Insurers are looking at new ways to engage customers and cultivate loyalty by offering services beyond insurance, according to an industry report by global consulting firm Bain & Company.
The report, titled “Building Connections – and Profits – with Ecosystem Services”, revealed that consumer interest in ecosystem services is growing. It surveyed more than 170,000 insurance policyholders in 20 markets.
Close to 90% of respondents in China said that they would change insurance providers if the firm could offer their desired services. This is a testament to how much power additional services have in attracting new customers.
“We are seeing a growing polarization in the insurance sector between low-cost providers on one end, [and] those who are redefining the very nature of what it means to be an insurer on the other and commoditized players in the middle,” Henrik Naujoks, head for financial services at Bain & Company, said.
“While the ecosystem approach may not be a good fit for every insurer, those that do want to become the central player must move fast and decisively to fend off the competition,” he added.
Additionally, many Asian consumers want their insurers to go above and beyond – by offering services other than insurance.
The survey showed that around six in 10 of Malaysian and Singaporean respondents are interested in additional services from their insurance providers. The more services a company offers, the more touch points it creates with its customers, which is highly correlated with customer loyalty. Insurance is usually a “low-touch” industry, but ecosystem services can counteract this.
Bain & Co also found that customers are willing to pay higher premiums to gain access to ecosystem services.
“Within the price competitive automotive insurance sector, up to 60% of survey respondents would be willing to pay more for additional services,” the report said.
It should be noted that the ecosystem services model is still quite new, especially in developed markets. Less than 10% of customers in these markets have used more than three ecosystem services.
The study also found that many ecosystem services benefit consumers by providing health benefits and added safety, leading to fewer insurance claims and potentially improving profits for insurance providers.
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