CUSTOMER BEHAVIOR AND LOYALTY IN INSURANCE: GLOBAL … · value to customers. A customer-centered approach has ﬁ nally gained the attention of many insurance executives ... its

CUSTOMER BEHAVIOR AND LOYALTY IN INSURANCE: GLOBAL EDITION 2016

Creating opportunities beyond basic coverage

Net Promoter Score® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

Copyright © 2016 Bain & Company, Inc. All rights reserved.

Key contacts in Bain’s Global Financial Services practice

AmericasRodrigo Maranhao in São Paulo ([email protected])

Antonio Rodrigues in Toronto ([email protected])

Diego Santamaria in Mexico City ([email protected])

Andrew Schwedel in New York ([email protected])

David Whelan in Chicago ([email protected])

Asia-Pacifi cAlfred Shang in Beijing ([email protected])

Harshveer Singh in Singapore ([email protected])

Peter Stumbles in Sydney ([email protected])

Matt Sweeny in Tokyo ([email protected])

Youngsuh Cho in Seoul ([email protected])

Europe, Middle East and AfricaAndrew Carleton in London ([email protected])

Camille Goossens in Paris ([email protected])

Vincenzo Gringoli in Milan ([email protected])

Christian Kinder in Munich ([email protected])

Nicolás Lopez in Madrid ([email protected])

Henrik Naujoks in Zürich ([email protected])

Kazimierz Stanczak in Warsaw ([email protected])

Chris Stokes in London ([email protected])

Acknowledgments

This report was prepared by Henrik Naujoks, Camille Goossens, Gunther Schwarz, Harshveer Singh,

Andrew Schwedel and David Whelan, who are partners with Bain’s Financial Services practice, and a team

led by Tanja Brettel, a practice area director, and Shilpi Goel, a practice area consultant. Team members are

Rahul Agarwal, Vidisha Agarwal, Sourish Gue, Vaibhav Kalani and Pranav Singh. The authors thank Bain

partners in each of the countries covered in the report for their valuable input and John Campbell for his

editorial support.

Customer Behavior and Loyalty in Insurance: Global Edition 2016 | Bain & Company, Inc.

Page i

Contents

Executive summary: The consumer is sovereign . . . . . . . . . . . . . . . . . . . . pg. 3

1. The imperative to earn greater loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 11

2. Creating delight through mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 17

3. Mastering the customer-switching game in P&C . . . . . . . . . . . . . . . . . . . pg. 25

4. Capturing greater share of wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31

Appendix: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 36


Page 2


Page 3

The consumer is sovereign

From tracking drivers’ braking behavior to installing wearable devices on factory workers and funding medical-

advice mobile apps, many insurance companies are trying to become more present in their customers’ lives. They

know that improving the long-term economics of the business will require interacting more and delivering more

value to customers. A customer-centered approach has fi nally gained the attention of many insurance executives

as an alternative to the traditional, internal focus on products, agents and in-year fi nancial considerations.

What accounts for this shift in perspective? The low-interest-rate environment has depressed investment returns

for paid-in premiums, and in mature markets, there has been almost no growth in product penetration, forcing

insurers to rethink their economic models for their core businesses. Regulators in some countries, including the

UK and Australia, have also been questioning whether fee structures for fi nancial advisers generate acute confl icts

of interest that harm consumers. These macroeconomic and regulatory forces make earning customer loyalty

more important now than ever.

More broadly, many executives now realize that a business built around customer loyalty and advocacy can yield

substantial long-term benefi ts. 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, Bain & Company analysis shows, with the mix

of these forces dependent on the particular market and type of insurance.

Bain’s new survey of 164,421 consumers in 19 countries, through Research Now, sheds light on how various cus-

tomer segments perceive their P&C and life carriers, what customers want from their carriers and how different

distribution and interaction channels infl uence loyalty.

The survey data shows that loyalty remains tough for many insurers to come by. One structural reason is that

insurers have far fewer interactions with customers than, say, retail banks. In some markets, interactions are even

dwindling with the rise of online aggregators (also known as comparison sites).

Another reason stems from the fact that most insurers don’t have or have just begun to install a full-fl edged system

to analyze their customer feedback and take actions that will improve customers’ experience. Feedback that

doesn’t lead to action is meaningless.

In some of the countries surveyed, though, one or two carriers in life and P&C manage to excel in earning con-

sumers’ advocacy. Most loyalty leaders have found ways to generate more meaningful interactions by redefi ning

what it means to be a provider. For example, HUK-Coburg, the loyalty leader in Germany, has continually redefi ned

its value proposition around auto insurance since launching its network of partner car repair shops in 2005. Over the

years since then, it has improved its claims experience and added services such as inspections, all at attractive prices.

While earning loyalty is necessary, it is insuffi cient for generating superior revenue growth. Insurers must also

motivate customers to actively promote the company and learn to monetize loyalty. Bain’s new survey analysis

and our work with insurance companies worldwide suggest four important themes for insurers to keep in mind

as they build out a customer-centered distribution and service model.


Page 4

Fight to get closer to the customer

Being in touch more frequently with consumers contributes to loyalty, in both the life and P&C sectors. The

level of contribution varies—with France and Spain at the low end and China, Indonesia and Malaysia at the

high end—but it is signifi cant in every country surveyed. Interactions that are complex and attract more

multichannel behavior, such as getting advice and a quote on a life insurance product or initially fi ling a

claim, have the biggest potential to delight customers. But even raising the number of simple digital interac-

tions can advance the cause of loyalty; as a bonus, each interaction allows an insurer to learn more about the

individual consumer and to set the stage for customized future offerings.

