Assessing the Quality of the Customer Experience

Transcription

1 Assessing the Quality of the Customer Experience The 2015 Majesco Research Report on the UK Insurance Industry Research commissioned by Majesco Research carried out by Redshift Research

2

3 TABLE OF CONTENTS EXECUTIVE OVERVIEW 4 RESULTS AT A GLANCE 6 REASONS FOR CHOOSING MOTOR AND HOME & CONTENTS INSURER 8 THE UK INSURANCE LANDSCAPE 9 REASONS FOR CHOOSING LIFE, PENSIONS & ISA PROVIDER 10 CUSTOMERS DON T WANT CUDDLY TOYS 12 CUSTOMER SERVICE - COULD DO BETTER? 16 WHAT CUSTOMERS WANT 17 ALL EGGS IN ONE BASKET? 18 COMMUNICATIONS BREAKDOWN 22 LOOKING TO THE FUTURE - INTRODUCING SELF-SERVICE 24 METHODOLOGY 26 DEMOGRAPHICS 27 Contents 3

4 EXECUTIVE OVERVIEW Insurance Industry failing to deliver on customer service 1 in every 3 respondents feels that insurers are failing on minimum expected service levels and this ratio largely holds across all lines of business and service areas. The 2015 Majesco Research Report on the UK Insurance Industry reveals that insurers are falling well behind other sectors that do far better at customer satisfaction. World class retailers such as Amazon score 86.7% 1 and even rail travellers report an overall satisfaction figure of 83% 2 much higher than the highest customer satisfaction score in the insurance industry of 69%, reached by motor insurance providers. One reason for these shockingly poor customer experience findings is that insurers have framed insurance as a largely price sensitive sector. There is no doubt that price remains a key factor for customers choosing a provider, especially for mandatory insurance such as motor insurance and buildings insurance. However competing on price alone would appear to be an outdated and ineffective strategy for an industry that has so much to offer in terms of product and service differentials. Yet insurance firms are widely failing to compete on products and service. It is surprising to note that in spite of the severe competition in the industry Insurers fail to provide good service on basic service elements like informing customers about products and benefits in a simple manner. The situation is much worse when it comes to handling claims or servicing requests. It is time that insurers reframe themselves to delivering service performance and life-simplifying solutions to customers at a competitive price. The value part of the Price Value equation seems to be largely ignored by insurers. The 2015 Majesco Research Report highlights a clear demand for insurance products that suppliers are simply not providing. Over 70% of respondents said they want a family product, combining motor, home, life, savings and pensions in one single insurance policy. As many as 42% of respondents would buy a family product tomorrow, while 30% were unsure but did not rule out the option a total of 72% of respondents expressed a wish to buy a product that is not being offered. In fact, only 28% said they would not presently consider a family offering. Of those respondents who had concerns about a family product, 43% said that they didn t think the price would be right while 35% were worried about practicalities such as their various policies having different renewal dates. These are all factors that insurers could address and in the process capture a large slice of a latent market. Such and other latent markets being left untapped points to the fact that the customer s voice is getting lost in the noise which insurers are creating about price. Cumbersome legacy systems reflecting fixed processes and siloed products inhibit many insurers from making wholesale changes, such as introducing family products or cherry picking products under one umbrella brand. But a new entrant to the market someone who listens to what customers want and delivers on that potentially stands to disrupt the entire insurance sector very quickly. High acquisition costs are a major cause of the low industry profitability. Recommendation 4 The 2015 Majesco Research Report

