transformation in p&c and life insurance

Customer loyalty and the Digical SM transformation in P&C and life insurance: Global edition 2014

Net Promoter® and NPS® are registered trademarks, and Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

DigicalSM is a trademark of Bain & Company, Inc.

Copyright © 2014 Bain & Company, Inc. All rights reserved.

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

Andrew Schwedel, David Whelan and Camille Goossens, partners in Bain’s

Global Financial Services practice, and a team led by Tanja Brettel, a practice

area manager, and Shilpi Goel, a project leader at the Bain Capability Center. The

authors thank Bain partners and teams in each of the countries covered in the

report for their valuable input, and John Campbell for his editorial support.

Key contacts in Bain’s Global Financial Services practice:

Americas: 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 c: Peter Stumbles in Sydney ([email protected]) Jennifer Zeng in Beijing ([email protected]) Sameer Chishty in Hong Kong ([email protected]) Thomas Olsen in Jakarta ([email protected]) Tomoya Hasebe in Tokyo ([email protected]) Harshveer Singh in Singapore ([email protected]) Youngsuh Cho in Seoul ([email protected]) Sangwook Jin in Seoul ([email protected])

Europe, François Goffi net in Brussels (francois.goffi [email protected])Middle East Camille Goossens in Paris ([email protected])and Africa: Henrik Naujoks in Düsseldorf ([email protected]) Gunther Schwarz in Düsseldorf ([email protected]) Vincenzo Gringoli in Milan ([email protected]) Bertrand Facq in Warsaw ([email protected]) João Soares in London, for Portugal ([email protected]) Antonio Martinez in Madrid ([email protected]) James Anderson in London ([email protected]) Andrew Carleton in London ([email protected])

Global insurance loyalty | Bain & Company, Inc.

Page i

Table of contents

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 1

1. Loyalty trends around the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 7

2. P&C insurance: The battle for customers . . . . . . . . . . . . . . . . . . . . . . . . pg. 15

3. Life insurance: Delighting customers in a low-touch industry . . . . . . . . . . . pg. 23

4. The shift to a Digical business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 29


Page ii


Page 1

Executive summary

Customer loyalty has been tough to come by in the insurance industry, especially for life insurers that traditionally

have far fewer interactions with customers than, say, retail banks. Yet in most countries, for both the life and the

property and casualty (P&C) sectors, one or two insurance carriers manage to excel in earning their customers’

passion and advocacy.

Why dwell on loyalty? Because there’s ample evidence that loyalty improves a carrier’s economics and leads to

sustained, above-market growth. 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—with the mix of these forces depen-

dent on the particular market and type of insurance. In the US, for instance, Bain & Company analysis shows

that a promoter’s lifetime value is worth, on average, nearly seven times that of a customer who’s a detractor of

the carrier and two to three times that of a passive customer.

Bain’s new survey of 158,422 consumers in 18 countries sheds light on how various customer segments perceive

their P&C and life carriers, what customers want from their carriers and how they behave, and how different

distribution and interaction channels infl uence loyalty. The research was conducted online over six months in 2013

and early 2014 through Research Now for the great majority of respondents and through Survey Sampling Inter-

national (SSI) for additional respondents in Asia.

The survey measures loyalty by calculating the Net Promoter ScoreSM (NPS®) for each insurance company, derived

from responses to this question: On a zero-to-10 scale, how likely are you to recommend your insurer to a friend

or a colleague? Based on the scores they give, respondents are classifi ed as promoters (9–10), passives (7–8) or

detractors (0–6). NPS is the percentage of promoters minus the percentage of detractors.

Many insurers appreciate the merits of loyalty, of course, and they collect and measure feedback from customers.

The problem is that few act on the feedback in ways that put the customer’s perspective and priorities at the

center of the business. Feedback that doesn’t lead to action is meaningless. Truly customer-centered companies

analyze the feedback to identify patterns and take actions that will improve the customer’s experience, based on

how those actions will affect the economics of the business.

A customer-centered approach thus remains a radical departure from most insurers’ internally focused stance,

which assumes the agents are the customers. The traditional organization tends to focus on products and fi nan-

cial considerations, especially in-year measures.

In a business built around loyalty, by contrast, the salesforce serves end customers, whether they are new or existing.

Technology doesn’t just support and automate internal processes; rather, it’s deployed to accommodate customers’

priorities in ways that can actually delight them. Digital and physical channels fuse into a DigicalSM approach that

customers now demand. And fi rm economics improve not only through fi nancial and technical engineering but

also through the fi nancial benefi ts of loyalty.

A few insurers that have become loyalty leaders in their markets have moved well beyond surveying customers

to systematically looping back survey responses to frontline employees and managers. Based on that ongoing


Page 2

feedback loop, they’ve made signifi cant changes to products and processes in order to improve the customer’s

experience at critical touchpoints and episodes.

