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Report: Customer satisfaction doesn’t guarantee loyalty

The insurance industry needs to improve its customer retention strategies, because a satisfied customer isn’t always a loyal one, according to the World Insurance Report, an international study of more than 10,000 insurance customers, insurers and distributors.

The study, released by Capgemini, a consulting, technology and outsourcing service provider, and the European Financial Management and Marketing Association, noted that although customers may not express dissatisfaction with the type or quantity of interactions they have with insurers or agents, nearly 40 percent switched providers in the past five years.

“Rising Internet use is increasing transparency in the industry, providing customers with better access to information on product specifications and pricing – and increased bargaining power. As a result, customers have become more self-sufficient, price-sensitive and less loyal,” said Bertrand Lavayssière, managing director for Capgemini Global Financial Services. “To serve informed customers better and stem the loss of profitable customers, insurers will need to hone their customer retention strategies and achieve a comprehensive yet discerning view of what it is specifically that customers’ value.”

The fact that customers rarely interact with distributors hinders customer loyalty, the report stated. The study found that 71 percent of customers never or rarely (only once per year) interact with their principal distributor. In contrast, customers typically interact with their banks more than 200 times per year.

The Internet further segregates the distances the insurance customer base, the report indicated. “Because they so rarely have the opportunity to speak with customers, the key for insurers and distributors is to understand each interaction’s value with the customer,” Lavayssière said.

The World Insurance Report focused on the seven countries – France, Germany, Italy, the Netherlands, Spain, United Kingdom and United States – that together account for more than 60 percent of all direct insurance premiums written in the world.

The statistics indicate that frequency of interaction does not equal satisfaction. Italian customers met with insurers more frequently than customers in any of the other countries surveyed. Yet, customers in the Netherlands reported the highest levels of satisfaction in all of their interactions – via the Internet, with agents, in claims, at banks, and in basic customer service – with insurers. Only 26 percent of Dutch non-life customers switched providers in the past five years, compared to the global average of 39 percent.

The United States had the highest overall customer satisfaction rating and the second-lowest percentage, 31 percent, of customers who have switched insurance providers in the past five years, compared to other countries.

In the United States:

•82 percent of American customers were satisfied with agents, compared to 74 percent globally.

•79 percent were satisfied were claims processing versus 69 percent globally.

•And 77 percent were satisfied with basic customer service, compared to 59 percent globally.

Two-thirds of distributors interviewed said they could get customers to increase their financial services spending if insurers would provide them with better data and tools.

Many distributors “believe they’re missing significant opportunities to grow their business and could more effectively tap into the full potential of their customers if they had access to more complete customer insights and better tools and services,” said John Mullen, Capgemini’s vice president.

Mullen said the most innovative insurers fine-tune their product offerings to meet changing customer demands.

To view the entire report, visit www.capgemini.com/world
insurancereport.