Insurers have considerable work to do in developing stronger, mutually beneficial relationships with their customers, according to a new survey.

Consumers trust the insurance industry less than they trust banks, supermarkets, car manufacturers and online retailers, the customer relationship survey by Ernst & Young found. Since consumers are more likely to buy products from companies they trust, insurers need to work on deepening that relationship and proving they care about the well-being of their customers.

Consumers surveyed indicated they want more frequent and relevant communications from their insurers. They also want multiple access points, including self-service options, and look for insurers that demonstrate the ability to go beyond underwriting to become true risk-mitigation partners.

EY’s Global Consumer Insurance Survey 2014 asked approximately 24,000 people in 30 countries around the globe about their relationships with insurance providers. The survey focused on what matters most to consumers in these relationships, how they interact with their providers and how satisfied they are with the range of offerings from insurers.

The survey examined various factors relating to turnover, including how global consumers perceive the industry, how likely they are to switch providers and which factors matter most at different points of the relationships.

Close the Communication Gap

Consumers want more frequent, meaningful and personalized communications—but there are large gaps between what customers want and what they get from their insurers.

More than half (57 percent) of the insurance consumers surveyed said they would prefer to hear from their providers at least semi-annually, but only 47 percent currently receive that level of contact. These consumers indicated they were open to receiving special deals and promotions, as well as general information and policy updates.

On the other hand, about 1 in 6 respondents indicated that they “never” want to hear from their insurance provider.

Due to this disparity in consumer preferences, EY suggested that carriers looking to optimize communications allow customers to set preferences for content, frequency and channels—and make it easy for them to update these on a regular basis, as life events and circumstances change.

Better communications with customers can help insurers understand changing consumer needs and respond appropriately. For example, the insurer may provide advice on improving home security or offer discounted services for certain types of individuals or groups.

Take Advantage of “Moments of Truth”

With 44 percent of the consumers surveyed reporting that they had no interactions with their insurers during the previous 18 months, any interaction— even seemingly insignificant administrative tasks—can become a “moment of truth.”

If things go right, these moments of truth can lead to positive outcomes like coverage increases, additional policies or higher favorability ratings from the consumer. Meanwhile, possible negative outcomes for these events include coverage reductions, policy closures or lower favorability ratings.

Of those consumers surveyed, 58 percent reported having a moment-of-truth experience in the last 18 months. Critical touch points that can lead to moments of truth occur throughout the policy life cycle, including:

• When consumers have questions about existing coverage, deductibles or premiums, or when they need to update personal information.
• When consumers look to increase coverage, obtain a new policy or replace an existing policy.
• When consumers inquire about claim status or want to dispute a claim’s resolution.

The good news: 70 percent of customers experiencing a moment of truth reported a positive outcome.

Quality of communications was cited by 60 percent of the respondents as the most important factor in elevating interactions with an insurer into moments of truth. Closing the communication gap can make insurers more aware of shifting consumer needs so they can turn moments of truth into cross- and up-selling opportunities.

EY offered several suggestions for insurers looking to boost customer engagement and increase the probability of turning a moment of truth into a positive outcome:

• Develop processes to differentiate between inquiries that require “high-touch” service and those that can be routed to self-service channels.
• Establish affinity groups, customer clubs or rewards programs for specific segments.
• Offer supplemental information on topics of interest (like household safety or safe driving tips, comparison data for similar customers) along with standard communications to demonstrate interest in wider consumer needs.

Going Multichannel

Insurers need to rethink their distribution strategies and partner relationships, the survey found.

While in-person interaction is still important to consumers, it is no longer a requirement. Call centers and digital options such as web chat are now seen as viable replacements for face-to-face interactions for many tasks.

In fact, the survey found that roughly 8 in 10 customers are willing to use digital and remote contact channels (including web chat, email, mobile apps, video support or phone) for many different types of interactions and transactions. The key is finding the right mix to fit the needs of both insurer and insureds. EY recommended choosing three or four contact methods.

The survey also found that whether an insurer sells direct or through a broker can have a significant impact on customer attrition: Consumers purchasing from independent brokers are 29 percent more likely to switch insurers or cancel policies.

However, when it comes to up-selling during moments of truth, brokers outperform direct insurers and those with dedicated agents.

Regardless of whether they choose to sell direct or through an intermediary, EY said that insurers must maintain control of the consumer relationship. Failure to do so can lead to lost policies—especially if customers feel abandoned by their carrier.