In one of Allianz’s European life and health insurance operations, for instance, feedback revealed that customers

had to call back repeatedly about the status of payments and were expected to describe their medical conditions

again and again. An Allianz team fi gured out a process solution: On the initial call, a case manager would be

assigned to the policyholder and handle all contact until the claim was resolved. Any delay in the reimbursement

process would trigger a call or text message informing the policyholder of the claim’s status. Soon after imple-

menting the new protocol, the claims unit saw a double-digit increase in its NPS and a signifi cant rise in policy

renewal rates.

Putting customers at the center of the universe requires top management’s commitment to invest in redesigning

products, refi ning processes and consistently delivering on what the company promises customers. The customer

focus needs to become part of the organization’s very DNA, from the CEO’s agenda right through to frontline

employees and to third parties such as repair shops.

While earning goodwill among customers is necessary, it is insuffi cient for generating superior revenue growth.

Leaders must also motivate customers to actively promote the company. Bain’s research and client work suggest

four specifi c steps that are essential to succeeding with a customer-centered distribution and service model.

1. Decide where you must win and where you can afford to lose

Loyalty leaders know they can’t be all things to all people. They either started with a mandate to serve a narrow

segment of customers—as is the case with most mutual companies—or they decided to defi ne a narrow segment

and put the needs of those customers fi rst.

In the UK, for instance, Admiral’s in-vehicle telematics system, called LittleBox, aims to reduce auto insurance

premiums for young customers with safe driving habits. Sheilas’ Wheels targets safe female drivers, with lower

premiums and tailored branding messages. In Asia, a number of insurers have refi ned their offerings for affl u-

ent, high-value customers and wrapped them in premium services, including regular check-ins by agents or

fi nancial advisers.

Other attractive new segments have been developed based on behaviors and interests rather than basic demo-

graphics. Discovery Holdings, a major insurer based in South Africa, has generated exceptional growth over the

past decade in part through its Vitality program, which appeals to people committed to healthy living. Vitality

members accrue points for demonstrating certain healthy, safe behaviors—reinforced through discounts on gym

memberships and healthy foods, as well as by installing tracking devices in cars—which they can redeem for

rewards from other vendors. Vitality has built a healthier book of business with a better risk profi le and a lower

cost to serve, and has helped Discovery maintain a very loyal customer base.

2. Selectively invest in moments of truth

Being in touch regularly and in meaningful ways with customers builds loyalty both in P&C and life, Bain’s

survey shows. During moments of truth such as fi ling a claim, it’s vital to exceed customers’ expectations and


Page 3

deliver a level of service and support that leaves strong positive impressions. This does not mean simply offering

more generous payment policies; our survey results show that the initial fi ling of a claim often has a higher poten-

tial to delight than the subsequent payment.

Regular communication containing useful, relevant information reinforces those impressions. Affl uent customers,

in particular, place a high value on regularly staying in touch. That’s a departure for some agents who live mainly

by commissions for new sales and thus have little incentive to nurture relationships with current customers.

Many carriers have underinvested in touchpoints where they communicate directly with customers relative to

those touchpoints handled by agents, so carriers will want to improve the functionality of their direct touchpoints.

In many Asian countries, for instance, there’s a trust defi cit between younger customers and traditional agents,

who are perceived as being too mercenary in their interactions. Some challengers and incumbents in Asian mar-

kets, therefore, are betting on alternative channels such as direct (Lifeplanet, Kyobo’s joint venture with Lifenet

in South Korea) or bancassurance (AXA), a channel that has reached a roughly 40% market share in new business

volumes in certain Asian countries.

Each insurer will want to dig beneath the NPS averages to determine which touchpoints and episodes are most

effective at earning loyalty—and how to invest for the specifi c country and situation. In Italy, reputation plays a

prominent role in both life and P&C, whereas claims or advisory services matter more in many other countries.

In the UK, insurers lack a strong physical presence, which makes it more challenging to delight customers.

3. In P&C, acquire mostly through price, but retain through product and service innovation

A quandary: Today’s fi erce battle for new customers in P&C is largely won by price, yet price-sensitive buyers

are more prone to switching later for a lower-priced offer. (For the life sector, price matters less than investment

returns, except for standardized products like term life, because there’s less price transparency.)

One way to deal with this problem is to avoid the most price-sensitive customers and use marketing that empha-

sizes other types of value, as Allstate has done in the US through advertising that focuses on peace of mind.

Even price-sensitive customers, though, can be converted to loyal promoters through differentiated products and

standout service. Indeed, Bain’s research shows that loyalty leaders in most countries, such as Liverpool Victoria

in the UK and Apia in Australia, excel on both price and service dimensions.

Some product and service innovations depend on digital technologies. In the US, MetroMile has launched an auto

policy that sets price by the number of miles driven, made possible by in-vehicle telematics.

Other innovations focus more on management of certain operations like the supplier network. HUK-Coburg, a

leading auto insurer in Germany, has assembled a network of 1,300 certifi ed repair shops. Going through these

garages saves costs and thus reduces prices, while also providing high-quality repairs and a better claims expe-

rience—a combination that HUK-Coburg customers love.


Page 4

4. Accelerate the transformation to a Digical model

The migration of customers to digital channels started with music retailing, consumer electronics, airlines and

hotels. So the bar for insurance companies has been set high by accomplished digital leaders like Amazon in

online retailing.

