Reimagining customer relationshipsAsia-Pacific

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Executive summaryTwo years after EY’s inaugural Global Consumer Insurance Survey, results from the 2014 survey confirm that the insurance industry is focusing the same type of digital-driven and consumer-led disruption that retail, banking, media and entertainment and other sectors have experienced. Indeed, it seems clear that insurers have much work to do in delivering the customized experiences, intuitive toolsets and easy information access that today’s informed and empowered customers require.

Our survey results confirm that insurance customers are unique in many ways. Traditional views on advocacy and loyalty are not necessarily as clear cut within the insurance sector, as they are in other industries. With the exception of Australia, Asia-Pacific region does not show a strong positive correlation between increased levels of advocacy and lower attrition rates. Across the region, customers value experiential factors such as being easy to deal with and having clear communications. In Asia, customers also value broader characteristics, such as brand reputation and financial stability, more than is found globally. Customers in Asia’s developing markets appear to have higher incidence of “moments of truth” than their peers in developing markets globally — but the good news is, they have more positive outcomes.

This regional overview should be read in conjunction with the 2014 Global Consumer Insurance Survey report. It provides a snapshot of more detailed findings and data for the Asia-Pacific region.

The report compares some of our global findings with survey data for the markets in this region, using the following sub-regional groupings:

• Total Asia-Pacific region (all markets in scope, listed below)

• China

• South East Asia (SEA) developing markets: Malaysia, Indonesia

• Asia mature markets: Hong Kong SAR, Singapore, South Korea

• Australia

Product types throughout this report: Life includes life insurance and annuities/pensions. Non-life includes auto insurance and home insurance (both building and contents/renters insurance).

Walter Poetscher Insurance Customer Leader Oceania

Shaun Warren Insurance Customer Leader Asia

Look for the report at ey.com/insurance/GCIS2014 and check out our interactive tool to dip deeper into the findings.

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Key finding 1:

High turnover and low trust signal serious relationship issues. The Global Consumer Insurance Survey report found that insurance companies ranked toward the bottom of the list of trusted companies.

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This pattern is consistent in the Asia-Pacific region, where 70% of all customers express complete or moderate trust in insurance companies. However, most notably, these same consumers have a much higher relative level of trust in banks (see figure 1).

Developing markets also appear to have a higher level of trust in insurance companies — China (70%) and SEA developing markets (76%) — than do the mature markets:

Level of trust (percentage of consumers citing “complete trust” and “moderate trust”) by type of business — Asia-Pacific

70%Insurance companies

84%

78%

82%

80%

68%

62%

86%

77%

69%

74%

62%

75%

84%

79%

90%

84%

72%

70%

83%

78%

92%

79%

67%

70%

85%

82%

94%

81%

65%

52%

58%

57%

74%

55%

56%

53%

78%

72%

71%

74%

69%

76%

86%

65%

94%

82%

80%

Supermarkets

Online shopping

sites

Banks

Car manufacturers

Pharmaceutical companies

SEA Developing Markets

Australia AsiaMature Markets

ChinaTotal Asia-Pacific

Global Developing Markets

Global Mature Markets

Global Total

Australia (53%), Asia mature markets (52%). This last figure, however, is heavily skewed by South Korea (47%), in contrast to Singapore (74%) and Hong Kong SAR (69%). While the actual evaluations of trust may vary in absolute numbers, their relative ranking remains stable: fifth in developing markets and sixth (last on the list) in mature markets.

6

Reasons to switch vary by product lineCustomers were asked to indicate their top reasons to close or replace a policy. Globally, they indicate that their primary reasons to switch centered on “cost/terms” and “policy benefits/coverage,” though experiential factors such as communications and service levels were also common reasons. While the Asia-Pacific customers mostly echo this pattern, their reasons do differ to some degree. “Cost/terms” remain at the top, but this is cited less frequently than globally.

Non-life customers in this region, in particular, appear to place greater relative emphasis on policy benefits/coverage, communications, the level of service received and recommendations by broker or friends. Although, surprisingly, Australia is an outlier in this latter aspect, with only 8% of auto insurance customers citing recommendations of others, compared to 37% of auto customers in Asia-Pacific. Also, brand reputation and claims handling play a far more frequent role in decision making among home insurance customers in the region.

Key finding 1:High turnover and low trust signal serious relationship issues.