Current digital tools, moreover, expand the universe of possible interactions. Links between insurers’ IT

systems, customers’ smartphones and connected devices in cars, homes and workplaces now enable more

product and service innovations, not just a convenient channel to interact through.

That universe includes a range of services that extend well beyond traditional insurance coverage. A large

share of consumers in our survey expressed interest in such services, and an even larger group would be

willing to share their fi nancial, health or other personal data with insurers. These fi ndings signal consumers’

trust in their carriers, opening the door to stronger relationships with customers.

A strategy of adding services might not strictly aim to raise revenues, but rather to deliver value by earning

greater loyalty and lifetime value of customers. Some insurers are starting to create an ecosystem of such

services, with emerging initiatives taking many forms:

• AIG has invested in Human Condition Safety, a technology start-up developing wearable devices, analytics

and systems to improve worker safety. These tools help workers, managers and worksite owners prevent

injuries in manufacturing and construction.

• AXA Germany has teamed up with RWE, using RWE’s SmartHome automation system to minimize

fl ood damage and provide fast support—an example of AXA’s stated shift “from payer to partner.”

• Many ancillary services for drivers depend on a telematics box installed in the vehicle (see Figure 1)—

for example, a street-sweeping alert from Metromile and stolen-vehicle tracking and recovery from Discovery.

• A few insurers have experimented with “gamifi cation” and found that it stimulates customer engage-

ment in vertical markets such as auto and health. In South Africa, Discovery used a mobile app devel-

oped by Cambridge Mobile Telematics for a nationwide safe-driving contest, in which tens of thousands

of drivers competed for prizes. Findings show that safe driving increased by more than 30% during

the contest.

Competition has intensifi ed as fi ntechs redefi ne how customers experience insurance and aggregators and

brokers interact directly with consumers. Expanding services—often in concert with third-party providers—

offers a powerful means for insurance providers to use their customer assets so they don’t get sidelined into

the lower-value role of a utility.


Page 5

Fix the basics and accelerate the mobile channel

Customers want to be able to use the channel that’s convenient to the moment, whether that’s a website, an in-

person meeting, a phone call, a video chat with an agent or, increasingly, a mobile device. The expectation of using

any channel pervades all customer segments, regardless of age, income or insurance needs. And the share of

consumers using digital channels to complement other channels keeps growing: almost one-third of consumers

in Hong Kong and two-thirds in mainland China now use digital channels when purchasing a P&C product.

Mobile’s role, in particular, continues to expand though it’s well below what many banks have offered their cus-

tomers. As a quick indicator, consider that when Bain asked consumers if they would miss more their mobile

phones or physical wallets for a day, more than half chose their phones, with the share reaching 79% in China (see Figure 2). Mobile clearly has advanced past the tipping point, though the rate of adoption varies signifi cantly

among countries. Multinational companies thus will need a thorough understanding of the digital dynamics in

each country of operation; they cannot simply roll out a mobile app worldwide.

Companies that get mobile design right can reap huge benefi ts. Our survey shows that mobile can create delight

among customers in many countries (see Figure 3).

Some of the most creative and promising mobile apps originated in China. For example, Ping An, one of China’s

largest insurers, in 2009 launched the fi rst online fi nancial management service in China, linking customers to

Figure 1: A broad array of connected car services is using telematics and smartphone apps

Live conciergesupporting navigation

Alert when speedlimits are exceeded

Antitheft service if the boxregisters an unusual style

of driving

Alert if the vehicle exits a “safe” neighborhood as defined by

the customer (parental controls)

Weather alert basedon geolocation

Parkinglocations

Street-sweepingalerts

Claimscertification

Simplified claim notification,including automatic form fill-in

based on telematics data

Automatic assistanceif severe accident occurs

Customerassistance andpersonalizedcasemanagementin the eventof a crash

Road or medical assistance

Highwaytolls and parkingfees

Alert whenvehicle ismoved or towed

Alert if the caris hit while parked

Antitheft serviceif the box isremoved oruninstalled

Stolen vehiclerecovery

While driving

After an accident

Whileparked

Source: Bain & Company/ANIA Observatory on Telematics, Connected Insurance & Innovation


Page 6

dozens of websites, including insurance, banking, payments and airlines. More recently, it built a mobile platform

called Ping An Good Doctor, which now has 77 million registered users and more than 50,000 doctors on board.

Mobile-led service provision allows insurers to differentiate themselves from competitors. But the loyalty leaders

also excel at the basics of business: accuracy, reliability and ease of use in every channel and during every interaction.

Mastering the basics—engaging customers seamlessly across channels—requires coordination among different

functions within the organization. It’s critical to have a unifi ed, complete view of the customer across all business

lines, which can be a challenge for traditional insurers, whose underwriting, claims, marketing, sales and call-

center departments make their own investment decisions and whose different businesses, such as P&C, life and

health, operate separately. Another common challenge stems from underinvestment in mechanisms to ensure

that the customer interactions in one channel fl ow through to the other channels. Isolated, uncoordinated invest-

ments create major ineffi ciencies and make for a disjointed customer experience. To deliver a seamless experi-

ence, these walls must come down.

Raise the game in customer acquisition and retention

Performance on acquisition and retention of customers varies widely among P&C insurers—and only a very few

companies excel at both, our survey shows.