Every country has a signifi cant share of digitally active insurance customers, Bain’s survey shows. And digital usage

will increase over the next three to fi ve years—but digital channels don’t replace physical channels. Customers

who use only digital channels give the lowest NPS, since they would still benefi t from talking with a person when

dealing with complex insurance products or transactions. Multichannel customers give the highest NPS.

This shift in behavior and the attendant disruption present both an opportunity and a threat. Insurance companies

can signifi cantly improve the customer experience if they act quickly yet thoughtfully to build out digital channels

for transactions and communications, transform their physical networks for higher-value services and redesign

their processes to seamlessly integrate their various channels.

Laggards, meanwhile, may get crushed by forward-looking competitors and upstarts that provide a better expe-

rience and better service at a lower cost. Consider China’s Internet giants Alibaba and Tencent, which recently

partnered with Ping An to offer online insurance.

As insurers make the transition to a Digical world, they should target investments in proportion to the value at

stake by, say, digitizing processes to both reduce costs and please customers. Case in point: AIA has issued iPads

to its agents throughout Asia so they can sit with customers, do a needs analysis and accept customers’ digital

signatures to allow straight-through processing.

• • •

Every insurance company can benchmark against competitors in its home market and against the best performers

globally. The following sections explore customers’ behaviors and perceptions in life and P&C, with an eye toward

helping insurers understand the factors infl uencing loyalty.

Insurers that deliver the best customer experience advance against the competition, because they begin with

their target customers’ priorities and expectations. Earning loyalty fi gures prominently in their approach.

These leaders rely on a proven approach such as the Net Promoter SystemSM and listen regularly to customer feed-

back to determine what they’re doing right and wrong from the customer’s standpoint. They use fast feedback

loops so employees learn what customers want, and they harness employees’ discretionary efforts to adjust

products and customer experiences. Senior executives play a critical role by convincing employees in different

parts of the organization to work together and by ensuring that the organization has the tools for making

appropriate trade-offs when necessary.

The result, over time, is more promoters and fewer detractors—a powerful engine for sustainable, profi table

organic growth.


Page 5

• NPS among insurers varies substantially by coun-try. Because local perceptions and market traits account for some of that variation, it’s most useful to compare firms within an individual country. Within many national markets, NPS varies widely. In Australia, for instance, top P&C performer Apia has an NPS that is 57 points higher than the worst performer and 32 points higher than the country’s average.

• Loyalty fl ows through to a carrier’s economics. Customers who are promoters of their carrier have a far higher lifetime value than detractors.

• Loyalty leaders in each country tend to be locally based and use a mutual model, whereas multi-nationals and other local business models have lower NPS. Mutuals often have a customer-centered mindset and experienced salesforces, and they are able to offer lower prices than most other traditional carriers.

• Leaders also are often multiline providers. Cus-tomers generally give a higher NPS when they have both life and P&C products with their main provider.

• Although insurance has fewer customer transactions than some industries such as retail banking, being in touch with customers has a large positive effect on loyalty for both life and P&C. Insurers in devel-oping markets tend to have more interactions than do those in developed markets, even ad-justing for the fact that their customer bases tend to skew toward newer customers.

• Promoters beget promoters. NPS is higher for people who primarily relied for their purchase decision on a recommendation from someone they know or from social media platforms, or who had a prior relationship with the carrier.

1.Loyalty trends around the world


Page 8

Figure 1: Within each country, there’s a wide range of Net Promoter Scores for the P&C sector

Spain

Portugal

Poland

Italy

Germany

France

Belgium

Euro

pe

Note: Excludes markets with insufficient number of providers that have >100 respondents Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

NPS (P&C)

US

Mexico

Canada

No clear leader

State Farm

USAA

Average NPSMaximum NPSMinimum NPS

Am

eric

as

Ethias

MAIF

Allianz

AXA

HUK-Coburg, HUK24

Spain Mutua Madrileña

Genialloyd, Linear

−100 −50 0 50 100%

South Korea

Singapore

Japan

Indonesia

China

Australia Apia

China Life P&C

Asuransi Central Asia, Sinar Mas

Mitsui Direct, Sony

Samsung

NTUC Income

Asi

a-Pa

cific

UK Liverpool Victoria


Page 9

Figure 2: Within each country, there’s a wide range of Net Promoter Scores for the life sector

Spain

Portugal

Poland

Italy

Germany

France

Euro

pe

NPS (life)

US

Mexico

Canada

AXA

RBC Insurance

USAA

Average NPSMaximum NPSMinimum NPS

Am

eric

as

MAIF

Allianz

BES-Vida

CosmosDirekt, HUK-Coburg

Spain Mutua Madrileña

Reale Mutua

−100 −50 0 50 100%

Singapore

Japan

Indonesia

Hong Kong

China

Australia No clear leader

PICC Life

Prudential UK

Allianz Life, Prudential UK

Great Eastern Life, Prudential UK

Sony

Asi

a-Pa

cific

UK Aegon, Aviva, Scottish Widows

South Korea Samsung, Shinhan

Note: Excludes markets with insufficient number of providers that have >100 respondents Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 10

Figure 3: Insurance customers who are promoters of their carrier have a much higher lifetime value than that of detractors

Insurance Industrials Telecommunications and technology Banking

0

2

4

6x

Customer lifetime value (NPV), promoter value indexed to detractors

6.05.4

5.0

2.31.9

1.5

5.0

2.4 2.2

3.0

2.21.6

EMEA

P&

C c

o.