Figure 2: Top reasons for closing or replacing a policy — Asia-Pacific

19%

23%

26%

21%

24%

25%

27%

27%

40%

46%

45%

20%

22%

24%

24%

25%

26%

28%

28%

38%

47%

50%

Customer loyalty benefits

Did not like the way claim was handled

Brand reputation

Experienced personal/family milestones

Research I conducted

Policy did not align to my life circumstances

Level of service received

Frequency/relevance of communication

Recommended by broker, friends

Policy benefits/coverage

Cost/terms

Global TotalAsia-Pacific Total

Life Auto Home

19%

21%

21%

12%

20%

12%

31%

19%

37%

47%

46%

17%

18%

17%

11%

20%

14%

26%

16%

29%

42%

57%

30%

31%

35%

28%

33%

25%

36%

39%

43%

55%

54%

26%

26%

29%

25%

30%

26%

31%

34%

39%

48%

59%

70% of all customers in the Asia-Pacific region express complete or moderate trust in insurance companies, lagging behind other industries.

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Brand reputation and financial stability most valuedCustomers were asked to indicate the most important characteristics in their relationship with their insurer. Globally, they placed the greatest importance on “value for money,” “clear communications” and “being easy to deal with” (in that order). In contrast, Asia-Pacific consumers rated strong brand reputation and financial stability as the top two most valued aspects, closely followed by communications, “value for money” and “being easy to deal with.”

While regional results remain largely consistent across product type and sales channel, there are variations within the Asia-Pacific region:

Figure 3: Most important characteristics during ongoing relationships

• In China, the two most important relationship characteristics are brand reputation (49%) and financial stability (43%)

• In Australia, “value for money” (64%) and “easy to deal with” (57%) rank as the top two characteristics for a relationship

• The remaining markets, both mature and developing, each place the strongest emphasis on “easy-to-understand communications” and “recommend policy best for needs/budget”

For multinational insurers operating in Asia-Pacific region, this indicates a clear requirement for diverse customer engagement and marketing strategies for different markets.

GlobalTotal

Asia-PacificTotal China Australia

Asia MatureMarkets

SEADevelopingMarkets

47%

43%

42%

40%

36%

36%

33%

33%

36%

40%

35%

46%

41%

33%

34%

27%

36%

38%

33%

49%

43%

31%

34%

25%

64%

49%

57%

36%

37%

29%

21%

31%

34%

52%

45%

29%

40%

47%

35%

44%

33%

46%

37%

38%

31%

39%

37%

30%

Value for the money

Easy to understand, clear communication

Easy to deal with

Strong brand reputation

Financial stability of insurance company

Recommended policy best for my needs/budget

Provided information the way I wanted it

Responsive

Most valued

Next three most valued

* Participants were asked to indicate the five most important characteristics regarding their relationship with their “purchase source” (for example, insurer or broker)

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Quality of engagement and customer service matters

More detailed analysis of “what matters most” to consumers and their satisfaction with these characteristics, across different distribution channels, identifies relationship strengths and vulnerabilities. Customers across all channels, in their own way, point to a need to improve the quality of engagement and customer service.

• Independent agents and brokers: results indicate vulnerabilities regarding “being easy to deal with” and providing choice regarding how consumers interact with them.

Key finding 1:High turnover and low trust signal serious relationship issues.

• Dedicated agents: “being easy to deal with” and demonstrating “value for money” appear to be the key vulnerabilities for this channel.

• Direct from insurer: in addition to “value for money” and “being easy to deal with,” direct channel customers also show dissatisfaction with a lack of 24/7 access, loyalty bonuses and special deals. Notably, the latter characteristic is something that can be viewed as both a way to increase customer engagement and perceptions of value for the money.

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Independent agents and brokers

Dedicated agents

Directly from the insurer

Relative satisfaction

Average satisfaction

Relative importance

Vulnerabilities(below averagesatisfaction, relativelyhigh importance)

Figure 4: Analysis of strengths and vulnerabilities by distribution channel, based on satisfaction with the most important characteristics during relationship phase — Asia-Pacific

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Key finding 2:

Just because they leave you doesn’t mean they don’t love you.The global report raises the issue of the tenuousness between advocacy and attrition.

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Key finding 2:

Just because they leave you doesn’t mean they don’t love you. While there may be some association of the two measures

within more mature markets, there does not appear to be a strong relationship between the two in the global aggregate.