That’s true for several reasons. Acquisition leaders tend to attract customers who are highly price sensitive and

thus more likely to defect when they are presented with a lower-priced offer; price-sensitive customers in the US

Figure 2: Most consumers in most countries would miss their phones more than their wallets

0

20

40

60

80

100%

China SouthKorea

HongKong

Brazil Poland France Mexico Spain US Singapore UK Australia Germany Canada Japan

Percentage of people who would miss their phones more than their wallets, 2015

Source: Bain/Research Now NPS survey, 2015

Under age 25

Age 55 or over

Average


Page 7

have a defection rate of 2.6 times that of other customers. Customers of acquisition leaders tend to be younger and

lower income, and have fewer insurance needs. These companies spend more on advertising, and some skew

toward direct distribution channels, using no or few agents. Their structurally lower expense ratios allow them to

deliver on a low-price promise.

By contrast, companies that lead in retention have more customers who value peace of mind. Their customers

tend to be less price sensitive, older and more affl uent, and have more complex insurance needs. One payoff for

these companies is that retention correlates strongly with higher loyalty.

The acquisition-retention divide often gets reinforced by company culture and business model. Some fi rms have

set up to excel in acquisition with a low-cost, convenient, advertising-heavy, direct-to-consumer business model.

Such P&C fi rms may have a more diffi cult time with customer retention given that the customers they attract

tend to be more price sensitive and more prone to switching in the future.

Whatever an insurer’s initial tendency, a few practical implications fl ow from our survey:

• Refi ne marketing campaigns to be more selective in choosing customers. Attracting only price-sensitive

customers will likely generate higher churn down the road, so carriers that take this route will have to con-

tinually manage costs down to attract an outsize share of new customers and maintain their market positions.

As the advertising arms race escalates, there may come a point of diminishing returns, so insurers should

make advertising and direct marketing more effective today.

Figure 3: China’s P&C insurance companies have created remarkable digital experiences

0

1

2

3

4

5%0 35 36 37 38 39 40 41 42 43 44%

Bubble size shows frequencyof interactions

Online

Phone

Annoying

Reliable Delightful

Variable

Increasing likelihood to delight

Dec

reas

ing

likel

ihoo

d to

ann

oy

Share of P&C customers in China, 2016

Notes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider”; responses were scored on a scale from −5 to 5, and interactions that were given scores of ≥4 were considered likely to delight; interactions given scores of ≤−1 were considered likely to annoy Source: Bain/Research Now NPS survey, 2016

In-person

Mobile


Page 8

• Use advanced analytics to improve consideration among less price-sensitive segments. Once the customer is

on board, intensify tailored marketing to provide services and information that customers value or to reas-

sure them that “we’ve got your back.”

• To boost conversion of new prospects, make it easy for people to fi nd the right information, get a quote or get

confi rmation. While instant online quotes now are routinely offered in auto lines in some countries, online

quotes have only begun to appear for home coverage. Agents or contact center reps should also follow up

with people who abandon online applications.

• To help improve retention, build predictive models that better match tailored products to target segments.

USAA, for example, mines customer data to inform targeted marketing that is triggered by a life event, such as

offering additional auto insurance to a family when a child turns 16. Few insurers systematically track such

triggers: Bain’s digital insurance benchmarking study in 2015 found that fewer than 50% of P&C carriers and

35% of life carriers track any customer buying signals (such as buying a house or car) using digital technologies.

• Invest in delighting, not simply satisfying, customers at key moments of truth. In P&C, claims handling offers

a huge opportunity to delight. Some carriers, for instance, have achieved greater loyalty and retention by

developing a network of certifi ed auto repair centers that provide higher-caliber repair at lower cost.

Retention rates often can be raised through some straightforward tactics, not expensive new capabilities. Con-

sider recent changes at Farmers, a US multiline insurer. A few years ago, its operating model was geared to acqui-

sition, and the company was losing up to 25% of its customers every year. Stepping back to examine why, Farmers

learned that its top-decile customers were worth signifi cantly more than those in the bottom decile, and what

accounted for that difference was customers’ tenures with Farmers and the number of policies they held. Yet

Farmers had no loyalty program for its long-time customers.

Farmers turned its attention to creating better experiences, focusing on its highest-value customers. For example,

key drivers of defection were a complex pricing system and poor communication around renewal pricing. A

household that had six policies with Farmers could go through 6 to 12 renewal periods in a year, each with its own

notice of price change—yet no explanation of why the price moved. Armed with this knowledge, Farmers

recently refi ned its scripts and communications for agents and call centers, and is testing innovative price-

stabilizing products that received early positive feedback.

Expand your share of wallet

One of the most effective methods to retain more customers is to sell them more products. Customer churn drops

sharply as an insurer sells customers another one or two products, our survey fi nds. And many insurance fi rms

have ample room to expand their share of the customer’s wallet. A large group of life insurance customers, par-

ticularly in Asia, expressed a need for more products or more coverage, and would likely buy from their primary

insurers. Finding profi table growth through current customers typically is less expensive and yields a higher

return on investment than acquiring new customers.

Fortunately for marketers, some of the barriers to cross-selling have fallen in recent years. The proliferation of

customer data with rich contextual information and greater computing power to analyze this data make it feasible


Page 9

to learn more about customers, create more compelling value propositions and target with more precise offers at

the most opportune time.

Here again, insurers can use a variety of tactics. Some tactics are relatively basic, such as adding a sales compo-

nent to inbound calls, freeing up time for agents to actually sell or offering online diagnostic tools that show

consumers how to optimize their coverage. In the UK, Admiral gives customers and their immediate family

members a strong incentive to insure their cars with the company. Even if family members reside at different

places, they can be insured on one policy and receive Admiral’s MultiCar benefi ts and discounts. Customers have

insured more than 3 million cars through this program since 2005.