US

P&C

co.

N. A

mer

ican

P&

C c

o.

EMEA

insu

ranc

e co

.

Asi

an li

fe in

sura

nce

co.

Asi

an in

sura

nce

co.

US

bank

Asi

an b

ank

Reta

il ba

nk

Mot

orcy

cle

co.

Util

ities

co.

Latin

Am

eric

an a

irlin

e

Elec

troni

cs c

o.

Wire

less

co.

EMEA

tele

com

3.1

1.91.4

4.0

Tele

com

Source: Bain & Company client examples


Page 11

Figure 4: Mutual companies earn higher loyalty scores than other models

P&C

Life

US Germany Singapore

US Germany Singapore

0

10

20

30

40

50%

Mutuals(local)

40

Other localproviders

25

Multinationals

Mutuals(local)


Multinationals

Mutuals(local)

Multinationals

Mutuals(local)

Multinationals

Mutuals(local)

Multinationals

Mutuals(local)

Multinationals

25

NPS by insurance provider category

–20

–10

0

10

20%15

–1

–10

–40

–30

–20

–10

0%

–16

–32

–30

–20

–10

0%

–17–20

–30

–20

–10

0%

–7

–18

–10

0

10

20% 19

3

Note: For Singapore, “other local providers” is not shown due to small sample sizesSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


–27


–6


Page 12

Figure 5: When customers have both life and P&C products with one carrier, they give higher loyalty scores

US life carrier with some P&C business US P&C carrier with some life business

Own only life productswith carrier

8

Own life and P&C productswith carrier

20

NPS (life) NPS (P&C)

91% 9%

0

10

20

30%

Share ofrespondents

Own only P&C productswith carrier

37

Own P&C and life productswith carrier

54

89% 11%

0

20

40

60%

Share ofrespondents

Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 6: Being in touch contributes to loyalty, and carriers interact with customers more frequently in developing markets

Chi

na

Indo

nesi

a

Pola

nd

Portu

gal

Hon

g Ko

ng

Mex

ico

Sing

apor

e

Ger

man

y

US

Spai

n

Can

ada

Aus

tralia

Sout

h Ko

rea

UK

Japa

n

Italy

Fran

ce

Percentage point difference in NPS for customers who had/did not have an interaction in the past 12 months

3784 6275 45 547167 51 3970 3352 55 714982

% of respondents with interaction in the past 12 months

5883 6072 50 657476 65 5472 5457 60 675991

0

20

40

60%

LifeP&C

Life P&C



Page 13

Figure 7: Promoters foster promoters, as purchasing decisions based mainly on referrals or prior experiences with a carrier lead to higher loyalty scores

NPS by major reason for purchasing (P&C)

NPS by major reason for purchasing (life)

Own research

Existing relationship

Recommendation viaagent/broker

Recommendation via friends/family or social media

Own research




Own research




Own research




0 50%

44

32

41

37

−20 0 20%

15

−2

18

−4

0 30%

15

6

16

13

0 30%

19

6

27

16

−30 0

−10

−19

−10

−15

0 30%

10

5

11

0

−20 0 20%

3

−12

1

−5

0 50%

28

25

29

24

US UK

US UK

Germany Australia

Germany Australia

Note: NPS only for customers who purchased a first policy with their main P&C or life insurance provider in the past yearSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

• In every country, price stands as the most important purchasing criterion, just ahead of having the right product for one’s needs. Price-sensitive buyers, however, give the lowest NPS in the fi rst year after signing up. To reduce churn, companies will need to engage in more meaningful interactions.

• Low prices don’t necessarily confl ict with good service. Loyalty leaders, such as Liverpool Victoria in the UK and HUK-Coburg in Germany, excel at both price and performance on touchpoints, as perceived by customers.

• The battle for scarce customers is most pronounced in developed markets, where the majority of a carrier’s new customers actually switched from another carrier.

• Retention of customers correlates strongly with their NPS for both auto and home categories, with USAA ahead of the pack in the US. And retention has a strong infl uence on creating lifetime value.

• The importance of cross-selling and referrals de-pends on the country and the provider. Cross-selling, for instance, weights more heavily in China and Indonesia.

• Customer experience at touchpoints, as well as price, have the greatest infl uence on loyalty in most countries.

• Excellent claims handling, especially around claims fi ling and third-party interactions, is critical to delight customers and avoid creating detractors. Even though few customers have a claim at any given time, the experience makes an enormous impression on them. Interactions with repair garages, doctors and other third parties stand out as fl ash points for frustration.