5 is crucial to attracting new customers cost effectively and increasing industry profitability. Yet even established insurers with a well-known brand and high customer numbers are struggling to drive business through recommendation. Less than a third of respondents would recommend their insurer without the offer of any extra benefits. Customers are certainly not responding to the enticement of cuddly toys such as friendly rodents and robots so popular with the insurance industry only 4% of respondents said this would influence their decision as to whether to recommend their insurance company to friends or family. Respondents have many different views on how insurers could improve their services for the future but a central theme emerges. Insurers of all types could communicate with existing customers more effectively and by making better use of their customers preferred channels of communication. When it comes to policy amendments, questions and requests for information, for example, currently most customers say they use the telephone to communicate with insurers. In future though, half of respondents would like to be contacted via . When managing their policies in their own time the majority of respondents would like to use an online form through a website. The 2015 Majesco Research Report is a wakeup call to an industry that has become hidebound by traditional ways of working and lacks focus on the customer experience. The insurance industry is not listening hard enough to what customers are clearly saying that they want. Insurers need to improve customer service, make it easier for customers to access documents and customer support and improve the ease of doing things online. There is huge scope for insurers to make changes that will enable them to stand out from the crowd with their service delivery. There is real opportunity to alert customers buying on price to the service differential that could mean an easier claims process or simpler, time-saving selfmanagement of documents and renewals. The technology is available to support many of the changes needed to underpin improved customer services. A few small tweaks could make a big difference to the way insurers interact with customers and as a result the customer experience. In some cases, however, a more radical refresh will be needed. For most insurance providers change is not optional, but if existing insurers fail to tap into the opportunities that currently exist, game-changing new entrants will come along and forcibly disrupt the market. Addressing customer needs is no longer just good business practice but key to survival and future business success. Vidyesh Khanolkar, Vice President, Majesco UK Ltd. 1 UK Customer Satisfaction Index of January National Rail Passenger Survey Autumn 2014 Executive Overview 5

6 RESULTS AT A GLANCE 1 in every 3 respondents feels that insurers are failing on minimum expected service levels. Even the highest customer satisfaction score in the insurance industry of 69%, reached by motor insurance providers, compares unfavourably with world class retailers such as Amazon, which scores 86.7% 1 even rail travellers report an overall satisfaction figure of 83% 2. Insurance remains a price sensitive sector but high income customers in particular are not buying on price. In lower income categories, price is most valued by 80% of respondents but in higher income categories the importance of price falls to 60-75% while the importance attached to quality of service shows a reverse trend. 57% of respondents would prefer to manage their policy themselves, via a website. 60% of respondents say their motor or home & contents insurers only contact them once a year, probably on renewal. Life, pensions & ISA insurers are more communicative although the majority (47%) communicate with their customers just once a year, 26% get in touch two or three times a year. 4% of respondents said the enticement of a cuddly toy such as the friendly rodents and robots so popular as TV advertisement characters with the insurance industry would influence their decision as to whether to recommend their insurance company to friends or family. 1 UK Customer Satisfaction Index of January National Rail Passenger Survey Autumn The 2015 Majesco Research Report

7 SECTION ONE REASONS FOR CHOICE AND RECOMMENDATION

8 THE UK INSURANCE LANDSCAPE Of the 1,000 sample, most respondents have motor insurance and home & contents insurance. Fewer hold life insurance, pensions or ISAs. The research uncovered an industry characterised by high levels of customer dissatisfaction, with customer choice of insurer heavily driven by price. The impact of brand trust & loyalty and quality of service Brand trust & loyalty and quality of service also affected customer s choice of motor insurance and home & contents insurance. % of respondents who bought insurance based on brand trust & loyalty Motor insurance 33% Home & contents insurance 34% % of respondents who bought insurance based on quality of service Motor insurance 30% Home & contents insurance 31% Which of these types of insurance do you currently have? 59% 83% 84% Motor Home & Contents Life, Pension & ISAs 8 The 2015 Majesco Research Report