Other tactics depend on more sophisticated analytics techniques, such as automatically generating a next-best

offer or integrating the insurer’s P&C, life and health customer databases in order to see which products are con-

sumed by a single household. In the US, Progressive uses analytically optimized pricing to raise cross-selling

rates, and it prepopulates renewal application forms with discounts for customers adding products. Some 40% of

Progressive customers have both auto and home insurance, and an average lifetime value that is two to four times

as high as customers with only one product.

Executives committed to raising their cross-selling and upselling rates should fi rst ask, which of our products are

lagging—for example, how many of our auto policyholders don’t hold a second product, and how does that com-

pare with the market leader? Answering this question determines the priorities in terms of product and customer

segment. Second, executives should ask, what tactics can we use to reach our target?

• • •

Consumer sovereignty has only grown stronger with choices for less expensive insurance coverage just a few

clicks away. But most consumers don’t want to defect. To the contrary, they often want to simplify their lives and

do business with a single company that gives them reasons to stay. For most insurers, then, reigniting organic

growth involves a heightened focus on earning customers’ loyalty by understanding their needs, interacting with

them more intensely and delivering more value in the core insurance offering, and beyond. Digital tools now

allow companies to get there faster, at scale and with more precision.

• Most insurers, especially in the life sector, rarely interact with customers—a major impediment to earning loyalty. Being in touch with customers has a large positive effect on loyalty, for both life and P&C.

• Across all of the countries analyzed, there is a signifi cant gap between loyalty leaders and lag-gards—up to 60 points and 80 points in the P&C and life sectors in the US, respectively. Many of the leaders in 2014 continue to lead today: in the P&C sector, for example, Liverpool Victoria in the UK and HUK-Coburg in Germany; in the life sector, USAA in the US and Prudential (UK) in some Asian markets.

• Many customers trust insurers to serve them beyond basic coverage, as providers of platforms offering ancillary services related to car, home, health and life. These services range from auto sales and leasing sites to fi tness club memberships and flood monitoring in home basements. Many involve partnerships with third parties.

• Of those customers who value such services, about 50% in Germany and 80% in South Korea and France view their primary insurers as potential platform providers.

• Furthermore, most customers would share their health, fi nancial and other personal data with insurers. About 60% of customers in Japan and 95% in China are willing to share at least one type of personal data.

1.The imperative to earn greater loyalty


Page 12

Figure 4: In most American and European markets, there is a large gap in customer loyalty between leaders and laggards in the P&C sector

Switzerland

UK

Spain

Italy

Germany

France

Euro

pe

US

Mexico

Canada

Primary P&C insurer’s Net Promoter Score® relative to loyalty leader, 2016 (indexed to zero)

Schweizerische Mobiliar

Liverpool Victoria

Mutua Madrileña

Genialloyd

HUK-Coburg

MAIF

USAA

No clear leader

No clear leader

Am

eric

as

−100 −80 −60 −40 −20 0

AverageHighest scoreLowest score

Note: Net Promoter Score® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.Source: Bain/Research Now NPS survey, 2016

Figure 5: In most Asia-Pacifi c markets there is a large gap in customer loyalty between leaders and laggards for the P&C sector

South Korea

Singapore

Malaysia

Japan

Indonesia

Hong Kong

China

Australia

Primary P&C insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)

Samsung

NTUC Income

Etiqa, Zurich

Sony

Allianz

Prudential (UK)

PICC

Apia

Asi

a-Pa

cific

−100 −80 −60 −40 −20 0




Page 13

Figure 6: In most American and European markets there is a large gap in customer loyalty between leaders and laggards in the life sector

Switzerland

UK

Spain

Italy

Germany

France

Euro

pe

US

Mexico

Canada

Primary life insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)

No clear leader

Prudential (UK)

MAPFRE

Allianz, UnipolSai

HUK-Coburg

MAIF

USAA

Seguros Monterrey

No clear leader

Am

eric

as

−100 −80 −60 −40 −20 0



Figure 7: In most Asia-Pacifi c markets there is a large gap in customer loyalty between leaders and laggards in the life sector

South Korea

Singapore

Malaysia

Japan

Indonesia

Hong Kong

China

Australia

Primary life insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)

Shinhan

No clear leader

Prudential (UK)

Sony

Allianz, Prudential (UK)

Prudential (UK)

China Life

Allianz

Asi

a-Pa

cific

−100 −80 −60 −40 −20 0




Page 14

Figure 8: Being in touch contributes to loyalty

0

10

20

30

40

50

60

70

China

43

63

Indonesia

26

42

Malaysia

33

Singapore

35

26

Mexico

3128

HongKong

3227

Brazil

32

23

Poland

2727

Switzerland

2327

SouthKorea

24

Japan

2422

Italy

2519

Australia

2321

Germany

2321

US

26

15

Canada

23

17

UK

1820

Spain

1814

France

20

12

Percentage point difference in Net Promoter Scores between customers who had an interaction in the past 12 months and those who did not

3225

Life P&C


Figure 9: Customers would value a platform for services beyond insurance coverage …

0

20

40

60

80

100%

Share of customers saying they would value a platform for services in four areas

Auto Home Health Life

Mexico

Such as monitoring driving behavior, platform to buy or sell

cars, getting advice on auto repairshops, antitheft services

Such as advice and discountson home monitoring systems,recommendations for repair providers, real estate sales,

flood monitoring

Such as health advice and monitoring, fitness-plan provider,

doctor recommendations

Such as health advice/monitoring,estate planning and legal advice

China

Brazil

US

Indonesia

Canada

Poland

Malaysia

Spain

Singapore

France

Australia

Switzerland

Italy

Germany

Hong Kong

UK

South Korea

Japan



Page 15

Figure 10: … and customers view insurers as potential providers of additional services