2.P&C insurance: The battle for customers


Page 16

Figure 8: Price is the strongest purchasing criterion across countries, followed closely by the right product for one’s needs

0

20

40

60

80%

Fair and competitive

prices

64

Right products

59

Ease of purchasing

48

Favorablereputation

48

Excellent customerservice

44

High qualityof advice

40

Reliable partnerin claims

processing

38

Share of P&C customers for whom the criterion had a major influence on their purchasing decision

Asia-Pacific Europe Americas Average

Note: Includes only customers who purchased a first policy with their main P&C insurance provider in the past yearSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 9: New price-sensitive buyers give lower Net Promoter Scores than those who buy for other reasons

Price

Product

General service

Claims

Reputation

Price

Product

General service

Claims

Reputation

NPS by major reason for purchasing (P&C)

0 50%

44

46

45

36

31

0 50%

32

29

28

15

9

−20 0 20%

18

8

13

−3

−10

0 30%

21

17

16

9

9

US Australia

Germany UK

Note: Includes only customers who purchased a first policy with their main P&C insurance provider in the past yearSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 17

Figure 10: Overall, loyalty leaders complement price leadership with service excellence

Germany UK

US Australia

0

10

20

30

0 10 20 30 40 50

Number of promoters’ positive price comments (vertical axis) and touchpoint comments (horizontal axis) per 100 responses (P&C)

USAA

0

10

20

30

0 10 20 30 40

Apia

0

10

20

30

0 10 20 30 40

HUK-Coburg

HUK24

0

5

10

15

20

0 10 20 30

Liverpool Victoria

Note: “Touchpoints” include advice, purchasing, claims, service and distribution channelsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 11 : In mature markets such as the US, most new customers have switched from another carrier

US auto insurance US home insurance

Change in number of customers in the past year, indexed to beginning of year

50

75

100

125

100

9

–8

101

Change in number of customers in the past year, indexed to beginning of year

50

75

100

125

100

9

–5

104

Beginning ofthe year

End ofthe year

Acquisition Defection Beginning ofthe year

End ofthe year

Acquisition Defection

Switched from another insurer New to market

Source: Bain/Research Now US P&C insurance survey, 2014


Page 18

Figure 12: Insurers with higher Net Promoter Scores have lower defection rates

US customer loss index (P&C)

NPS

Source: Bain/Research Now US P&C insurance survey, 2014

0

0.5

1.0

1.5

2.0

−20 0 20 40 60 80%

R²=0.58

US insurance company

Figure 13: Retention has a strong infl uence on creating lifetime value

0

100

200

300

Estimated US customer lifetime value, indexed to passive (P&C)

40

Retention

47

Cross-sell

Size of wallet

Share of wallet

Cross-sell

10

Referrals

3

Passive

100

Retention

133

22

Referrals

15

Promoter

270

Detractor

Note: All products are assumed to be of equal value to the insurerSource: Bain/Research Now US P&C insurance survey, 2014


Page 19

Figure 14: Cross-selling is more prevalent in some developing markets

0

1.0

2.0

3.0 2.9

1.91.7 1.7

1.5 1.5 1.5 1.4 1.4 1.4 1.3 1.3 1.3 1.3 1.3 1.2 1.2 1.1

Share of promoters who own more than one product, indexed to share of detractors (P&C)

CanadaMexico

US Belgium

France

Germany

Hong Kong

ItalyPoland

Portugal

Spain

UK Australia

China

Indonesia

Japan

Singapore

South Korea

Developing markets Developed markets

Note: Numbers are roundedSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 15: Customers’ experiences at touchpoints, as well as price, have the greatest infl uence on loyalty in most countries

0

20

40

60

80

100%

Canada US Germany Italy UK Australia

Share of positive mentions from promoters (P&C)

Singapore

0

20

40

60

80

100%

Canada US Germany Italy UK Australia

Share of negative mentions from detractors (P&C)

Singapore

Factors influencing promoters Factors influencing detractors

Note: “Touchpoints” include advice, purchasing, claims, service and distribution channels; “other“ includes emotional responses, loyalty responses, responses indicating little familiarity with the providerSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Touchpoints Price Reputation Product Other


Page 20

Figure 16: Claims interactions, though infrequent, have the greatest effect on loyalty

Oneinteraction

per year perrespondent

Payingmy billRenewing

my policy Getting a quote on a productAdding or

changing a policy Getting information

about a product

Getting status updatesand questions answered Initially filing

a claim

Receiving payment for

my claim

Interacting with third parties involved in

my claim

Service moments Buying moments Claims moments

High

Low HighLikelihood to delight

Likel

ihoo

d to

ann

oy

Note: Respondents were asked about the effect that a recent interaction had on their likelihood to recommend their insurer; numbers are roundedSource: Bain US Auto Insurer Moments of Truth Survey, 2013

US respondents (P&C)

Receivingcorrespondencefrom insurer

Figure 17: A positive claims experience has a strong positive effect on loyalty

Percentage point difference in NPS (P&C) of customers satisfied with their claims experience vs. all other customers

Source: Bain/Research Now and Bain/SSI Global NPS survey 2013/2014

4440 40

36 35 35 35 34 34 32 32 30 29 28 28 28

19

14

15%29%34% 15%22% 14%18% 18% 18%34% 13% 21%8%20% 23% 25% 15% 14%

0

10

20

30

40

50%

% of customerswith claimsexperience inpast 12 months

Canada

MexicoUS

Belgium PolandFranceGermany

Hong Kong ItalyPortugal

Spain

UK

Australia

China

Indonesia Japan

Singapore South Korea


Page 21

• Across countries, most customers buying life insur-ance say product attributes are a major factor influencing their decision, closely followed by price and reputation.

