Key Consumer Trends for Insurance Providers in 2010

Introduction

Global insurance premium growth has been negative for the past two years. This reflects the recession's negative impact on the mainly mature markets in Western Europe, North America and Japan. This requires new thinking on how products, marketing and business strategy fits together in an increasingly consumer-centric market.

Scope

*This report examines the shift in consumer attitudes towards insurance over the June 2009 to June 2010 period

*This report is global in scope, examining issues impacting 19 international insurance markets

*This report analyses the impact of the global downturn and the subsequent change in consumer needs on the general and life insurance markets

Highlights

The global financial crisis has had an impact on all consumers and their attitudes and motivations for buying insurance. In this challenging environment it is no longer sufficient to react to consumer behaviors, rather insurers need to understand the trends & influences behind insurance purchasing decisions.

An obvious strategy for growth hungry insurers is to establish operations in rapidly expanding markets where demographics and economic conditions favor growth the most. This has been the strategy of a few insurers in recent years, with mixed results.

The wave of consumers, across all markets, streamlining lifestyles has had direct implications for insurance markets. Policyholders lowering the level or cutting the features of their policies to cut costs. This behavior has been relatively constant as most economies have exited the recession since 2009, though it is uneven across product type.

Reasons to Purchase

*Understand the impact that the recession has had on your customer base

*Understand how to target the changed insurance needs of the post-recessionary consumer

*Access Datamonitor's time series survey data to help you understand how your clients have been affected over time

[Studien Infos ausblenden]