0

20

40

60

80

100%

SouthKorea

France

Japan

Mexico

Malaysia

Spain

Indonesia

China

Italy

Brazil

Australia

Singapore

HongKong

Switzerland

US

Poland

Canada

UK

Germany

Among P&C and life customers interested in a platform for services that extend beyond insurance coverage, the share who can imagine an insurance company providing the platform


Figure 11 : Most customers would share personal data with insurers

0

20

40

60

80

100%

P&C and life customers aged 25–34, ranked by willingness to share personal financial, health or other data with insurers

Ope

n sh

arer

s

China

Hong Kong

Indonesia

Mexico

Malaysia

Italy

Singapore

Switzerland

Germany

Brazil

US

Canada

Australia

France

Spain

UK

Poland

South Korea

Japan

Sele

ctiv

e sh

arer

sN

ot w

illin

g to

sha

re

Notes: Open sharers are willing to reveal personal data to insurers; independent of the type of data; selective sharers would only share some personal dataSource: Bain/Research Now NPS survey, 2016

• Customers are increasingly embracing digital channels, both online and mobile, for their insurance interactions. The share of digitally active customers has increased everywhere over the past two years, though the rate of change varies by country. China, Brazil and Mexico have seen the greatest growth in digital use.

• Digital does not replace other channels but rather complements them, as customers are using more channels than they did two years ago. Digital raises the level of interactions, and a signifi cant share of customers now use digital channels for purchasing P&C products.

• Multichannel interactions tend to be more effective in garnering loyalty. In most countries, digital-only customers give lower loyalty scores than cus-tomers who use phone-only, in-person or multiple channels. Customers want easy, fast, convenient websites and mobile apps, and few insurers have been able to design digital tools that meet these expectations.

• Mobile usage is coming on strong, however, even outpacing online usage in some Asian markets, such as Singapore, Hong Kong and Australia. And despite the low loyalty scores for digital on average, mobile offers huge potential to delight, especially for claims. Among some loyalty-leading companies, for example, customers give the highest loyalty scores for their mobile experience. USAA, whose banking arm invented remote check deposit in 2009, has been in the forefront of mobile innovation, in large part be-cause it serves members of the military who are deployed to bases around the world.

2.Creating delight through mobile


Page 18

Figure 12: The share of digitally active customers has risen, and China and the UK lead with about 77%

0

20

40

60

80

100%

0 5 10 15 20 25 30 35

Share of digitally active P&C and life customers, 2016*

Percentage point increase in share of digitally active customers,* 2016 vs. 2014

US

SpainCanada

Australia

Singapore

MexicoBrazil

France

China

MalaysiaIndonesia South

Korea

Hong Kong

Italy

Japan

Poland

UK

Germany

*Respondents who used digital channels for their most recent research to find insurance-related information and for their most important interaction with their insurance providersNotes: 2014 data for Switzerland is unavailable; Switzerland had a 53% share of digitally active customers in 2016Sources: Bain/Research Now NPS surveys, 2013–14 and 2016; Bain/SSI NPS surveys, 2013–14

Figure 13: Customers increasingly use digital channels in combination with other channels

0

5

10

15

20%

0 20 40 60 80%

AustraliaJapan

China

Germany

Share of P&C customers using digital and other channels, 2014 and 2016

Share of digital-only P&C customers, 2014 and 2016

Italy

South Korea

Hong Kong Malaysia IndonesiaSpain

Mexico

Brazil

Singapore

France

Canada

Poland

UK

US

Sources: Bain/Research Now NPS surveys, 2013–14 and 2016; Bain/SSI NPS surveys, 2013–14

20162014


Page 19

Figure 14: Almost one-third to two-thirds of customers use digital channels when purchasing a P&C product

0

20

40

60

80

100%

Share of customers using digital channels to purchase a P&C product in past 12 months

66

59 5853 52 51

47 46 4542 42 41 40 39 38

30 30 29

China

UK

Indonesia

Brazil

Australia

US

SouthKorea

Singapore

Germany

Malaysia

Italy

Mexico

Spain France

Japan

Poland

Canada HongKong

Note: Includes digital-only and hybrid-channel customers Source: Bain/Research Now NPS survey, 2016

Figure 15: The use of digital channels for purchasing has increased signifi cantly, complementing, not replacing, physical channels in most countries

−50

0

50

100

150

200%

Change in number of channels used per customer for P&C product purchase, 2016 vs. 2014

Mexico

China

France

Japan

Spain

Indonesia

Brazil

South Korea

Canada

US

Malaysia

Australia

Poland

UK

Germany

Singapore

Italy

HongKong

Digital (email, browser through computeror mobile device, mobile app)

Phone (customer service center, personal adviser)

In-person (agent, broker, bank)

Channel categories

Sources: Bain/Research Now NPS surveys, 2013–14 and 2016; Bain/SSI NPS surveys, 2013–14


Page 20

Figure 16: P&C customers interacting only through digital channels give relatively lower loyalty scores in most countries

−10

−5

0

5

10

15

Net Promoter Scores of P&C customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)

4

Australia

1010

5

−5

10

1

5

France

6

0

6

US

7

China

Digital-only customers In-person or phone-only customers Multi-channel customers


Figure 17: Life insurance customers interacting only through digital channels give relatively lower loyalty scores in most countries