Figure 5: Policy closure rates (attrition) with last 18 months, by advocacy level (likelihood to recommend) — for key markets and sectors, Asia-Pacific

Although insurance customers who are unlikely and very unlikely to recommend do appear to leave their insurer in greater numbers, those with neutral or positive levels of advocacy often report similar levels of attrition.

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

SEA Developing Markets

43%45%

66%

83%

45%

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

26%32%

63%

48%44%

Asia Mature Markets

Very unlikely

Unlikely

Neutral

Likely

Very likely

Very unlikely

Unlikely

Neutral

Likely

Very likely

Att

riti

on(C

lose

d a

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Att

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lose

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18

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Key finding 2:Just because they leave you doesn’t mean they don’t love you.

Asia-Pacific consumers largely confirm these findings. Australian consumers, in fact, are the only ones to show a slightly stronger positive relationship, indicating that attrition reduces in line with advocacy. The remaining sub-regions in Asia-Pacific do not show strong correlation between these measures for neutral and positive advocates; indeed the opposite seems to be the case.

This is also the case across life and non-life sectors in Asia-Pacific. In non-life, there is no difference in levels of attrition between strong advocates and neutral customers and the life sector actually shows an inverse trend, similar to global life findings. More generally, however, the Asia-Pacific region has far higher absolute levels of attrition for “advocating customers” across both sectors, compared to global data.

26%34%

43%

70%

12%

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

Att

riti

on(C

lose

d a

polic

yin

last

18

mon

ths)

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

Att

riti

on(C

lose

d a

polic

yin

last

18

mon

ths)

China

Australia

48%43%

58%55%

51%

Very unlikely

Unlikely

Neutral

Likely

Very likely

Very unlikely

Unlikely

Neutral

Likely

Very likely

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Asia-Pacific has far higher absolute levels of attrition for “advocating customers” compared to global data.

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

Att

riti

on(C

lose

d a

polic

yin

last

18

mon

ths)

Asia-Pacific Non-life

Advocacylikelihood to recommend

0% 20% 40% 60% 80% 100%

Att

riti

on(C

lose

d a

polic

yin

last

18

mon

ths)

Asia-Pacific Life

44%37%

52%51%49%

47%47%

71%76%

47%

Very unlikely

Unlikely

Neutral

Likely

Very likely

Very unlikely

Unlikely

Neutral

Likely

Very likely

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Key finding 3:

Insurers have so few interactions with their customers that each one becomes a critical moment of truth. In general, Asia-Pacific customers are more likely than their global counterparts to both interact with their insurer and report a recent moment of truth.

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High regional levels of interaction More than two-thirds of Asia-Pacific current customers report at least one contact with their insurer over the past 18 months — significantly greater than reported among global consumers. The mature markets within the region also report higher levels of interaction than the corresponding global benchmark. Chinese customers engage at a level similar to those in developing markets globally, but customers in SEA developing markets engage at an exceptionally high level (82%).

Given these higher regional levels of interactions, it is not unexpected that customers are more apt to report experiencing moments of truth. Overall, the incidence of moments of truth at the regional level is much higher than reported globally (67% vs. 58%). Relatively higher incidence levels can also be found within the developing countries and among mature regional markets, with the exception of Australia.

Consistent with the global findings, customers using brokers are more likely to report a moment of truth (80%). However, what is unique in this region is that those using a broker are more likely than their global counterparts to cite a negative outcome.

Overall, the incidence of moments of truth in Asia-Pacific region is much higher than reported globally.

Moments of truth An interaction or experience that positively or negatively changed the customer’s perception of their insurer or broker

Positive outcomes Coverage increases, new policies or higher favorability ratings

Negative outcomes Coverage reductions, policy closures or lower favorability ratings

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Key finding 3:Insurers have so few interactions with their customers that each one becomes a critical moment of truth.

Figure 6: Customer interactions with their current insurer during the last 18 months — Asia-Pacific

Australia Asia Mature Markets

At least one 56%

Global Total Asia-Pacific Total

At least one 68%

At least one 56%

At least one 44%

Global Mature Markets

At least one 50%

At least one 59%

None 41%

China SEA Developing Markets

At least one 70%

Global Developing Markets

At least one 67%

At least one 82%

None 18%

None 44%

None 56%

None 30%

None 32%

None 50%

None 33%

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Need for more positive customer engagementMoments of truth can have positive (coverage increases, new policies or higher favorability ratings) or negative outcomes (coverage reductions, policy closures or lower favorability ratings). Customers in the Asia-Pacific region routinely report a positive outcome across most types of these interactions. In particular, however, customers are most likely to ascribe a positive moment of truth to contact relating to managing their policy, such as updating information or obtaining information about the policy.

