In a world where consumers are
becoming increasingly tech-savvy, using the internet to manage
financial affairs is fast gaining in popularity. Accenture believes
this represents significant threats to broker and bank channels, as
well as opportunities for insurers prepared to change with the
times.
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Insurance buyers are increasingly
turning to the internet, a trend Accenture strongly advises will
demand a reassessment of distribution strategies. The management
consulting and technology services company bases this view on a
survey it conducted of consumers in the UK, France, Germany, Italy,
Spain, and Brazil.
“Consumers are actively seeking better
deals, have more options to choose from and are empowered by new
web-driven tools to be more selective,” said Serge Callet, global
MD of Accenture’s insurance practice.
Significantly, Accenture’s study emphasised
that insurance websites and aggregators are gaining ground in all
the countries surveyed.
This comes at a time when customer loyalty is
more than usually questionable. Indicatively, when respondents to
Accenture’s survey were asked whether they plan to renew or
purchase insurance products with their current providers, 53% of
said that they did not or that they were unsure and “plan to look
around”.
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By GlobalData“For insurance companies willing to take a
bolder approach to pricing and distribution and to tailor and
target their sales channels more precisely to customer needs,
current customer loyalty weakness is a strategic growth
opportunity,” stressed Callet.
Accenture found that UK and German insurance
customers have the least loyalty to their current providers, with
71% either not planning to purchase their insurance policy with
their current provider again or unsure and planning to look
around.
Customers in France, Italy and Spain are the
most loyal to their insurance providers, with 64% of respondents in
France, 61% in Italy and 58% in Spain planning to with continue
doing business with their current provider the next time they
purchase or renew an insurance policy.
Banks and agents lose out
Accenture’s survey also indicated that
the internet is gaining significant ground on banks and insurance
agents as the preferred channel for buying insurance. Specifically,
while most respondents said they had purchased at least one of
their current policies through an agent or bank (59% and 33%,
respectively), a much lower percentage of buyers are planning to do
so over the next 12 months (49% and 27%, respectively).
Furthermore, a notable 34% of respondents
purchased at least one policy online – through insurers’ websites
or price-comparison websites – and an even greater percentage (43%)
plan to do so over the next 12 months. The trend is most
significant in the UK, where Callet said 70% of respondents plan to
purchase their policies online over the next 12 months.
“This confirms the dominance of insurance
websites and aggregators in the UK,” he said. “Our survey also
revealed surprisingly strong online growth in France, Germany,
Italy, Spain and Brazil, where the number of consumers planning to
buy policies online in the next 12 months is 10 percentage points,
on average, greater than those who had done so previously.”
Accenture’s study also raised questions about
the outlook for bancassurance given that banks are losing ground to
online insurance sales channels. However, the study did highlight
that banks hold considerable advantages over insurers.
A majority of respondents to Accenture’s survey
(60%) specified banks as their preferred “one-stop shop” for
financial services products, while 47% think of banks as a
preferred financial advisor. Accenture found that consumers also
see banks as more accessible than insurers and they are three times
as likely to have weekly or monthly contact with them.
But despite this positive picture, the study
casts doubts over future trends. Notably, only 15% of respondents
said they are “sure” they will purchase more insurance products
from their bank while 23% said they were undecided.
Accenture found that bancassurance is the most
popular in Brazil, where 54% of respondents said they expect to
purchase or renew their insurance policy through a bank over the
next 12 months.
For now the trend towards online purchase by
buyers is more slanted towards general insurance, with 40% of
respondents reporting that they prefer the online channel for
buying general insurance products.
However, the online channel is also gaining
favour, with 12% of respondents saying they have purchased a life
insurance product through an insurance website or an aggregator.
Significantly, almost twice as many (21%) said they plan to
purchase life insurance online in the next 12 months.
Growing channel for
advice
Underpinning the findings of
Accenture’s study is a new White Paper from Google, IFAs in the
Digital, which focuses on the need for independent financial
advisers in the UK to pay more heed to the internet as a channel to
connect to consumers in search of advice.
In the White Paper, Google highlights the rapid
growth in online searches for finance-related terms, which in 2009
increased by 30% year-on-year. For “unbiased financial advice”
specifically, Google noted that in February 2010 there were 84%
more queries than in February 2008, while in the first quarter of
2010 there were over 50,000 searches for the term “IFA”.
Founder of IFA Life and an internet marketing
specialist focused on IFAs, Philip Calvert commented that the
internet is now part of people’s lives and it is thus not
surprising that they are increasingly using online searches to find
financial help and advice. IFA Life is a social networking website
dedicated to IFAs, mortgage brokers and financial planners.
In the White Paper, Google also noted that
there is skepticism among many IFAs that older, high net worth
(HNW) individuals use the internet as part of their financial
research. However, Google emphasised that studies indicate that
HNWs are increasingly using the internet and are using search as an
alternative research tool for managing their wealth.
According to internet research specialist
comScore, 30% of UK adult internet users have annual household
incomes of more than £50,000 ($73,000).