Overview 1
Catalyst 1
Summary 1
Methodology 1
Table of Contents 2
Table of Figures 3
Table of Tables 4
Introduction 5
A challenging insurance environment requires a more targeted approach to insurance sales 5
Global premium income declined for the second year in a row in 2009 5
This report aims to give insurance providers a framework with which to more effectively connect with target consumers 6
Datamonitor's insurance consumer insight has line of sight to survey data 6
A post-recessionary consumer segmentation model gives insight into the thinking behind purchasing behavior 6
Consumer Context 9
Trend: Macroeconomic indicators point to a weak recovery in mature markets 9
Low growth is forecast for most European and American economies 9
Tighter regulations in mature markets will likely depress growth in the short term 10
Solvency II will see European insurers focus more on regulatory compliance than growth 10
Government reactions to the global financial crisis have also resulted in regulatory uncertainty 11
Insight: Mumbai, Dubai, Shanghai or good-bye to high growth in insurance markets 12
Emerging economies are attractive to insurers searching for growth due to growing insurance density and penetration 12
Economic and GWP growth will be considerably more robust in emerging economies 12
Increasing material possessions and growing affluences are key factors behind the insurance opportunity 13
The expanding yet still young nature of many emerging markets is driving growth 14
Action point: Expand outside of home markets 15
Rapidly opening and expanding Asian markets must be a top consideration for expansion 15
Joint ventures work well for insurers wanting to tap fast-growing Asian markets 16
Sharia-compliant subsidiaries in the Middle East will be a necessary investment 16
Insurers in mature markets need to be ready to capitalize on the results of slow growth and aging populations 17
Maintain a single global brand, but differentiate messages that target post-recessionary consumer segments 18
Trend: Consumers are streamlining their lifestyles to try to live within their means 19
Consumer debt has reached truly epic proportions in rich nations 19
Consumers are aware their finances are precarious and are taking steps to find a firmer footing 21
Insight: This has driven consumers to disengage from many commoditized insurance products, viewing them simply as costs 22
Consumers will trade down to essential cover 22
Insurance sold alongside other purchases or products will suffer as a result 23
Streamlining consumers are also debt-adverse, reducing opportunities to sell payment protection products 24
Action point: Providers need to work with consumers' efforts to streamline their lifestyles 25
Reduce home insurance policy prices as liabilities decline due to fewer people buying the latest electronic gadgets 25
Fewer vacations, closer to home, represent a market for single trip policies 25
Prioritize aggregator distribution rather than partnerships with the motor trade 26
According to the consumer segmentation model, marketing to streamlining consumers needs to recognize their rational nature 26
Trend: Consumer confidence is fragile, as people can all too easily see themselves getting into trouble 27
Government policies are increasingly shifting into dampening mode 27
2010 has seen governments' stimuli withdrawn after supporting the markets in 2009 27
Austerity measures in a number of European countries have weakened safety nets and created heightened feelings of vulnerability 28
Central banks have begun to tighten credit in key countries 28
Insight: Confidence has grown, but remains very weak in many counties 29
Positive economic headlines have failed to penetrate the mindsets of most mature market consumers 29
In the majority of mature markets surveyed, most consumers had negative views 30
Insight: Growth economies are more optimistic than mature markets, reflecting better fundamentals 31
Continued growth has kept consumers in emerging economies optimistic 31
However, even among growth markets consumer confidence has taken a knock 32
Action point: Consumers need products that restore their confidence about making the big purchases or decisions in life 33
Cross-sell protection products that target job insecurity 33
Life insurers need to repeatedly stress the value of policies in uncertain economic times 34
Trend: Value shopping will prove to be an enduring habit for consumers, but many can look beyond price 36
Even though conditions have improved, consumers have come to expect deals on their insurance 36
Wage growth has been constrained by job insecurity in mature markets and until recently by competition in growth markets 36
In the recession, consumers in most countries could rely upon promotions to help them get more for their money 37
Consumers have turned to price comparison websites to help them maximize their value 38
Aggregator usage lags in many markets due to regulatory obstacles 39
Insight: Consumers are not always simply looking for a cut-rate insurance deal, sometimes preferring truly maximized value 40
Consumers are aware that quality cover will cost them 40
A home is a castle, even for those consumers that see cheap insurance as generally being the best 41
Action point: Consumers want tools and partners that provide them with the cover they need at a competitive price 42
Aggregators need to allow for easier shifting or changing of policy features in the comparison process 42
Gocompare.com, a UK aggregator, allows consumers the greatest freedom to customize a search 43
Default settings need to be efficient and easy, with simple yet advanced customization options 44
Marketing by aggregators needs to appeal to rational and confused consumers with multiple points of comparison 44
Trend: Consumers are becoming more open to non-standard players in the FS market 46