9 REASONS FOR CHOOSING MOTOR AND HOME & CONTENTS INSURER Price remains a key factor for choosing motor insurance (79%) and home & contents insurance (71%). However, even in a very price sensitive category like motor insurance, one fifth (21%) of respondents do not rate price when choosing their current provider. Insurers appear to be missing a major opportunity to compete on quality of service, leaving themselves vulnerable to annual churn as customers look for the best price on renewal. High income customers in particular are not buying on price. For most insurance categories as income increases importance of price decreases. In lower income categories price is most valued by 70-80% of respondents but in higher income categories the importance of price falls to 55-59% while the importance attached to quality of service shows a reverse trend. While price continues to be important in this sector, brand trust & loyalty and quality of service are vital too and insurers could do a lot more to compete on service offerings. Why did you choose your current provider? Price 48% 71% 79% Brand trust and loyalty 33% 34% 47% Quality of service 30% 31% 32% Easy online access via web or mobile 16% 16%19% Clarity of information 14% 18% 17% Available through a price comparison website 8% 20% 16% Motor Existing customer discount/multi-buy Incentives/Reward Recommendation from a friend/family member Discount voucher/advertising promotion Other Free with bank account 14% 13% 9% 9% 9% 16% 4% 6% 14% 6% 6% 5% 2% 4% 10% 2% 2% 7% Home & Contents Life, Pension & ISAs Reasons for choice and recommendation 9

10 REASONS FOR CHOOSING LIFE, PENSIONS & ISA PROVIDER For life, pensions & ISAs, price is much less likely to be a reason for choosing a provider than it is for motor insurance and home & contents insurance. It is likely these policies are seen as more valuable in the long term. Reasons behind choice of insurance provider by income bracket % of people choosing price as reason for choosing insurance provider 100% 80% 60% 40% 20% Less than 15k p.a. 15k k 25k k Price k Income categories 50k k Motor Home & Contents Life, Pension & ISAs 75k k Motor Home & Contents Life, Pension & ISAs % of people choosing quality of service as reason for choosing insurance provider 100% 80% 60% 40% 20% Less than 15k p.a. 15k k Quality of service 25k k k 50k k Motor Home & Contents Life, Pension & ISAs 75k k Income categories Motor Home & Contents Life, Pension & ISAs 10 The 2015 Majesco Research Report

11 % of people choosing feature as reason for choosing insurance provider 100% 80% 60% 40% 20% Less than 15k p.a. 15k k 25k k k Income categories 50k k 75k k Quality Price Why did you choose your current provider for life, pensions & ISAs? Just 48% of respondents mentioned price as a reason for selecting their current life, pensions & ISA provider. Brand trust & loyalty were of almost equal importance with 47% of life, pensions & ISA customers choosing a provider based on brand trust & loyalty. It is no surprise that brand trust & loyalty is more likely to be a reason for choosing a provider for Life, Pensions & ISAs. This supports our opinion that customers welcome an offer that is not purely based on price. Younger customers prioritise Price is likely to be a factor of decreasing importance in the buying decision in future. For the under 35s the importance of price is much lower and that of service much higher than it is for the over 35s. The importance given to service and trust in the buying decision is set to increase and insurers need to be ready to tap into this. Reasons for choice and recommendation 11

12 CUSTOMERS DON T WANT CUDDLY TOYS Recommendation is an important driver for new business. Yet less than a third (30%) of respondents would recommend their insurer without the offer of any extra benefits. This may reflect the lack of any positive experience with the insurer as well as negative experiences, such as a badly handled claim. renewal quote. The cuddly toy, beloved of the insurance industry, would encourage only 4% of respondents to recommend their insurance company to friends or family. Most respondents (58%) would be encouraged to recommend insurers if they provided an incentive of a 10%-20% discount on their What would encourage you to recommend an insurer to a friend and/or family member? I would recommend my current insurer without the offer of any extra benefits 30% If they provided an incentive of a 10%-20% discount on my renewal quote 58% If they provided me with some form of loyalty point rewards e.g. Avios and Nectar 29% If they provided me with a cuddly toy Nothing, I would never recommend my current provider Nothing, not even if my current provider offered me a 10%-20% discount on my renewal quote Nothing, not even if my current provider offered me a 25%-50% discount on my renewal quote Nothing, not even if my current provider offered me a 50% discount on my renewal quote 4% 6% 2% 1% 2% 12 The 2015 Majesco Research Report