−20

−10

0

10

20

30

Net Promoter Scores of life insurance customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)

3

Australia

12

17

−8

−14

China

16

−4

9

France

86

13

US

22

Digital-only customers In-person or phone-only customers Multi-channel customers



Page 21

Figure 18: For research, customers still use online more than mobile in most markets

0

10

20

30

40

50%

0 10 20 30 40 50%

Share of customers using browser or app on smartphone or tablet for P&C insurance research

Share of customers using browser on desktop or laptop for P&C insurance research

Germany

Italy

Mexico

France

Japan

Canada

Switzerland

Hong Kong

Spain

Brazil

Poland

SouthKorea

Singapore

US

Australia UK

Malaysia

Indonesia

China


Online exceeds mobile

Mobile exceeds online

Figure 19: Online interactions are less frequent for customized advice, although mobile has become rele-vant in many markets

China

Online exceeds mobile

Mobile exceeds online

IndonesiaMalaysia

SingaporeBrazilMexico

SouthKorea

UK

SpainHong Kong

Japan

US

Australia

GermanyPoland

France

Switzer-land Canada

Italy

0 10 20 30 40 50%0

10

20

30

40

50%

Share of P&C customers using browser or app on smartphone or tablet for customized advice

Share of P&C customers using browser on desktop or laptop for customized advice



Page 22

Figure 20: In-person interactions still provide a better P&C experience in some countries, but Asian markets show that mobile can delight

Channel experience score for P&C, relative to leading channel, 2016 (indexed to zero)

Americas Asia-Pacific Europe

China Malaysia SpainSouthKorea

UK

Mobile Online (including email) In-person Phone

Note: Channel-experience score is calculated by subtracting “likelihood to annoy” percentage from “likelihood to delight” percentageSource: Bain/Research Now NPS survey, 2016

BrazilUS IndonesiaAustraliaHongKong

Singa-pore

ItalyFranceGermany

0

−5

−10

−15

−20

Figure 21: For the P&C sector in the US, in-person interactions generally create a strong experience, but customers appreciate mobile for claims

Channel experience score for P&C in the US, relative to leading channel, 2016 (indexed to zero)

Mobile Online (including email) In-person Phone

Note: Channel experience score is calculated by subtracting "likelihood to annoy" percentage from "likelihood to delight" percentageSource: Bain/Research Now NPS survey, 2016

0

−5

−10

−15

−20

P&C marketaverage

Learn aboutprovider or product

Seek customizedadvice

Purchase product Seek services Submit claims


Page 23

Figure 22 : The mobile channel offers a major opportunity to delight P&C customers

0%

2

4

6

8

100 35 40 45%

Bubble sizeshows frequencyof interactions

Online

Annoying

Reliable Delightful

Variable

Increasing likelihood to delight

Dec

reas

ing

likel

ihoo

d to

ann

oy

Share of P&C customers in US, 2016

*Based on share of digitally active customersNotes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider"; responses were scored ona scale from −5 to 5; interactions that were given scores of ≥4 were considered likely to delight, and interactions given scores of ≤−1 were considered likely to annoySource: Bain/Research Now NPS survey, 2016

In-person

In-person

Mobile

Phone

Online

Online

Mobile

Mobile

Phone

Phone

Net Promoter Score leader (USAA) Top 5 digital insurers* Market average

• In both auto and home, most new customers have switched from another carrier, rather than being fi rst-time buyers. The UK, with its strong presence of aggregators, has by far the highest share of switchers among the people who bought a policy in the past year. Customer churn is most problematic for carriers in countries where an older demo-graphic, combined with high insurance penetra-tion, limits the number of fi rst-time buyers.

• Insurers typically compete aggressively to acquire new customers or to retain current customers. Very few manage to excel in both activities, and some underperform in both.

• Before customers switch auto or home policies, they tend to engage in comparison shopping, which heightens competition and crimps profi t-ability. Aggregator platforms have emerged in all markets, and they have become the main channel for comparison-shopping research in a few markets, such as Japan, Germany and the UK.

• Acquisition hinges on generating and converting leads, and many companies have ample room to improve in one or both of those activities to win their fair share of shoppers.

• Companies that lead in acquisition attract more price-sensitive customers than companies that excel in retention. These customers naturally are more diffi cult to retain, having high defection rates—up to 2.6 times that of other customers—as they hunt for the next price deal.

• Earning greater loyalty puts the brakes on defection, but as companies still need to acquire new cus-tomers, it’s essential for insurers to pursue three streams simultaneously: to attract and convert more customers who value peace of mind, to drive down the cost of acquisition and to give new cus-tomers good reasons to stay.

3.Mastering the customer-switching game in P&C


Page 26

Figure 24: P&C carriers tend to perform better on either customer acquisition or retention, but not both

Auto insurance in the US Auto insurance in the UK

0

0.5

1.0

1.5

2.00 0.5 1.0 1.5 2.0

Customer acquisition index

Customer-loss index

Better

Better

Worse

0

0.5

1.0

1.5

2.00 0.5 1.0 1.5 2.0

Customer acquisition index

Customer-loss index

Ave

rage

Better

Worse

Ave

rage

Worse

Worse on both

Better on both

Worse on both

Better on both

Average BetterWorse Average


Figure 23: The majority of new customers have switched from another insurer

0

20

40

60

80

100%

UK

Italy US

Japa

nPo

land

Fran

ce

Ger

man

y

Sing

apor

eA

ustra

lia

Spai

nBr

azil

Can

ada

Sout

h Ko

rea

Mal

aysi

a

Mex

ico

Switz

erla

nd

Chi

na

Indo

nesi

a

Customers who purchased an auto policy from new provider in past 12 months

0

10

20

30

40

50

60

70

80

90

100%

UK

Aus

tralia

Fran

ce

Ger

man

y

Can

ada

US

Customers who purchased a home policy from new provider in past 12 months

Auto Home

Switchers First-time buyers



Page 27

Figure 25: Most P&C customers comparison shop before buying coverage

0

20

40

60

80

100%

Share of customers who comparison shopped before purchasing auto insurance in past year