Insurance products are commoditized, making distributors open to competition from non-FS players 46
'Too big to fail' does not resonate in the insurance field as more and more players enter the market 46
More non-standard players have joined the insurance market around the world 47
Insight: Insurance consumers are searching for personalized and customized services 48
This can be for products specifically tailored to their needs such as those offered by affinity groups 48
The custom rewards that supermarkets or retailers can offer are also attractive to consumers 48
Action point: Insurers need to establish close relationships with affinity partners that bring a USP 49
Reach out and cultivate non-standard partners that have a genuine niche 49
Customize policies where possible to the customer base of the brand or affinity group 50
Target brand partners that can leverage a rewards program to generate higher retention 50
Trend: Reviews and opinions on insurance are always at a consumer's fingertips 50
Advances in online social interactions mean consumers in all markets are more interconnected than before 50
The increasing use of social media sites is not confined simply to the Western world 51
Insight: consumers will rely on the advice of peers and reviews when selecting policies and providers 52
Consumers have come to trust friends and family much more than FS experts 52
Growth market consumers are no more trusting of insurers but more confident in their banks 53
In all markets, financial blogs, review sites and forums are becoming major influences on consumers 54
Action point: Understand that the customer will be checking outside sources during the sale process 55
Sales processes must allow for pauses for consultation 55
Insurance providers need to engage with social media to provide a controlled opportunity for consultation 55
Integrated forums and comparison tools can help consumers feel that they have consulted 56
Provide the information and reassurance that the panicked consumer needs 57
Trend: Inflation and the erosion of buying power will dominate consumer thinking 58
The threats to consumer finances have evolved and are no longer simply due to weak labor markets 58
In countries such as Australia, price concerns are far greater than employment concerns 60
It is important to note that consumer opinion on inflation is often at odds with reality 60
Price increases for insurance have contributed to the squeeze on consumer finances 61
Insight: Consumers have come to prioritize reducing financial serves costs, particularly in insurance 62
Higher premium rates and tighter budgets have driven higher price sensitivity 62
Consumers can find cheaper rates even in undeveloped insurance markets 63
Insight: High costs are leading to consumers underinsuring or forgoing optional cover altogether 64
Legal obligations keep consumers purchasing common insurance products, but not necessarily the same policies 64
Underinsurance risks becoming a significant issue among policyholders in many countries 65
Action point: Providers need to view insurance as part of a package of costs that consumers are trying to control 66
Cost and price control is critical in discretionary insurance products lines for delivering cheap quality cover 66
Innovative products that encourage consumers to reduce their potential claims for lower premiums should be pursued 67
Guarantees that premiums will not increase will be popular, offering protection against rising costs 67
Trend: Consumers will increasingly expect insurance providers to demonstrate seamless customer relationship management 68
Consumers are interacting with their insurers in a wider range of channels and platforms 68
Many insurers are now collections of sometime-competing brands 68
Technological change has opened up multiple distribution platforms for even a single brand 69
Insight: Consumers are becoming more tech-savvy and demanding of their providers 71
Convenience has become a precondition for being able to deliver FS and insurance services 71
Technology and distribution strategies have encouraged fewer customer auto-renewals, not price sensitivity 73
Action point: Providers need to recognize that convenience and ease of use are insurance requirements 75
Multiple points of contact need to be available, allowing consumers to select the means that they are most comfortable with 75
Insurance providers need to have sites that work all the time, every time, making investment in IT essential 76
Multiple brands need back-office connectivity to prevent needless churn 76
Use a holistic view of the consumer to identify gaps in consumer protection and promote cross-sales 77
Appendix 79
Supplementary data 79
Definitions 87
Premium income measures 87
Earned premiums 87
Gross premium 87
Net premium 87
Written premiums 88
Distribution definitions 88
Bancassurers 88
Banks/building societies 88
Brandassurers 88
Brokers 88
Company staff 88
Direct channel 88
'Other' company agents 88
Partnerships 88
Methodology 89
Further reading 90
Ask the analyst 90
Datamonitor consulting 90
Disclaimer 90
List of Tables
Table 1: Global insurance GWP real growth, 2007-09 (%) 6
Table 2: GDP growth rates and forecasts, 2005-15f (%) 10
Table 3: Outstanding loans from commercial banks (% of GDP) 21
Table 4: Life insurance product penetration by consumer segment, 2009-10 (%) 36
Table 5: Insurance product penetration by country, 2009-10 (%) 79
Table 6: To what extent do you trust the following when it comes to your finances (your banking, insurance, credit cards etc)? Sources scoring 4 ("a lot") or 5 ("completely") on a five-point scale, 2009-10 (%) 80
Table 7: Average economic confidence by quarter, mature markets, 2009-10 (%) 81
Table 8: Outstanding commercial loans by value to GDP ratios by country, 2004-09 (%) 82
