Insurance shifting from sellers’ to buyers’ market, where trust rules

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Insurers must modify their sales strategies to appeal to modern consumers looking foremost for good advice and quality interactions through multiple interaction points, a new report says.

Insurers should improve interaction quality by offering multiple interaction methods, including personal contact, concentrating on the desires of the customer, and securing their trust, according to IBM.

“Insurance has shifted from a sellers’ to a buyers’ market,” Christian Bieck, global insurance leader for IBM Institute for Business Value and co-author of the IBM study, said in a statement.

Multiple interaction points

More than 60% of consumers plan to use more than one interaction point such as phone, website or face-to-face meetings to purchase insurance policies, the report said.

IBM said 49.5% of participants chose online channels as their preference for gathering information about insurance; 47.9% preferred personal contact; 46.4% preferred peer groups; and 35.5% preferred websites of aggregators or independent comparison providers.

“Our findings shows that the customer of the future is diverse and multi-modal,” Bieck said in a statement. “Consumers prefer interaction point choices – and consumers can and will switch insurers if their preferred interaction points are not available.”

Personal contact is important

Bieck said that personal contact is “first and foremost” when people do business with insurers, especially in the U.S.

“The conventional [belief is that] U.S. consumers are very price-sensitive, and that’s simply not true,” Bieck told IFA. “Actually, personal interaction is even more important for the U.S. [than the rest of the world], and after the financial crisis, that became even more true.”

Consumers especially prefer personal interaction when purchasing a policy: 31.5% chose the tied agent as their point of purchase, while 16.8% chose the insurer website, according to the report.

Demographics vs. psychographics

The report recommended that insurers think about psychographics rather than demographics when approaching customers.

“Insurers are still in the product-centric mode of looking at the customer, which we try to change by saying, ‘What is the persona of people?’ Each type wants different things when they shop for insurance.”

Consumers attracted to trust

Customers with low trust in the insurance industry as a whole are about 20% more likely to switch their providers, the IBM report indicated.

“People want to know that they get what they were promised in the moment of truth, which in insurance means the claim,” Bieck told IFAwebnews.com. “Insurers can believably sell insurance as being companies to trust, and the people in front of the customer who transport that picture are the ones that are likely to be successful in this environment over most types of consumers.”

The IBM online study included 21,740 consumers from 20 countries globally.

This article first appeared in the March 2011 edition of Insurance & Financial Advisor.

 

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