UKBrazil

ItalySpain

PolandAustralia

USGermany

MexicoFrance

JapanSouthKorea

CanadaMalaysia

SwitzerlandIndonesia

SingaporeChina


Figure 26: Aggregators have the strongest role for P&C comparison shopping in Japan, Germany and the UK

0

20

40

60

80

100%

Japan Germany UK Poland Switzer-land

Spain Brazil Mexico Italy France SouthKorea

Australia Canada US Malaysia

Comparison-shopping research for auto insurance in past 12 months

Aggregator shopping exceeds traditional

shopping Traditional shopping exceeds aggregator shopping

Aggregator shopping Traditional shopping



Page 28

Figure 28: P&C acquisition leaders attract more price-sensitive customers than retention leaders

0

20

40

60

80

100%

Acquisition leaders

Price

Advice/easeof purchase

Product

Service/claims

Other

Retention leaders

Reputation

Prior relationship

0

20

40

60

80

100%

Acquisition leaders

Retention leaders 0

20

40

60

80

100%

Acquisition leaders

Retention leaders

Australia Germany US

Price


Product

Service/claims

Reputation

Price


Product

Service/claims

Reputation

Prior relationshipOtherPrior relationship


Customers who purchased an auto policy from a new provider in past 12 months, by key purchasing criteria

Figure 27: Many carriers have room to improve their lead generation and conversion, each of which contributes to winning a fair share of shoppers

Auto insurance in Germany Auto insurance in Australia

Conversion of leadsHighLow

Conversion of leadsHighLow

Notes: Traditional shoppers only, not aggregators; fair share is defined as market shareSource: Bain/Research Now NPS survey, 2016

High

Low

Lead generationrelative to

marketshare

Winning morethan market share

Winning lessthan market share

Winning morethan market share

Winning fairshare ofcomparisonshoppers

Winning lessthan market share

High

Low

Lead generationrelative to

marketshare

Carrier

Winning fairshare ofcomparisonshoppers


Page 29

Figure 29: Price-sensitive P&C customers tend to churn more; their defection rate is up to 2.6 times that of other customers

0

1

2

3x

2.6 2.6 2.52.4

2.2 2.22.0

1.8 1.81.6 1.5 1.5

1.41.2

1.00.9 0.8 0.8

Defection rate of price-sensitive auto customers relative to other auto customers (past 12 months)

ChinaUK Indonesia

Brazil

Australia

US SouthKorea

Singapore

Germany Malaysia

Italy Spain

MexicoFrance JapanPoland

Canada Switzerland

Higher defection rate Lower or similardefection rate


Figure 30: P&C insurers with higher loyalty scores have lower defection rates

0

0.5

1.0

1.5

2.0

0 20 40 60 80

Customer-loss index for US auto insurance

Net Promoter Scores for P&C insurers in US, 2016

Worse R2=0.51

Better

Ave

rage

US insurance company


• Improvements in cross-selling can generate huge value in both P&C and life. Customers owning more insurance products stay longer, as evidenced by a much lower churn rate at any stage of the relationship for people who have multiple contracts relative to those with just one. And fi nding profi t-able growth through existing customers typically is easier and less expensive than acquiring new customers, and yields a higher return on investment.

• There is a massive gap between cross-selling leaders and laggards among P&C, life and multi-line insurers in each country. Leaders sell up to twice as many products as laggards. The gap between multiline insurers is widest in Hong Kong, the US and France, and narrowest in Australia, Mexico and Switzerland.

• Opportunities abound to expand share of wallet. Many life insurance customers express a need for more coverage and more products, particularly in China, Indonesia, Malaysia and South Korea. Moreover, in most countries, the majority of customers are likely to buy from their primary insurers. Many carriers have earned the right to an additional sale—but they have to ask.

• Insurers have opportunities to engage with cus-tomers through live and digital channels. Many customers expect insurers to be proactive about contacting them with advice about such things as planning for savings and investments.

• Leaders in cross-selling often have higher loyalty scores, longer customer tenures and favorable customer demographics. Profi ciency in cross-selling thus offers a route to growth: directly, by selling more products per customer, and indirectly, as customers with more products stay longer.

4.Capturing greater share of wallet


Page 32

Figure 32: For multiline fi rms, there is a large gap in cross-selling between leaders and laggards

Average number of P&C and life insurance products per household and provider, 2016 (indexed to market average)

1.9x 1.6 1.5 1.5 1.3 1.2 1.2 1.2 1.21.8 1.8 1.7 1.7 1.7 1.7 1.7 1.7

50

75

100

125

150

Number of products,leader relative to

laggard

HongKong

US

France

China

Singapore

Malaysia

Poland

Germany

Canada

Spain

SouthKorea

Italy

UK

Japan

Australia

Mexico

Switzer-land

AIA USAA MAIF PingAn

NTUCIncome

AIAPZU LVM

Desjardins

MAPFRESamsung

Allianz Aviva MeijiYasuda

Sun-corp GNP AXA


Maximum

Minimum

Market average indexed to 100

Figure 31: Cross-selling products reduces customer churn and generates signifi cant value for carriers