• Once customers are on board, however, the life insurance business depends on relationships. Inter-actions with a personal adviser tend to raise NPS, more so when complemented by interactions through other channels. In the US, for example, NPS for customers who interacted with an adviser and used digital channels is 34 points higher than for customers who used a call center and/or digital channels.

• The experience at critical touchpoints and episodes, including those involving an adviser, has the greatest propensity to delight or annoy customers. On the positive side, US and German loyalty leaders excel at delighting customers through touch-points as well as with their products or reputation.

• In Asia, affl uent customers give far higher NPS than do other customers. By contrast, in the mature and highly competitive markets of Australia, the UK and Canada, affl uent customers give lower-than-average NPS.

• Investing to improve advocacy pays handsomely. In developed markets, referrals from an existing customer to other potential customers play the biggest role in building customer lifetime value. In developing markets, cross-selling creates more value, because penetration there is low.

3.Life insurance: Delighting customersin a low-touch industry


Page 24

Figure 18: Across countries, product is the strongest reason for purchasing, followed by competitive prices and a company’s reputation

0

20

40

60%

Share of life customers for whom the criterion strongly influenced their purchasing decision

5249 47

42 42 42

Asia-Pacific Europe Americas Average

Fair andcompetitive prices

Ease of purchasing

Favorablereputation

Excellentcustomer service

High qualityof advice

Right products

Note: Includes only customers who purchased a first policy with their main life insurance provider in the past yearSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 19: Customers who interact with their personal adviser and use other channels tend to give higher Net Promoter Scores

–20

0

20

40

60%

50

28

16 16

5

–3

11

3

–9

5

–13–19

6

–9

–17

NPS for customers who interacted in the past 12 months (life)

US Canada

Channels used*

Germany Australia Singapore

Personal adviser and digital channels Personal adviser only Call center and/or digital channels

*Interaction with personal adviser can be via phone or in personSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 25

Figure 20: Touchpoints have the greatest infl uence on both delighting and annoying customers

Share of positive mentions by promoters (life) Share of negative mentions by detractors (life)

0

20

40

60

80

100%

0

20

40

60

80

100%

Factors influencing promoters Factors influencing detractors

Canada US Germany Italy UK AustraliaSingapore

Canada US Germany Italy UK AustraliaSingapore

Note: “Touchpoints” include advice, purchasing, claims, service and distribution channels; “other” includes emotional responses, loyalty responses, responses indicating little familiarity with the providerSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Touchpoints Reputation Product Price Other

Figure 21: Loyalty leaders in the US and Germany delight customers on touchpoints and either product or reputation

German life insurance US life insurance

-

-

USAA

USAA

Highest provider

Lowest provider

Loyaltyleader

0

5

10

15

20

25

30

35

Touchpoints Product Reputation

Number of positive comments by promoters (per 100 respondents)

0

5

10

15

20

25

30

35

Touchpoints Product Reputation

HUK-CoburgCosmosDirektCosmosDirekt

HUK-Coburg

Note: Germany has two loyalty leaders; “Touchpoints” include advice, purchasing, claims, service and distribution channelsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 26

Figure 22 : Agent interactions often comprise the most important touchpoints

Higher

Lower

Sales,marketing, policy

application

Customer-initiated policyadministration

Insurer-initiated policyadministration

Agent ReputationCustomerservice Product

A B C D E F G H I J K

Touchpoint's importance to customer loyalty (Asian life carrier)

Note: Importance to customer loyalty is calculated as the coefficient of correlation between the satisfaction score at each touchpoint and overall NPSSource: Bain & Company NPS survey for client

Figure 23: Affl uent customers give relatively high loyalty scores in Asia and some developing markets, but low scores in several developed markets

–20

–10

0

10

20% 18 1816 15 15

13

64

–1–3 –3

–5 –5

–9

Percentage point difference between NPS of affluent and nonaffluent customers with less than three years' tenure (life)

Indo

nesi

a

Pola

nd

Hon

g Ko

ng

Mex

ico

Sing

apor

e US

Spai

n

Can

ada

Aus

tralia

Sout

h Ko

rea UK

Japa

n

Italy

Fran

ce

Note: Countries with a sample size of less than 100 affluent customers have been excluded from the analysis Sources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 27

Figure 24: Referrals tend to create the most value in mature markets, while cross-selling creates greater value in developing markets

Customer lifetime value, detractor indexed to 100 (life)