13 What would encourage you to recommend an insurer to friend or family? Compared to motor and home & contents customers, respondents with life, pensions & ISA products are more likely to say they chose their provider due to an incentive or reward (16%) or following recommendations from friends or family (14%). Nothing, not even discounts, would induce 11% of respondents to recommend their current provider. It is notable that 70% of respondents would not recommend their current provider without the offer of any extra benefits. Clearly customers need to have an incentive to recommend their insurer. Insurers should look at various ways to engage their customers in a positive manner using schemes like loyalty plans. Reasons for choice and recommendation 13

14

15 SECTION TWO SERVICES AND SUPPORT

16 CUSTOMER SERVICE - COULD DO BETTER? A third of respondents do not rate their insurer s customer service as good. This compares to a positive customer score of 87.2% for John Lewis and 86.7% for Amazon (The UK Customer Satisfaction Index, January 2015). Insurers are struggling with basics such as informing customers about the policy and its benefits or making simple administrative changes to the policy, areas where 36% of customers rate service as average and below. Many insurers lack the streamlined, consistent systems and processes they need to deliver the level of customer service expected. What are insurers doing best? Customers rate motor insurers most highly on their instant quote and buy facilities. Customers rate home & contents and life, pensions & ISA providers most highly on payment collection. Online retailers would struggle to stay in business if 33% of their customers scored them this poorly! Insurers need to set clear standards and expectations of service with their customers and then adhere to them. How would you rate the overall level of support you receive from your providers? 23% 21% 16% 46% 44% 47% 35% 29% 32% Motor Home & Contents Life, Pension & ISAs 1% 2% 2% Very Good Good Average Poor How do you rate each of the following services provided to you by your insurers? Motor Home & Contents Life, Pension & ISAs 71% 73% 69% 74% 70% 62% 70% 69% 63% 67% 65% 61% 66% 62% 61% 62% 59% 56% 55% Please note: % show those rating the service as good or excellent 50% 45% Payment collection Instant quote and buy Renewals process and paperwork Product and policy information Policy administration Claims process and paperwork Offering discounts and benefits Motor Home & Contents Life, Pension & ISAs 16 The 2015 Majesco Research Report

17 WHAT CUSTOMERS WANT What changes should insurers make to improve their services? Insurers should focus on delivering good, consistent service rather than focus on free gifts or trying to be the cheapest. Customers want all types of insurance policies to be easier to understand, while insurers need to up their game and prepare to communicate better with customers, whether that be by providing a web portal for customers to access important documents at any time to answering calls more quickly and providing webchat facilities. Insurers do not deliver a consistent level of customer service. There are wide variations across time and line of business. Service could be very good on a day for a motor policy but poor for a home policy. What changes should your insurers make to improve their services to you in the future? Make policies easier to understand 33% 33% 35% Better variety of incentives/discounts 28% 36% 33% Answer my calls in an acceptable time Provide everything I require via Provide 24/7 access via a secure web portal Add live chat window to speak to an expert Extended call centre hours To be able to book a telephone appointment via an app/website Become more mobile to have easy access to documents Provide a secure mobile app Discontinue using postal service Other 4% 4% 4% 6% 7% 6% 13% 13% 16% 11% 11% 16% 13% 10% 10% 21% 20% 20% 32% 31% 31% 30% 29% 32% 26% 25% 29% 25% 23% 23% Services and support 17

18 ALL EGGS IN ONE BASKET? Many customers would prefer the convenience of having all their insurance in one single family policy, where available, but price and practicalities put them off. 42% of respondents said they would prefer to put all their insurance policies in one single policy bought via one provider yet the insurance industry is not geared up for this and there are few composite providers who can offer family policies. This represents a real opportunity for a new entrant to grab significant market share. Most customers do not want to put all policies with their current provider as they think the price they get will not be right. This misconception probably flows from the opaque and highly erratic pricing methods that the insurance industry needs to tighten up on. What would prevent you from putting all your insurances with one provider? I don t think I would get the right price 43% My policies have different renewal dates 35% I don t think I would get the right level of service across different products I don t know if this would benefit me I did not know it was possible Nothing would prevent me from doing this Other 2% 11% 17% 29% 28% 18 The 2015 Majesco Research Report