0

20%

Customer churn, by number of contracts held and as a share of total number of P&C and life insurance customers

Length of relationship (years)

0–1 1–2 2–3 3–4 4–5 5–6 6–7 7–8 8–9 9–10 10+

1 contract 2 contracts 3 contracts

Source: Bain analysis


Page 33

Figure 33: The gap between cross-selling leaders and laggards extends to P&C as well

Average number of P&C products per household and provider, 2016 (indexed to market average)

2.2x 1.4 1.4 1.4 1.3 1.3 1.2 1.2 1.2 1.22.1 1.8 1.8 1.7 1.7 1.5 1.5 1.4

50

75

100

125

150

Number of products,leader relative to

laggard

USFrance

AustraliaHongKong

SingaporeGermany

SpainMalaysia

PolandItaly

UKSouthKorea

CanadaSwitzer-

land

ChinaJapan

MexicoIndon-esia

USAAMAIF NRMA AIA NTUC

IncomeLVM

MAPFRE AIAPZU

Uni-polSai

NFUMutual

Sam-sung

LaPerson-nelle

Schwei-zerische Mobiliar Ping

AnMitsui

Sumitomo AXA Allianz


Maximum

Minimum

Market average indexed to 100

Figure 34: Life insurers have a huge opportunity to upsell and cross-sell more, especially in emerging markets

0

20

40

60

80

100%

Share of life insurance customers expressing need for more products or coverage, 2016

China

UKIndonesia SwitzerlandAustralia

US

SouthKorea

Singapore

GermanyBrazilMalaysia

Italy

Mexico Spain

France

JapanPoland Canada

HongKong

Need more coverage and more products Need more products Need more coverage

Note: More coverage refers to changing an existing policy, such as raising the amount insured or adding an annuitySource: Bain/Research Now NPS survey, 2016


Page 34

Figure 36: Many customers are open to getting advice from insurers on coverage and related services

Japan Singapore

Italy South Korea

France Singapore

Japan US

Hong Kong Brazil

Canada Indonesia

Japan Australia

France China

Planning for better savings/investments

Suffering from a severe disease

Being hospitalized

Buying a house

Purchasing a new car

Going for a medical checkup

Planning to travel

Planning for a healthier lifestyle

Having a child

Getting married

Starting a new job

Japan

Japan

US

Mexico

Share of customers expecting insurers to provide advice, ranked by country

20 40 60 80%0

Japan Indonesia

Minimum Maximum

Average of all countries


Figure 35: Most customers would likely buy a new life product from their primary insurers

0

20

40

60

80

100%

8680 79 79 78 76

7267 67 66 63 62 61 61 60

56 54

4138

Share of customers likely to buy new life insurance product from primary insurer

China

Mexico

Malaysia

Indonesia

Brazil

Italy

Spain

Switzerland

Poland

Singapore

Hong Kong

US

Canada

France

Germany

Australia

UK

SouthKorea

Japan

Likely Highly likely



Page 35


Page 36

Appendix: Methodology

Bain & Company partnered with Research Now, the online global market research organization, to survey consumer

panels in 19 countries: Australia, Brazil, Canada, China, France, Germany, Hong Kong, Indonesia, Italy, Japan, Malaysia,

Mexico, Poland, Singapore, South Korea, Spain, Switzerland, the UK and the US. The survey’s purpose was to gauge P&C

and life insurance customers’ loyalty to their main insurance providers and to understand the underlying reasons for their

views. Conducted between March 2016 and June 2016, the survey polled 164,421 consumers of P&C and life insurance.

For our analysis of individual insurance providers, we included only those in the Americas, Australia and Europe

that received at least 200 valid survey responses and those in Asia, Mexico and Poland that received at least 100

responses. In many cases, sample sizes exceeded these thresholds.

Survey questions

Respondents were fi rst asked to list the P&C and life insurance products they purchased and to name the corre-

sponding insurance providers. They then indicated their primary P&C and life insurance providers. Based on

their responses, participants completed either the P&C or life insurance questionnaire.

They also responded to two questions to assess their loyalty to their primary insurance providers:

• 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 primary insurance provider to a friend or colleague?

• Why did you give your primary insurance provider the score you did?

Based on the scores they gave, respondents were classifi ed as promoters (9–10), passives (7–8) or detractors (0–6).

The Net Promoter Score® is the percentage of promoters minus the percentage of detractors.

We asked which channels respondents currently use for the following: to gather information about an insurance

provider or insurance products, to seek advice, to purchase a product, to seek service and to submit and settle a

claim. We then asked respondents how their channel usage had infl uenced their likelihood to recommend their

primary insurance providers. We also asked whether they would be interested in platforms provided by insurers

that offer ancillary services related to car, home, health and life. Finally, we asked participants about their willing-

ness to share personal data with insurance companies.

In the survey, we included different questions for P&C respondents and life insurance respondents. We asked

P&C respondents about switching behavior in auto and home insurance. For life insurance respondents, we included

questions to understand the potential for cross-selling and upselling. Finally, we asked for demographic information:

household income, age and region of residence.

The results of our data analysis are robust. Our measurements for insurance carriers’ Net Promoter Scores in

each country and for respondents’ Net Promoter Scores for each demographic category were statistically signifi cant.

For each carrier, these scores were statistically signifi cant to an 80% confi dence level, with a one-tailed test ranging

from ±1.3% (n=4,956) to ±10% (n=100).

For more information, visit www.bain.com

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Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisitions. We develop

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