Table 9: Average economic confidence by quarter, growth markets, 2009-10 (%) 83
Table 10: Job security by country, 2010 (%) 84
Table 11: Selected consumer behaviors by country, 2009-10 (%) 85
Table 12: Impact on consumer finances, issues scoring 4 or 5 on a five-point scale, 2009-10 (%) 86
Table 13: Consumer views on the national job market, 2010 (%) 87
List of Figures
Figure 1: Real premium income growth has been weak due to declining industrialized markets 5
Figure 2: Datamonitor post-recessionary consumer segmentation model 8
Figure 3: Future growth will be lackluster in most mature markets for the foreseeable future 9
Figure 4: Emerging economies are predicted to grow strongly 13
Figure 5: Product penetration remains low for many general insurance products but is forecast to grow 14
Figure 6: Growing populations and larger middle classes will expand the market for life and health insurance products 15
Figure 7: Takaful insurance would be appreciated among the native populations of Saudi Arabia and the UAE 17
Figure 8: Separate consumer groups respond to various messages, making differentiated marketing key 19
Figure 9: The Western world's deleveraging has only just begun 20
Figure 10: Streamlining consumers are common in all countries 22
Figure 11: Streamlining has led to a number of policyholders reducing their costs by taking out simpler forms of cover 23
Figure 12: Foreign travel takes the brunt of consumers' streamlining behavior 24
Figure 13: Debt repayments are a high priority for many, making them less keen on credit in general 25
Figure 14: Streamlining behaviors are more likely to appeal in countries with more rational consumers 27
Figure 15: The RBA's early moves have already begun to strain consumer finances, while the Riksbank's actions have yet to concern Swedish consumers 29
Figure 16: Among mature markets, few consumers are confident of sustained economic growth 30
Figure 17: Despite continuing problems, US and German consumers are increasingly confident of a recovery 31
Figure 18: Brazil and India have the most optimistic consumers of any market 32
Figure 19: Third-quarter confidence was down sharply in Russia 33
Figure 20: Job insecurity is a key factor that insurers can address with protection products 34
Figure 21: Life insurance consumers in most countries value the security that life insurance provides their families 35
Figure 22: Consumers were still very much concerned about the job market in the first half of 2010 37
Figure 23: In most countries, consumers have become accustomed to deals and promotions 38
Figure 24: Insurance aggregator use is highest in Europe, where insurance markets are open and extremely competitive 39
Figure 25: The more fragmented markets of North America discourage aggregator use among consumers 40
Figure 26: Many consumers recognize that they are going to have to pay more for quality cover 41
Figure 27: Despite being the most price-sensitive, Italian and British consumers clearly value quality home cover 42
Figure 28: Simplicity and convenience are valued almost as much as the core FS traits of trust and honesty 43
Figure 29: Rational and confused consumers account for the majority of insurance aggregator users 45
Figure 30: Aggregator use is most prevalent among rational consumers 46
Figure 31: Supermarkets and retailers are viable insurance providers for a significant minority of consumers 47
Figure 32: Japanese and Canadian consumers are keen on getting loyalty points with their FS products 49
Figure 33: A network effect has created a positive feedback loop of growth for social media 51
Figure 34: Consumers have increasingly turned to the internet since the global recession began 52
Figure 35: Consumers in mature markets are much less likely to trust FS providers' opinions than those of non-experts such as themselves or their friends and family 53
Figure 36: Consumers in emerging economies are more trusting of banks but not of insurance experts 54
Figure 37: Substantial numbers of consumers are already turning to the internet for advice 55
Figure 38: moneysupermarket.com's news and community section provides a forum for consumers to discuss their concerns about financial matters, including insurance 57
Figure 39: Panicked consumers often rely on others when making decisions 58
Figure 40: Only Japan has consumers relatively untouched by the effects of inflation on their finances 59
Figure 41: Inflation has been a concern even for countries only lightly affected by the global recession 60
Figure 42: Inflation is predicted to rise only modestly in mature markets but abate in growth markets 61
Figure 43: Consumers in the UK's well-developed insurance market have led the way in shopping around for cheaper cover 63
Figure 44: Despite their less developed insurance markets, policyholders are keen to shop around in growth economies as well 64
Figure 45: Medical inflation has made affordability an issue for health insurance in many countries 65
Figure 46: Cutting back cover to the bare essentials is a popular financial strategy in some markets 66
Figure 47: Confusion has led to more consumers cutting their cover 68
Figure 48: Modern insurance groups are collections of underwriters, brands and distribution channels 69
Figure 49: Even a single distribution platform can give rise to multiple contact points 70
Figure 50: Iconic brands need to be leveraged across the digital spectrum 71
Figure 51: In most countries convenience is prized more than lowest price 72
Figure 52: Among the countries where convenience is especially popular, only in Saudi Arabia is the lowest price more prized 73
Figure 53: Auto-renewal rates are lowest in the UK and Germany 74
Figure 54: Most North American consumers still auto-renew their insurance 75
Figure 55: Integrated systems allow for an integrated view of the consumer 77

[Inhaltsverzeichnis ausblenden]