Guidewire (NYSE: GWRE) today released the latest edition of its annual insurance customer attitudes study* which reveals the opinions insurance customers have regarding the insurance industry and digital transformation. The report titled, ‘The Insurance Engagement Gap and its Impact on Perception and Innovation’, highlights how factors such as the cost-of-living crisis, technology, and diversity and inclusion in the insurance industry impact customers' views of insurers.
The research found that opinions about the insurance industry are fairly fixed. A third (33 percent) of UK policyholders said that they already held a negative opinion of the industry and this had not changed in the past twelve months. This compares to 19 percent who said that they had not changed their mind and that their opinion was already positive. Meanwhile, more than one in ten (12 percent) said that their view had become more positive due to the actions of insurers to support people. What is clear is that there is a strong correlation between those who have made a claim and those who hold positive opinions about insurers. Four in ten (40 percent) respondents who have made a claim in the last twelve months say that the actions of insurers to support people made them feel more positively toward the industry, compared to just 8 percent amongst those who have not made a claim.
Despite the widespread use of technology in people’s everyday lives and the focus on digitalisation in the insurance industry, customers show a preference for traditional ways of contacting their insurers. The majority of customers prefer phone contact in the event of a claim (66 percent, a 10 percent increase on 2023) and email (50 percent, an 11 percent increase compared to 2023). When a customer has made a claim, these numbers increase, with contact via phone and email becoming even more popular than the average, 79 percent and 56 percent respectively.
Other key findings are:
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Growing interest in usage-based insurance (UBI), however… - As customers are looking for greater flexibility from their insurance policies, almost half (47 percent) cited that as the reason to choose a UBI policy. Yet, only 10 percent of respondents have a UBI policy, a 4 percent decrease compared to 2023.\_
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Embedded insurance is not quite embedded in customers’ preferences - Like last year, 39 percent of respondents are comfortable buying insurance from companies like IKEA, Amazon, or Tesla when making another purchase. With more digitally savvy customers, positivity around embedded insurance also increases (for example 66 percent of those respondents who have processed a claim via a social media platform would be comfortable buying insurance via an embedded offering).\_
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AI is a part of our lives but… -\_ There is a general acceptance of insurers using AI in a supporting capacity, rather than a decision-making one. Almost half (49 percent) of respondents are uncomfortable with AI being used to make decisions about the price of their insurance without human intervention, with a further 26 percent saying that they are very uncomfortable. However, 32 percent say that they would be comfortable with AI assisting insurers in filling out documents, and 30 percent would be comfortable with AI helping a human call handler answer their questions.\_
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Protect my privacy - As insurers increase their use of digital and AI tools, customers are more concerned about how their private data is being collected and retained. There is a 6 percent increase year-on-year in the number of respondents who say that they cannot understand why insurers would feel the need to collect policyholder data (24 percent in 2024, compared to 18 percent in 2023). However, customers aged 18 to 24 years are the most likely to understand why insurers would collect more data, but almost half (47 percent) would prefer that they did not. This is not to say that UK insurance customers are completely opposed, however, as 28 percent of customers are happy for insurers to collect and use their data because it will improve services and reduce prices for those with low-risk behaviours.
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Is the insurance industry an exciting place to work? - In response to the question, “Should the insurance industry be more optimistic about how it is viewed as a place to work, especially amongst younger age groups?” nearly half (47 percent) of 18-to-24-year-olds and 41 percent of 25-to-34-year-olds indicate that insurance is an innovative and exciting industry to work in, compared to banking, big tech, retail, and engineering. Similarly, when looking at these work sectors, perceptions of diversity in the insurance industry are positive, with 48 percent of respondents believing that it is a diverse place where you can work with lots of different people. This jumps to more than six in ten (63 percent) amongst 18-to-24-year-olds, which is the second highest score amongst all the sectors behind retail (70 percent).
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Who makes insurance purchasing decisions? - It is much more common for people to be the sole decision-maker for insurance purchasing choices in their household (49 percent). When segmented by gender, 54 percent of men are the sole decision-makers, compared to 46 percent of women. Only 5 percent of respondents say that they take the advice of their insurance broker, however, this increases by 8 percent amongst those who have made a claim (13 percent). Whether it is a known insurance brand (39 percent) is the most influential factor when people are choosing which insurer to buy a policy from.
Will McAllister, SVP and Managing Director, EMEA, Guidewire, said, “Even though 2024 was a challenging year for customers and the insurance industry alike, our findings showcase just how essential personalised customer and insurer interactions are. Insurers have a key role in their customers’ lives, but at the moment this truth is only made clear to policyholders at the point at which they make a claim. This cannot remain the case. If insurers want to create more customer loyalty, and thus improve their expense ratio, they need to find ways to add value to their customers’ lives so that the claims and renewal processes are not the only meaningful engagements a customer has with their insurer.”
“It is also interesting that in an age where consumers freely share data with many other vendors and service providers, they still appear to be averse to sharing their data with insurers. The responses suggest that insurers still have a way to go in communicating and demonstrating the value the industry can deliver to improved pricing, better claims handling, and even loss prevention through enhanced use of data and technology,” continues McAllister. “Given the potential for data and technology to transform how insurance is purchased and provided in the years ahead, this feels like a key area where the industry should focus its attention.”\_
Michael Cook, Insurance Partner and Guidewire Lead at PwC UK said, “It is clear that the insurance industry still faces a number of challenges, with many of these being called out in the Guidewire Consumer Survey. These are especially acute in some of the personal insurance lines, such as motor, which means the trading and performance in this sector are particularly challenging. While technology can, and does, clearly play a role in resolving these challenges, it is the opportunities that advancing technology presents that will deliver greater benefits to insurers, the industry, and most importantly their customers.”
*Guidewire commissioned an independent market research company, Censuswide, to conduct a study of insurance consumers in Germany, France, Spain, and the UK. The sample comprised 4,126 respondents (roughly equal numbers per country). The study consisted of an online survey of people over the age of 18 years who had taken out or renewed one of the most common types of insurance (e.g. household contents, motor vehicle) within the last 12 months. The study looks at policyholders' perceptions of the sector. In particular, it looks at their views on the use of the new technologies available to insurers, the attractiveness of the insurance sector, the impact of inflation on their insurance decisions, changes in their perception of new products and services, and how they select their insurer. The study was conducted in February 2024 and has been running since 2019.
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