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IBM Study Finds Insurance Customers Worldwide Flipping From Channel to Channel

These "multimodal" customers have a low level of trust in the industry and cannot be marketed to in traditional ways, IBM insurance practice leader Christian Bieck says.

Insurance is a product that people don't want to have to buy or deal with, which makes the customer experience in the industry extremely important, Christian Bieck, global leader of the insurance practice for IBM's Institute for Business Value said in presenting a survey the company took of 18,700 insurance customers across 20 countries.

"Trust [in the industry] is low and loyalty is declining," Bieck says. "People want to be treated as people, and no place is this more true than insurance."

Bieck, who presented at a luncheon for carrier CMOs held by the IBM and the Harvard Business Review last Thursday, cited a quote from Ann Wahlroos-Jaakkola, sales director for Tapiola Group, a Finland-based insurance carrier and bank, backing his point: “Twenty-two percent of insurance customers will switch carriers this year, and another 40 % are considering switching. This is twice the rate experienced just two years ago."

Driving that wiliness and ability to change, Bieck adds, is the change in the consumer to a multimodal prospect, who moves from channel to channel seamlessly. Nearly 79% of survey respondents reported using two or more channels to search for insurance information; 62% used three or more.

"People want to use a lot of interaction points. They don't know what a channel is and they don't care," he says. "Consumers go from one device to the other without even thinking about it. And generationally, this is starting to blur.

However, there is still a pattern of person-to-person contact being important for closing insurance sales. Independent and captive agents combined for more than 50% of sales. In the future, though, consumers expect to buy insurance online.

"Even though websites are the No. 1 source of information, when people buy they want to have someone whose hand they can shake," Bieck says. "Saying 'the agent is dead' is premature to say the least. Searching is not purchasing and you need to find the right mix for your customers."

As this shift occurs in the customer base, data-driven marketing will become even more important as carriers work to find that mix, Bieck continues. The popularity of agents can help get this started.

"All [carriers] probably have agent organizations with a lot of information; [they] have to use this in a way that makes sense to target," he says.

Another fundamental change carriers must take into account, according to Bieck, is that they cannot market by lines of business anymore. Consumers don't see a difference between life/annuity and P&C products, putting them all under the "insurance" umbrella.

"In the mindshare and wallet share of your customers, insurance products are competing against each other," he explains. "Line of business distinctions that we insurers make are meaningless to customers."

Rather, carriers should market to psychographic segments of customers.

"This does not change much by demographic, but cultural background matters," Bieck says. "Always thought the US and UK were alike. That's not true, but Australia and the US look alike in the data we've found."

But with this mandate comes a responsibility and a necessity to be open with customers about how and why you're using that information, Bieck says. In an industry suffering from trust issues, this can be a major differentiator between companies. Prudent and open policies around customer data should be adopted, he says.

"Understanding your customer begins with using the knowledge you have about them in a sensible way," he concludes. "Be honest about how you're using their data."

Editor's note: Insurance & Technology's virtual event tomorrow will feature executives from Amica, New York Life, and Farmers discussing their strategies for an optimal customer experience. Register and join the conversation.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio

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