Blog article (1/3) on the buying behaviour of insurances: What could we learn from the insurance buying consumers?
This article should bring you some insights into consumer behaviour of buying insurances. What can we learn from insurance consumers?
Consumers are the ones paying for existing services and enable a huge insurance industry globally. What do they think of this enormous industry built around risk? Do we as makers of this business and being a part of it appreciate enough their efforts that they do on behalf of us? According to a report from Accenture (2017) buying behaviour of insurances is changing to a direction that creates pressure to renew ways to reach new customers and keep existing customers. Do we know how it is changing and what can we do to keep existing or gain new ones? Insurance sales are generally increasing (McKinsey and Company, 2017) and this is along with the change of buying behaviour of customers driving the change. Restraining these are dissatisfaction towards insurances and the increased capabilities to search for information. New insurance products and new entrants to the insurance market are the drivers to raise awareness of insurances.
Accenture´s (2017, http://tiny.cc/dqo45y ) financial services report pointed out that an essential aspect of Marketing for the existing market and future research is the change in how customers are seeking information for financial related topics. The new emerging buying persona is seeking information online.
The signs that do imply having a big gap in the expectations from the consumers, what they can gain on insurances, and they are more interested than ever before to find alternative solutions. When this is connected to the fact that there is a common understanding from insurance companies and consumers that the risk covered by the insurance product is not being fully understood due to the complexity of the terms and conditions. The factors of having the lack of understanding create a distrust imbalance between the seller of the insurance and the consumers buying it.
Insurance appreciated; do we know?
To be able to understand the minds of consumers an approach needs to be established to understand more of the underlying desires of consumers. Buyers of insurances are confused and insecure because new products are more being a mixture of old traditional insurances and services and the concept of insurance is changing (PWC, 2018 https://www.pwc.com/gx/en/ceo-survey/2018/deep-dives/pwc-ceo-survey-2018-insurance.pdf )
There are quite a few researches and to mention few of them that have focused on the aspect to understand the drivers of consumers around insurances (Barroso and Picón, 2012; Ulbinaitė et al.,2011). The researches take into account the facts of the decision process for a consumer to evaluate the final purchase of the insurance product. The distrust of feeling challenging to understand insurance products creates the opportunities for companies not traditionally in the insurance business to offer the trust element to the consumer through another business industry product (Forbes, 2018). For us, as an industry, it is alarming that there are none of our representatives from the financial sector on the most reputable company listing among the 100 top companies in the world. What does it mean, one implication would be that a consumer would buy insurance from these companies rather than from any one of the companies offering insurance now?
The challenges the insurance industry has with the connection to the fact that the brand value of the insurance company is low demands new approaches to market insurance products. According to the research, consumers consider or buys new insurance at least every five-year interval and the cycle is increasing. Once the potential buyer of the insurance has reached to the buying process the created feeling during this process is the essential area to be improved by the insurance industry.
Consumer of insurance?
The findings Yellow May has discovered that generally, the cost is the decisive factor for consumers to buy and select a particular insurance product. The price consciousness and focus have several limitations as consumers buy insurances to cover risks. What does this then imply? The insurance industry has assembled itself into a position that a lot of the incredible new solutions and the offerings come in the minds of the consumer down to the question, what is the price of one insurance product in comparison to the other if they can compare.
Further, challenges shown by the various articles and published researches do imply that the sales cycles of insurances are shorter than before and changes in the context can be greater than before.
Generally, there is a lack of interest towards insurances as they are services you need to pay and do not receive any services in return if nothing happens. In some areas social pressure to have insurances particularly in Western countries is increasing due to the lack of trust to governmental institutions (Lagarde, 2018) to take care, for example, social welfare or health services.
There needs to be a shift to change this trend otherwise the traditional or new companies have several challenges with the consumers that still currently do pay the insurance industry´s processes. In the forthcoming articles, we will be revealing our own suggestions to approach this opportunity that the consumer is setting us as an industry.
Germany has a special focus as the largest EU driver on the insurance sector. Germany is considered to have a rapid pace of development due to the biggest internal market and still being part of the EU area enabling access to a larger economic area. It as an individual country will have more focus and will be used as an example in the following articles. Generally, according to a study by the German Insurance Association (2018), there has been a slow growth of the insurance premiums in 2017; it still has been the most revenue created year ever.
Handles the factors to understand the required elements to be able to meet the future expectations of the consumer.
Other parts of this article series will focus:
(2/3) The factors of being able to deliver solutions?
(3/3) What are the solution options to be able to transform the business?)