Carrier in developed Asian markets Carrier in developing Asian markets

Source: Bain & Company analysis for client

0

200

400

600

0

200

400

600

Detractor Retention PromoterCross-sell Referrals Detractor Retention PromoterCross-sell Referrals

Figure 25: Referrals are more readily generated by promoters in mature markets, while cross-selling works better with promoters in some developing markets

Share of promoters who recommended their carrier, indexed to share of detractors (life)

Share of promoters who own more than one product, indexed to share of detractors (life)

Referrals Cross-sell

Note: Numbers are rounded; Excludes countries with a sample size of less than 100 in any comparison groupSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

0

2

4

6

8

10

7.8

5.04.5 4.2 4.2

3.6 3.3 3.3 3.3 2.9 2.8 2.7 2.7 2.7 2.41.5

0

1

2

3

2.1

1.8 1.7 1.6 1.6 1.6 1.5 1.5 1.5 1.4 1.4 1.3 1.3 1.2 1.2 1.2

Developed markets Developing markets

Chi

na

Indo

nesi

a

Pola

nd

Hon

g Ko

ng

Mex

ico

Sing

apor

e

Ger

man

y

US

Spai

n

Can

ada

Aus

tralia

Sout

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rea

UK

Japa

n

Italy

Fran

ce

Chi

na

Indo

nesi

a

Pola

nd

Hon

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Mex

ico

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apor

e

Ger

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US

Spai

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ada

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Sout

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Japa

n

Italy

Fran

ce

• All countries have a signifi cant share of customers who do research or interact digitally with their insurer, and their ranks will grow over the next three to fi ve years. Digital usage will grow to become the dominant channel for prepurchase research in many countries. For the actual purchase, however, most cus-tomers still use mainly phone or in-person meetings.

• Digital interactions thus need to be complemented with offl ine interactions in order to delight cus-tomers. In fact, digital-only interactions result in the lowest NPS in most countries.

• Hybrid customers merit extra attention, given that they have higher incomes than customers who don’t go online. And the hybrid share of the total market is large and growing.

• Insurance markets across the globe fall into three broad categories of channel usage: Traditional relationship markets include Canada, Spain and Japan. These will likely evolve to relationship 2.0 markets, which currently include Mexico, China, Singapore and Hong Kong. In addition, Germany, Italy and the US have started down this path. Finally, there are two transactional markets—the UK and Australia—where relationships have far less importance.

• These different markets require different short-term and midterm approaches by insurers. Omnichannel in the UK means mainly digital and call-center tele-phony; in the US it means integrating in-person, phone and digital channels.

• Customers do not expect or want exclusively digi-tal insurers. Among all types of interactions, the strongest demand for digital tools comes in pur-chasing online and handling claims.

• For most interactions, Asian customers show the highest demand for digital tools. Strengthening security and user-friendliness would increase dig-ital demand in most countries.

4.The shift to a Digical business


Page 30

Figure 26: The share of digitally active customers ranges from 35% to 70%, with a sharp increase expected over the next three to fi ve years

0

20

40

60

80

100%91

8782 82 80 80 79 78 77 76 76 74 73 71 69 69 67 64

Share of digitally active insurance customers* (P&C and life combined)C

hina

Indo

nesi

a

Pola

nd

Hon

g Ko

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Belg

ium

Portu

gal

Mex

ico

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Ger

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US

Spai

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Sout

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Japa

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Italy

Fran

ce

Next 3−5 years Today

*Respondents who used digital channels for their last insurance-related information research and most important interactions with their insurance providers (to learn about the provider or product, get advice, make a purchase, obtain service or pursue a claim) in the past 12 months; maximum of three responses allowed for choosing channelsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 27: Most digitally active customers will be hybrid, using phones and in-person meetings as well

0

20

40

60

80

100%

Share of digitally active insurance customers in next three to five years (P&C and life combined)

9187

82 82 80 80 79 78 77 76 76 74 73 71 69 69 67 64

Chi

na

Indo

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Pola

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Hon

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Belg

ium

Portu

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Spai

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Hyb

rid c

usto

mer

sD

igita

l-onl

y cu

stom

ers

Japa

n

Italy

Fran

ce



Page 31

Figure 28: Digital-only interactions yield lower Net Promoter Scores than multichannel interactions

−20

0

20

40

60%

NPS for customers who interacted in the past 12 months (P&C)

28

3943

40

5

13 11

19

3

14

2119

−19 −18

−4−1

US Germany Australia Singapore

Digital onlySingle channel

In-person or phone only In-person and phoneMultichannel

Digital and in-person and/or phone


Figure 29: Hybrid customers in most countries have higher incomes than those who use only phone or in-person channels

−20

−10

0

10

20%

Percentage difference between average household income of hybrid and offline customers (P&C and life combined)

1312 11 11

9 98 8 7

6 6 54 3 3

1 1

−10

Chi

na

Indo

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Pola

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Hon

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Belg

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Portu

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US

Spai

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Japa

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Page 32

Figure 30: Customers today still purchase insurance products mainly offl ine

0

20

40

60

80

100%

Share of channels mentioned for last product purchase (P&C)

