Insurance services represent an opportunity for banks to improve customer experience and increase customer loyalty
Consumers have an average of four different insurance products split across three providers, with 63 percent saying they would prefer to deal with a single provider, according to a new survey by Collinson Group.
Following the rise of price comparison and aggregation services, the way people buy insurance has fundamentally changed – competition is fierce, prices are lower and consumers use multiple providers. However, Collinson Group research amongst 2,500 loyalty programme members has found that customers would value a more streamlined way to buy insurance through a single provider. Banks can capitalise on this opportunity by offering insurance products through loyalty initiatives, or value-added packaged accounts and credit cards – improving the customer experience, boosting loyalty and generating incremental revenue.
When asked why they would prefer insurance products with a single provider, 79 percent cited convenience. More than half (51 percent) said they would expect better prices for staying loyal and 39 percent said they would expect to receive added benefits or rewards for staying loyal to one provider.
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When asked why they use multiple providers, more than a third (37 percent) said their provider doesn’t offer different products, and more than a quarter (27 percent) said they don’t feel there is any benefit for staying loyal.
An additional Collinson Group’s global study of more than 6,000 affluent middle class customers further emphasises the opportunity for banks, showing a high perceived value of insurance products. The findings found that 72 percent of affluent middle class customers highly value health insurance, 66 percent travel insurance and 63 percent lost cards assistance. Banks should also consider other non-traditional assistance products such as identity protection, to help in the modern age of cyber-crime. The research found that 57 percent of customers rated identity theft protection as a highly valuable service, and that fears over data security influences what brands or products they use. Offering identity protection insurance is another way banks can show commitment to customers.
Mark Roper, Commercial Director of Collinson Group said: “Banks have an opportunity to boost loyalty and make consumer’s lives easier by including insurance products in loyalty programmes or within packaged accounts and credit cards. Given the data banks hold on consumer spending, using this information at the right time to offer highly personalised, timely and relevant insurance products would be valued by customers and can also generate incremental revenue for banks.
“Due to their substantial buying power, banks can achieve economies of scale to deliver value across insurance products and pass this back to their customers. They can offer insurances at the low prices their customers expect due to a group risk approach, packaged as part of a bank account or credit card. This will provide differentiation and builds on or leverages existing loyalty to the bank’s core products –bank accounts or credit cards.
“With effective integration, banks could offer travel insurance to a customer that has just booked a flight, or car insurance when they buy a new car. This will be well received by customers who indicate in the research that relevant offers are welcome, and by consumers that like the idea of a ‘one stop shop’ but need to feel that the provider offers great value and quality products. Banks should be capitalising on this consumer need by seizing the opportunity to create more meaningful and deeper emotional relationships with their customers, and grow their bottom line.”