19 What puts customers off putting all their insurance policies with one provider? 43% of respondents didn t think the price would be right. It is likely that customers consider it would be cheaper to source competitively priced products separately. 35% of respondents mentioned practicalities such as differing renewal dates. A single policy would remove the issue of renewal dates, so customers need to be guided by insurers for the initial transition. 29% of respondents were worried about getting a good, consistent level of service across all products. Would you prefer to have a single policy covering all your insurance requirements? 14% 28% 30% 22% 6% Definitely yes Probably yes Don t know Probably not Definitely not Services and support 19

20

21 SECTION THREE COMMUNICATION AND MANAGEMENT OF POLICIES

22 COMMUNICATIONS BREAKDOWN Insurers are widely failing to communicate with their customers as often as customers would like and in the way customers want to be communicated with. They are also simply not using many of the increasing variety of communications channels customers prefer. This is likely to result in missed opportunities to communicate with customers and prospective customers effectively on subjects such as discounts and benefits that customers clearly express an interest in. Customer interaction needs to be more frequent Over 60% of respondents say their motor or home & contents insurers only contact them once a year, probably on renewal. Life, pensions & ISA insurers were reported to be more communicative 47% of respondents stated that their insurers communicate with them once a year, whilst 26% received communication two or three times a year. How customers are contacted by their insurance providers 55% of respondents with life, pensions & ISA insurance are contacted by post 54% of respondents with motor insurance are contacted by 51% of respondents with home & contents insurance are contacted by 6% 9% 15% Less than once a year On average, how often does your provider currently contact you? 63% 66% 47% Once a year 26% 19% 17% 2-3 times per year 2% 2% 4% 1% 1% 2% 4-10 times per year More frequently Motor Home & Contents Life, Pension & ISAs 6% 6% 6% Never What methods of communication do your insurers use when they need to contact you? 55% 54% 51% 45% 47% 38% 27% 24% 23% 18% 17% 17% 12% 5% 7% 6% 3% 3% Motor Home & Contents Life, Pension & ISAs Post Telephone (call centre) Through a secure website In person Mobile App 22 The 2015 Majesco Research Report

23 How customers want to be contacted The majority of customers of all types of insurance prefer to be contacted by . While 55% of life, pensions & ISA insurance customers are mainly contacted by post, 62% would prefer to be contacted by only 36% want to be contacted by post. There is a clear disconnect between customer preference and what insurers are doing. Embracing digital Insurers need to improve their communications and embrace the digital age. Customers of all types of insurers want them to answer phone calls more efficiently at a time of their choice, do more with and introduce web chat facilities and the option to book a call via the web or an app. Don t stop sending letters! While many customers want to see more digital means of communications, over a third want insurers to continue using the postal service. Best in class insurers communicate with their customers most frequently, in the way customers prefer to be communicated with. This is something the rest would do well to emulate. 6% 5% 6% What methods of communication would your prefer your insurers to use when they need to contact you? Motor Home & Contents Life, Pension & ISAs 11% 8% 7% 18% 18% 19% 19% 18% 18% 36% 37% 36% 60% 62% 55% Mobile app In person Telephone (call centre) Through a secure website Post Life, pensions & ISAs Home & contents Motor Answer my calls in an acceptable time 31% 31% 32% Provide everything I need via 32% 29% 30% Add live chat window to speak to an expert 23% 23% 25% Extended call centre hours 20% 20% 21% Book a telephone appointment via app/ website 16% 13% 13% Communication and management of policies 23