Outcomes regarding potential sales opportunities resulted in mixed results: while more than four-in-five indicated that they had a positive experience in obtaining a new policy (81%), much higher levels of negative outcomes were reported in the region regarding inquiries about switching a policy from another provider (45% vs 32% globally) or a new type of insurance (18% vs 10% globally). The inference is

Figure 7: Percentages of consumers reporting a “moment of truth” — by key markets, products and channels, Asia-Pacific region

Participants were asked, “In the past 18 months, did you have a positive or negative experience that fundamentally changed how you thought of your provider/purchase source?”

clear: the manner in which insurers engage with customers on matters regarding potential new business fails to consistently meet customer expectations.

Positive moments of truth were further analyzed based on whether they specifically led to sales or non-sales outcomes. Developing countries within Asia-Pacific are more likely to have a positive moment of truth generate additional sales. In China, more than half (53%) indicated sales-based outcomes, and other developing markets reported a comparable level (48%). These compare to mature markets, such as Australia (37%) and other Asia mature markets (30%), which in themselves are consistent with equivalent global mature markets.

58%

45%

67% 67% 68%

40%52%

73%

63% 65%67%69%80%

66%70%66%

Positive outcome

Negative outcome

Neutral

Global total

GlobalMature

GlobalDeveloping

Asia-PacificTotal

China Australia AsiaMature markets

SEA Developingmarkets

Life Auto Home EmployerBroker Agent Direct Bank

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Key finding 4:

Consumers want more frequent, meaningful and personalized communications. Our global survey found large “communication gaps” between what customers want and what they currently receive.

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Most customers across the region express a clear preference for more frequent communications from their insurer. Implied within their request, of course, is that the communications should be considered personally relevant. This pattern of clear “communication gaps” holds across many different types of communications, such as general information, special deals and promotions, policy updates and statements. It also remains consistent across most sales channels in the region, with direct to consumer channels, in particular, showing some of the largest communication gaps (54% currently receive general information more than once a year, but 69% would prefer to do so; similarly, 41% currently receive policy updates this frequently, although 60% would prefer to).

There is a very positive association for Asia-Pacific customers between the frequency of communications received and their satisfaction levels

Figure 8: Frequency of outbound communications — current vs. preferred levels, Asia-Pacific region

Figure 8:

15%

General information Policy updatesSpecial deals/promotions

57%

28%

Current Preferred Current Preferred Current Preferred

10%

66%

24%

17%

59%

24%

8%

70%

22%

20%

44%

36%

10%

60%

30%

More than once a year Once a year or less Never

20

Key finding 4:Consumers want more frequent, meaningful and personalized communications.

Not only do customers seek more frequent communications, but they want it to be better and more valuable. In the absolute, customers clearly indicate low levels of satisfaction with all types of communications. Overall, about 11% of all Asia-Pacific customers indicate a high level of satisfaction with the communications they currently receive. While those using brokers report higher levels of satisfaction (23%), these levels provide a clear indication that improving communications with customers remains critical.

Figure 9: Consumer satisfaction with outbound communications — Asia-Pacific region

Agent Direct Employer BankBroker

SatisfiedVery satisfied

Global Total

GlobalMature

GlobalDeveloping

Asia-PacificTotal

China Australia AsiaMatureMarkets

SEADevelopingMarkets

Life Auto Home

46%

31%

44%48%

44%44%

43% 42% 44%

44%

41%44% 45%

53%

14%4%

45%

11%12% 14%11%16%

46%

13% 11% 13% 12%23%

12% 8% 8% 5%

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Asia-Pacific customers confirm there is a positive association between the frequency of communications received and their satisfaction with these communications. Those who report receiving at least two communications a year have a satisfaction level nearly three times greater than those reporting a single communication. This pattern remains broadly consistent across all sales channels.