Chi

na

Indo

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a

Pola

nd

Hon

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ng

Belg

ium

Portu

gal

Mex

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Sing

apor

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Ger

man

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US

Spai

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Can

ada

Aus

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Sout

h Ko

rea

UK

Japa

n

Italy

Fran

ce

Online/email App/social media Phone (call center) Phone (personal adviser) In-person*

* In-person includes interaction with broker, agent and bankNote: A maximum of three responses was allowed for choosing channelsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Figure 31: More purchasing behavior will migrate online over the next three to fi ve years

0

20

40

60

80

100%

Share of channels mentioned for product purchase in the next 3–5 years (P&C)

Chi

na

Indo

nesi

a

Pola

nd

Hon

g Ko

ng

Belg

ium

Portu

gal

Mex

ico

Sing

apor

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Ger

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US

Spai

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Can

ada

Aus

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Sout

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UK

Japa

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Italy

Fran

ce

Online/email App/social media Phone** In-person*

* In-person includes interaction with broker, agent and bank** Phone includes interaction with personal adviser and customer service centerNote: A maximum of three responses was allowed for choosing channelsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014


Page 33

Figure 32: Three models of channel usage dominate insurance markets

Importance ofcall center

Importance ofonline/mobile tools

Importance of personal adviser

Source: Bain & Company analysis based on Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

• Channel usage for specific interactions is mostly single channel• High share of interactions with personal adviser and low usage of online channel

Traditional relationship markets(e.g., Canada, Spain, Japan)

• High usage of online channel and call center • Low share of interactions with personal adviser

Transactional markets(e.g., UK, Australia)

• High share of multichannel interactions• High in-person interactions and also high demand for online tools

Relationship 2.0 markets(e.g., Mexico, China, Indonesia, Singapore,

Hong Kong)


Page 34

Figure 33 : While customers demand robust digital tools, most do not expect a fully digital carrier

Social networking

Video call for advice

Co-browsing Webwith adviser

General apps (e.g., carrier information)

App or online inter-action with adviser

Product app including quotes

Info

rmat

ion/

seek

adv

ice

Note: A maximum of three responses was allowed for choosing digital toolsSources: Bain/Research Now and Bain/SSI global NPS surveys, 2013–2014

Share of customers who want to use digital tools for each interaction (P&C and life combined)

Average demandMaximum demandMinimum demand

Hong KongGermany

South KoreaCanada

MexicoJapan

IndonesiaJapan

IndonesiaGermany

ItalyAustralia

0 10 20 30 40 50%

Purchasing from digit-ally equipped agent

Purchasingproducts online

ChinaJapan

UKIndonesia

Purc

hase

Claims notification online or via an app

Claims statusonline or via an app

ChinaJapan

South Korea

Clai

ms

Personal portal for self-service PortugalJapan

Serv

ice

France

Appendix: Methodology

Bain & Company partnered with Research Now, a digital data collection provider, to survey consumer panels in Europe, the Americas and Asia-Pacifi c. Conducted in the winter of 2013–2014, the survey polled 147,989 customers in 18 countries.

Bain worked with SSI to survey an additional 10,433 policyholders in Asia. SSI applied its online sample blend encompassing SSI’s own managed panels plus online community members, social media participants and respondents from across the Web.

The survey’s purpose was to gauge customers’ loyalty to their main insurance provider in life and P&C, as well as to discover the underlying reasons why customers hold their views. We included only those providers for which we received at least 100 valid responses, though in many countries sample sizes exceeded 100 for each insurance provider included.

Respondents were asked to fi rst list the P&C and life insurance products they purchased, name the corresponding insurance provider and indicate their main insurance provider for both P&C and life. Then they were routed to either the P&C or life insurance questionnaire. We assessed their loyalty to their main insurance provider (either P&C or life) by asking two questions:

• 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 main insurance provider to a friend or a colleague?

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

To better understand their evaluation of their main insurance provider, we asked the respondents to assess their main provider’s performance along several dimensions. If respondents had submitted a claim within the past 12 months, they were interviewed about their satisfaction with their claims expe-rience. If respondents fi rst purchased a policy from their main P&C provider within the past year, they were further asked which criteria had a major, minor or no infl uence on their purchasing decision.

We also asked which channels respondents use for the following: gathering information about an insurance provider, learning about products, seeking advice or service, purchasing a product, or submitting and settling a claim. We subsequently asked them to predict how these channels will develop within the next three to fi ve years, and we asked them which online and smart mobile services they would like their insurers to provide in the future. The remaining questions elicited demographic infor-mation: household income, age and region of residence.

On the question of statistical signifi cance, our data and analysis measuring insurance providers’ NPS in the different countries are robust. The NPS measured for each insurance provider has confi dence intervals ranging from ±1.5% for a sample size of 5,000 to ±10% for a sample of 100, with an 80% confi dence level.

Countries classifi ed as developed are based on the World Bank’s high-income category; developing countries are based on its middle- and low-income categories.

Net Promoter® and NPS® are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

Net Promoter SystemSM and Net Promoter ScoreSM are trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

For more information, visit www.bain.com

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transformation in p&c and life insurance

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