24 LOOKING TO THE FUTURE - INTRODUCING SELF-SERVICE Not having a good digital interface is costing insurance companies as much as 8 out of every 100 of premium as back office staff need to be employed to do work that could be carried out online by the customers themselves. Customers are receptive to this customers of all types of insurers said they would welcome easy access to electronic documents across mobile devices. How would you prefer to manage your policy? An online form on a website 57% A secure online portal 49% Apps 16% Post 13% If you have a question, amendment or request for information, how do you currently communicate with your insurers? Telephone (call centre) 57% 63% 63% 37% 36% 37% Website portal Online form Post Live chat In person Mobile app 3% 3% 3% 7% 7% 6% 5% 6% 7% 5% 10% 10% 11% 11% 10% 10% 12% 11% Life, Pension & ISAs Home & Contents Motor Many legacy environments make it a real challenge for insurers to deliver the technology needed to underpin the changes they need to compete. However failure to modernise and meet customer needs leaves an entire industry exposed to new entrants with game-changing communications and business systems. Insurers who improve communications with customers and enhance customer service will be much better placed to compete in today s challenging market. 24 The 2015 Majesco Research Report

25 The rewards: Increased customer satisfaction and loyalty resulting in higher levels of customer retention and a lower cost per acquisition of new customers. Significantly reduced administration overheads and increased profitability enabling insurers to offer the most competitive discounts. Clearly insurers need to look at ways to improve customer service, enhance communications and make it easier for customers to do things online. If you have a question, amendment or request for information, how would you like to communicate with your insurers? 51% 51% 50% Telephone (call centre) 45% 47%49% Website portal Online form Live chat In person Post Mobile app 7% 6% 7% 7% 7% 7% 6% 6% 10% 18% 15% 14% 14% 15% 14% 13% 12% 15% Life, Pension & ISAs Home & Contents Motor Communication and management of policies 25

26 METHODOLOGY The 2015 Majesco Research Report on the UK Insurance Industry was conducted among 1000 UK adults with an insurance policy. The interviews were conducted online by Redshift Research in May 2015 using an invitation and an online survey via Redshift Research s Crowdology panel. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample. Sample was selected from the Crowdology & Crowdology partner panels. Crowdology is an online panel owned and operated by Redshift Research. The Crowdology panel is balanced across regional, age and gender demographic factors, and is nationally representative of the UK population. Each respondent completes 120 profiling questions before being accepted to join our panel. Panel Quality Management is carried out frequently to ensure reliable surveys. 26 The 2015 Majesco Research Report

27 DEMOGRAPHICS Supervisory, clerical or junior managerial work 22% Intermediate managerial, administrative or professional work 21% 48% 52% Retired Looking after home/family/dependents full time Skilled manual work (e.g. electrician, plumber etc) Lower paid full time manual work (unskilled or semi-unskilled e.g. in a factory or warehouse) 8% 7% 5% 17% Business owner 4% Part time lower paid work (e.g. cleaner, bar work etc) 4% Male Female Higher grade managerial, administrative or professional work 4% Unemployed 3% I am unable to work due to sickness/disability 3% Student 2% 7% 24% 18% 19% 22% 10% 1% 7% 24% 18% 19% 22% 1% 10% Over 65 Less than 15k p.a k k k 50k k 75k k 150k + 14% 14% 10% 10% 9% 9% 8% 8% 7% 5% 4% 2% South East North West Greater London Yorkshire/Humberside East Midlands East of England South West Scotland West Midlands North East Wales NI Methodology and Demographics 27

28 Majesco enables insurance business transformation for approximately 140 insurance customers by providing solutions which include software, consulting and services. Our customers are insurers, MGA s and other risk providers from the Property and Casualty, Life, Annuity and Group insurance segments worldwide. Majesco delivers proven software solutions, consulting and services in the core insurance areas such as policy, billing, claims, distribution management, BI/ analytics, digital, application management, cloud and more. For more details on Majesco, please visit Find out more about how technology solutions can support better communications and customer service in the insurance sector. Majesco UK Ltd. Pennant House, 2 Napier Court, Reading, RG1 8BW UK Phone: +44 (0) Fax: +44 (0)