Figure 10: Percentages of consumers very satisfied, by frequency of communication, for key channels — Asia-Pacific region

16%More than once a year

Asia-Pacific Total

Once a year or less 4%

11%

3%

19%

6%

Independent broker

Dedicated agent

Direct Employer Bank

23%

1%

24%

3%

33%

17%

21%

8%

10%

2%

17%

6%

9%

1%

8%

2%

14%

6%

9%

1%

3%

16%

19%

4%

7%

6%

6%

0%

9%

1%

More than once a year

General information

More than once a year

Once a year or less

Once a year or less

Special deals/promotions

Policy updates

22

Key finding 5:

As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships. Customers within the Asia-Pacific region report a more equally distributed use of inbound contact methods than found globally.

23

Across all transaction types, use of in-person remains the most common method, with the phone generating a very comparable level of use

Across all transaction types, use of in-person remains the most common method, with the phone generating a very comparable level of use. Additionally, with few exceptions (making changes to a portfolio and increasing coverage), the level of in-person vs. phone usage tends to be very comparable. Similar to global findings, digital methods are the preferred option to research potential new policies.

Figure 11: Consumer use of channels/information sources for different types of transactions and inquiries — Asia-Pacific region

Figure 11:

30%

2%

35%

3%5%

26%

Gen

eral

info

rmat

ion

abou

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icy

59%

25%

3%5%

8%

35%

30%

2%2%

30%

41%

48%

2%2%

7%

37%

44%

2%1%

17%

41%

2%

40%

2%1%

14%

31%

2%

39%

2%4%

23%

40%

31%

4%3%

22%

32%

21%

4%1%

6%

35%

37%

24%

1%3%

7%

28%

45%

43%

1%

11%

50%

19%

4%11%

12%

3%

39%

30%

8%

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In person Website Phone

Mobile appMail Email

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Given the higher use of other in-bound channels, it is not surprising to find that customers from Asia-Pacific generally express a much higher level of willingness to consider using remote and digital contact methods. For example:

• 55% of Asia-Pacific consumers would consider using web chat to inquire about a new insurance policy, compared to 41% globally; and 37% would use it to seek financial advice, versus 29% globally

• 33% of regional consumers would use a mobile app to research different types of insurance, compared to 27% globally

• However, Asia-Pacific customers appear to prefer email slightly less than global consumers; for example, only 33% would use email to ask questions about an existing policy, compared to 41% globally.

Across most types of inquiries or transactions, more than 90% of customers would consider at least one digital/remote option, with a 24-hour call center representing the most preferred option for six of the eight transaction types measured. However, only 16% of Asia-Pacific consumers say they would use only the phone hotline (16%). In fact, 28% are willing to try other digital contact methods but still need the phone as a fall back option. An even larger 44% would actually prefer to use any other digital option except for the phone (44%).

Key finding 4:As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships.

Figure 12: Percentages of consumers who would consider using these contact methods (assuming they were available) when interacting with their insurance company — Asia-Pacific region

Shaded areas indicate areas of interest/relatively high % consumer consideration.

* Note: Interactive Support is defined as combined phone and remote control of your computer screen to assist with navigating online materials

Inquire About New Insurance Policy

Questions about an existing policy

Seeking Financial Advice

Assistance With a claims

Researching different types of insurance

Managing your current policy

Renewing your policy

Cancel my policy

Web chat 55% 47% 37% 29% 35% 31% 23% 13%

Email 39% 33% 33% 28% 36% 35% 28% 22%

24 hour telephone hotline

45% 57% 42% 52% 37% 41% 41% 39%

Mobile app 29% 29% 28% 24% 33% 31% 21% 16%

Interactive support* 23% 27% 29% 27% 32% 28% 26% 12%

Video tutorials and guides

23% 24% 26% 29% 30% 24% 17% 10%

None of the above 7% 7% 11% 10% 9% 9% 13% 27%

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Key contacts in Asia-PacificAustralia Walter Poetscher

Tel: +61 2 9248 5145walter.poetscher@au.ey.com

Asia, Hong Kong SAR and Singapore markets

Shaun WarrenTel: +65 9147 5879shaun.warren@sg.ey.com

China Arthur BiTel: +86 10 58153818 arthur.bi@ cn.ey.com

Singapore Patrick Menard Tel: +33 1 46 93 67 70 patrick.menard@sg.ey.com

Indonesia Chew Lik ChangTel: +65 63098380 chew-lik.chang@sg.ey.com

Malaysia Brandon BruceTel: + 6 03 74958762 brandon.bruce@@my.ey.com

South Korea Young-Suk KimTel: + 82 2 3787 4278 young-suk.kim@kr.ey.com

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SCORE No. EG0211Document reference no. S1427093ED 0115

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