Executive summary
Consumers value purpose, not just coverage for losses
The traditional premise of insurance—providing capital to cover risk and reimburse claims—doesn’t fully satisfy anymore. Customers increasingly are looking for help from insurers to reduce and even prevent the risks that pervade their lives. For consumers, these risks largely involve their home, car, health, and financial well-being.
About the Research
Data powered by Dynata, a leading global first-party data and insights platform.
Consumer interest has risen in part because of intense turbulence and uncertainty in recent years. Extreme weather events, disease and the Covid-19 pandemic, aging populations, and technological disruptions are combining to radically change the risk landscape, both through more risks and different types of risk.
The changes thrust insurance companies into an identity crisis that calls on them to redefine their role. They have the chance, perhaps even the duty, to take a firmer hand in moving beyond reimbursement for damage to encouraging behaviors and providing solutions in ways that will reduce risks. We foresee a collective shift in the industry’s central purpose from loss reimbursement to risk solutions over the next decade, consistent with past efforts such as advocating for seat belts in cars and safety standards in house construction.
Indeed, consumer attitudes and behaviors have become increasingly purpose-driven in ways that extend beyond preventing risk. In Bain & Company’s new survey, powered by Dynata, of 28,765 consumers in 14 countries, some 80% of respondents want insurers to embed environmental, social, and corporate governance (ESG) initiatives into their proposition. And 59% globally want life insurers to reward them for healthy living.
From risk protection to prevention
Our survey confirms that consumers see a greater role for insurers than merely delivering on the basics of coverage. That expanded role starts with the broad dimension of risk reduction. New technologies, such as the Internet of Things or machine learning, along with massive data sets on auto driving behavior and other relevant trends, enable insurers to directly partner with customers to identify, prevent, and mitigate each risk event.
Some insurers already offer promising risk-reduction services. For instance, one European health insurer launched such services for three customer segments. It offers connected health apps for coaching and other purposes and has enlisted partners ranging from doctors to nutritionists. User sign-up has been brisk and largely free of churn.
In automotive coverage, one insurer has long experience with telematics, targeting customers in regions with high levels of theft and high premiums. Some 40% of policyholders have converted to the service, partly because of a simple online sign-up process aided by the salesforce. The insurer plans to expand services through a partnership with an automaker, and by signing up repair garages, gasoline stations, and used car dealers. Its aims to eventually create a one-stop platform for theft recovery, toll and tax payment, immediate vehicle assistance, and more.
And in Southeast Asia, a life insurer recently launched services for young families such as online health and parenting forums, trackers for family events and vaccines, and related expert content. The company relies on partnerships in prevention, diagnostic services, and food scoring. More than 300,000 customers signed up the first year, which led to one-fifth of active users then meeting with an insurance broker.
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To what purpose?
Beyond the risk arena, consumers also want insurers to excel on dimensions other than the functional basics of what we call Elements of Value®, including ethics, providing access, and reducing anxiety. We asked consumers to rate the Elements of Value’s 33 attributes, which can lift products and services above commodity status, on a scale of zero to 10. Consumer loyalty and advocacy increases in every country surveyed when insurers deliver a strong performance on higher-order elements.
However, few insurers currently excel at using these elements in their proposition, our survey and other analysis shows (see Figure 1). A traditionalist perspective persists in the industry, one that views insurers largely as capital providers and claims payers, not solution providers. The business case for a broader role can be tough to embrace, with a multiyear payback period and new skills required. The role entails figuring out how to promote personal advice and service rather than product, managing an ecosystem of partners, using data to target the right set of interventions, and adopting new economic models.
As seen in Switzerland, most insurers are not performing well on the Elements of Value® that matter a lot to customers
As seen in Switzerland, most insurers are not performing well on the Elements of Value® that matter a lot to customers
