UK insurers are failing to take advantage of InsurTech and digital insurance developments and trail the US, Asia and Africa in terms of customer engagement.
A survey of 1,637 insurance customers, by research agency Consumer Intelligence in partnership with The Digital Insurer, found that only 59% of UK based customers had access to an online portal as part of an insurance policy, compared to 71% in the US, 76% in Hong Kong and 82% in South Africa.
Motor and home insurance offer respondents greatest access to online portals in the UK – 73% and 63% respectively – but other areas have a long way to go. Only 39% of UK life insurers and 47% of health insurers offer a digital portal to their customers (see slide 1).
Lack of engagement
Such low levels of provision cannot be attributed to customer demand. More than two-thirds of UK consumers said they would use an online portal if made available to them.
Perhaps of greater concern is that insurers have failed to engage through the digital services they already do offer to their customers.
Insurers cannot hope to be as slick at digital engagement as online retailers – yet – but were rated very poorly up against other retail and service companies (see slide 2).
The industry placed ninth out of 10 sectors, with just 45% of UK-based respondents considering the industry’s online services as good or excellent – just above furniture and homeware companies.
UK insurance companies have got a long way to go to improve their digital engagement, said four out of five (81%) respondents, with almost half (42%) describing the industry as outdated and old-fashioned.
The UK is certainly missing out on considerable opportunities. Of those who already use insurer portals, almost half do so for a quote (49%) or to renew their policy (47%).
Though only 13% of UK respondents had made a claim online, 39% said they would be prepared to use an online claim service, if available.
The most important function of an online portal is to simplify the customer experience, say 59% of UK customers. However, traditional channels not only have a part to play but directly support online engagement.
A third of UK respondents said they would be more likely to use an online insurance portal if there was an option of contacting a customer service department.
Only 15% in the UK said they would not use an online portal under any circumstances, under half the reluctance shown by US customers, against a global average of 18% (see slide 3).
Could do better
The findings may paint the UK insurance sector in a bad light, but they also offer a warning to the other regions surveyed, which are struggling to get to grips with digital technology.
Based on the quality of digital and online services, US insurers were placed above high street retailers, but only 45% described them as good or excellent – the same as in the UK.
The other two regions showed very different scores, with South Africa achieving a 55% approval rating, against Hong Kong’s lowly 35%. However, there is a wide variance between those considered to be doing a good and an average job in these two markets.
Customers in Hong Kong may consider many of their insurers to offer particularly poor online services, but these providers were rated as the fourth most innovative above music companies and behind the TV and entertainment sector.
A problem of perception?
The reason the UK is lagging behind the other regions surveyed may be more about how those providers are perceived by customers.
More than six out of 10 (61%) believe the technology is used to reduce costs and improve margins. This is the same as in the US, while in HK it is 69% and 73% in South Africa (see slides 4-7).
Where UK consumers differ is in how they believe insurers will apply that technology for the benefit of consumers. Fewer than half (47%) believe it is used to improve the customer experience. Under 40% believe that insurers will use technology to provide great customer service, to reduce the cost of insurance and to provide high quality online and digital services (see slide 4).
In the US, Hong Kong and South Africa, those surveyed demonstrated a greater expectation that the implementation of technology will prove beneficial to the customer.
It should be remembered that the UK is a more mature market – as is the US – and many consumers will have high expectations of their carriers. Consumers in less mature markets such as Hong Kong have lower expectations – for now, at least.
In these markets, service is seen as a hygiene factor and of lower priority than investment returns and pricing. Though the results from Hong Kong are stronger than the UK, there are many more platforms in the UK that offer customers the opportunity insurers to get a quote and buy their insurance online than in Hong Kong.
A warning to the world
UK insurance is viewed as an industry well past its sell-by date. Even where it has updated and rolled out new systems and processes, it has failed to build on those innovations. More importantly, it has failed to effectively engage with customers to communicate the benefits to them.
“The extremely low trust and satisfaction scores we see in the UK are a reflection of a systemic under-investment in innovation and lack of priority on providing fair value and value-added services to UK consumers, resulting not just in general distrust and commoditisation but also a plethora of retrospective fines by regulators,” says Simon Phipps, head of Asia and global development, The Digital Insurer.
Almost four out of five (79% – slide 8) believe that technology makes their life easier, which is only eclipsed by South Africa (93% – slide 9).
Yet, it is within the power of UK insurers to address these concerns, so all is not lost. The data shows that while UK customers are more cynical about their provider’s motivations, there is a willingness to adopt the technology.
Insurers in other jurisdictions, particularly in rapidly developing markets such as Asia, should pay attention to the UK experience to avoid making the same mistakes.
“Insurers in emerging regions of the world, such as Asia, would be wise to heed the lessons from the UK to avoid repeating the same mistakes elsewhere,” adds Phipps.