Guidewire research finds room for improvement in insurer-customer relationship

Guidewire Software has released Love, Hate or Indifference, its 2021 insurance attitudes study. Findings indicate that the relationship between UK customers and general insurers still has room for improvement as the jurisdiction comes out of lockdown and plans for a post-pandemic recovery.

Compared to last year’s study, UK customer interest in insurance that might protect them from pandemic triggered losses has gone into reverse. There is less potential demand for insurance against job loss (2021, 14%; 2020, 20%), and against sickness (2021, 14%; 2020 19%). Only online identity theft protection is slightly up at 14% compared to 2020’s 12%.

Elsewhere in Europe, demand for pandemic protection insurance remains high. For example, in a parallel study in France, French insurance customers are more interested in sickness protection (37%) and job loss protection (31%). German customers who were also surveyed are even more likely to say the pandemic would make them consider insurance products for sickness (43%), job loss (37%), online identity theft (20%), and payment protection (25%). 

The Guidewire research suggests negative opinion has hardened about the apparent lack of support form insurers for their customers during the pandemic. More than a quarter (26%) of UK customers do not think that the sector did enough to help people in need. This compares to 17% of customers when Guidewire asked the same question in its 2020 study and the pandemic was in its early days.  

A continuing lack of valued connection and engagement between insurers and customers seems to lie behind this low opinion. Almost one in three respondents say insurers sell overpriced products, are reluctant to pay out claims or are a necessary but inconvenient service. While this has increased from last year (23%), the proportion of customers who say their insurer understands them and they value their products has flatlined at 15% year-on-year.

Insurers recognise the necessity to bridge the gap with their customers but further evidence of the need for clearer understanding lies in how even insurers’ efforts to respond supportively to the pandemic have not resulted in more positive consumer opinion. While one in 10 customers (11%) say they have received a refund on their policy, most (63%), are unaware that refund deals even exist.

Feedback from customers does suggest ways that insurers could engage with them better.

• Alert services could bridge the gap: two thirds (66%) of respondents say they would access a service from their insurer that sent warnings about issues to help prevent damage instead of just covering losses. The extent to which new services could improve the quality of customer experience is highlighted by how those who say insurance is “necessary but inconvenient”, are even more positive (72%) on alert services.
• Personalised, simplified insurance products hold real appeal: one in two (55%) respondents would be interested in consolidating their insurance policies and only dealing with one insurer who can cover all risks with one personalised insurance package. Even among those who think insurance is overpriced, this consolidation message has appeal for most (58%).
• Tap into early user trend for pay as you go: usage-based insurance could address customer negativity around value for money. While the study revealed there are few (9 %) existing customers of usage-based insurance products, most respondents (60%) say they can see the value of usage-based insurance for them. The 55+ age group (65%) seems particularly open to the concept. Even for those customers who say they are deeply negative about insurers, most (59%), warm to usage-based insurance.

Commenting on the study, Keith Stonell, managing director for Europe, the Middle East and Africa at Guidewire Software, said: “Like their customers, insurers have experienced a tough journey during the pandemic. This reaffirms how important it is for insurers to get closer to their customers, and build on relationships that have been put under heavy pressure.”

“The opportunities to remedy indifference, even negativity among customers, are very achievable; and the development of truly useful alert services, more personalised consolidated products, and usage based policies offers insurers a proven path to engaging with their customers more effectively and sustainably.”

Mark Dugdale