
1
1
0
−10
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 31
Indonesia
China
Mexico
UK
Japan
US
Singapore
Canada
France
South Korea
Hong Kong
Australia
Germany
Italy
Spain
Poland
Belgium
Portugal
−20
−10
Global insurance loyalty | Bain & Company, Inc.
Figure 30: Customers today still purchase insurance products mainly offline
Share of channels mentioned for last product purchase (P&C)
100%
80
60
40
20
Portugal
Hong Kong
Canada
France
Spain
Indonesia
Phone (personal adviser)
Mexico
Phone (call center)
Belgium
Poland
Japan
Hong Kong
China
South Korea
App/social media
Mexico
Online/email
US
Singapore
Italy
Germany
Australia
UK
0
In-person*
* In-person includes interaction with broker, agent and bank
Note: A maximum of three responses was allowed for choosing channels
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Figure 31: More purchasing behavior will migrate online over the next three to five years
Share of channels mentioned for product purchase in the next 3–5 years (P&C)
100%
80
60
40
20
Online/email
App/social media
* In-person includes interaction with broker, agent and bank
** Phone includes interaction with personal adviser and customer service center
Note: A maximum of three responses was allowed for choosing channels
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 32
Phone**
In-person*
Belgium
Indonesia
Spain
South Korea
France
Canada
Portugal
China
Italy
Poland
Japan
Germany
Singapore
US
Australia
UK
0
Global insurance loyalty | Bain & Company, Inc.
Figure 32: Three models of channel usage dominate insurance markets
Importance of personal adviser
Traditional relationship markets
(e.g., Canada, Spain, Japan)
Relationship 2.0 markets
(e.g., Mexico, China, Indonesia, Singapore,
Hong Kong)
• Channel usage for specific interactions is mostly
single channel
• High share of interactions with personal adviser
and low usage of online channel
Importance of
call center
• High share of multichannel interactions
• High in-person interactions and also high
demand for online tools
Transactional markets
(e.g., UK, Australia)
• High usage of online channel and call center
• Low share of interactions with personal adviser
Source: Bain & Company analysis based on Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 33
Importance of
online/mobile tools
Global insurance loyalty | Bain & Company, Inc.
Figure 33: While customers demand robust digital tools, most do not expect a fully digital carrier
Share of customers who want to use digital tools for each interaction (P&C and life combined)
0
10
Product app
including quotes
Information/seek advice
Purchase
Service
Claims
30
40
Germany
App or online interaction with adviser
South Korea
Germany
Co-browsing Web
with adviser
Australia
Video call for
advice
Japan
Indonesia
Italy
Mexico
Japan
Indonesia
Purchasing
products online
Purchasing from digitally equipped agent
50%
Hong Kong
Canada
General apps (e.g.,
carrier information)
Social networking
20
Indonesia
Japan
Personal portal for
self-service
UK
China
Japan
Portugal
Claims status
online or via an app
South Korea
France
Claims notification
online or via an app
Japan
Minimum demand
China
Maximum demand
Average demand
Note: A maximum of three responses was allowed for choosing digital tools
Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014
Page 34
Appendix: Methodology
Bain & Company partnered with Research Now, a digital data collection provider, to survey consumer
panels in Europe, the Americas and Asia-Pacific. Conducted in the winter of 2013–2014, the survey
polled 147,989 customers in 18 countries.
Bain worked with SSI to survey an additional 10,433 policyholders in Asia. SSI applied its online
sample blend encompassing SSI’s own managed panels plus online community members, social media
participants and respondents from across the Web.
The survey’s purpose was to gauge customers’ loyalty to their main insurance provider in life and P&C,
as well as to discover the underlying reasons why customers hold their views. We included only those
providers for which we received at least 100 valid responses, though in many countries sample sizes
exceeded 100 for each insurance provider included.
Respondents were asked to first list the P&C and life insurance products they purchased, name the
corresponding insurance provider and indicate their main insurance provider for both P&C and life.
Then they were routed to either the P&C or life insurance questionnaire. We assessed their loyalty to
their main insurance provider (either P&C or life) by asking two questions:
•
On a scale of zero to 10, where zero represents “not at all likely” and 10 represents “extremely
likely,” how likely are you to recommend your main insurance provider to a friend or a colleague?
•
Why did you give your main insurance provider the score you did?
To better understand their evaluation of their main insurance provider, we asked the respondents to
assess their main provider’s performance along several dimensions. If respondents had submitted a
claim within the past 12 months, they were interviewed about their satisfaction with their claims experience. If respondents first purchased a policy from their main P&C provider within the past year, they
were further asked which criteria had a major, minor or no influence on their purchasing decision.
We also asked which channels respondents use for the following: gathering information about an
insurance provider, learning about products, seeking advice or service, purchasing a product, or
submitting and settling a claim. We subsequently asked them to predict how these channels will develop
within the next three to five years, and we asked them which online and smart mobile services they
would like their insurers to provide in the future. The remaining questions elicited demographic information: household income, age and region of residence.
On the question of statistical significance, our data and analysis measuring insurance providers’ NPS
in the different countries are robust. The NPS measured for each insurance provider has confidence
intervals ranging from ±1.5% for a sample size of 5,000 to ±10% for a sample of 100, with an 80%
confidence level.
Countries classified as developed are based on the World Bank’s high-income category; developing
countries are based on its middle- and low-income categories.
Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
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