Reimagining customer relationships Asia-Pacific
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Executive summary Two years after EY s inaugural Global Consumer Insurance Survey, results from the 2014 survey confirm that the insurance industry is focusing the same type of digital-driven and consumer-led disruption that retail, banking, media and entertainment and other sectors have experienced. Indeed, it seems clear that insurers have much work to do in delivering the customized experiences, intuitive toolsets and easy information access that today s informed and empowered customers require. Our survey results confirm that insurance customers are unique in many ways. Traditional views on advocacy and loyalty are not necessarily as clear cut within the insurance sector, as they are in other industries. With the exception of Australia, Asia-Pacific region does not show a strong positive correlation between increased levels of advocacy and lower attrition rates. Across the region, customers value experiential factors such as being easy to deal with and having clear communications. In Asia, customers also value broader characteristics, such as brand reputation and financial stability, more than is found globally. Customers in Asia s developing markets appear to have higher incidence of moments of truth than their peers in developing markets globally but the good news is, they have more positive outcomes. This regional overview should be read in conjunction with the 2014 Global Consumer Insurance Survey report. It provides a snapshot of more detailed findings and data for the Asia-Pacific region. The report compares some of our global findings with survey data for the markets in this region, using the following sub-regional groupings: Total Asia-Pacific region (all markets in scope, listed below) China South East Asia (SEA) developing markets: Malaysia, Indonesia Asia mature markets: Hong Kong SAR, Singapore, South Korea Australia 24,000 people 30 markets 50 questions Look for the report at ey.com/insurance/gcis2014 and check out our interactive tool to dip deeper into the findings. Walter Poetscher Insurance Customer Leader Oceania Shaun Warren Insurance Customer Leader Asia Product types throughout this report: Life includes life insurance and annuities/ pensions. Non-life includes auto insurance and home insurance (both building and contents/renters insurance). 3
Key finding 1: High turnover and low trust signal serious relationship issues. The Global Consumer Insurance Survey report found that insurance companies ranked toward the bottom of the list of trusted companies. 4
This pattern is consistent in the Asia-Pacific region, where 70% of all customers express complete or moderate trust in insurance companies. However, most notably, these same consumers have a much higher relative level of trust in banks (see figure 1). Developing markets also appear to have a higher level of trust in insurance companies China (70%) and SEA developing markets (76%) than do the mature markets: Australia (53%), Asia mature markets (52%). This last figure, however, is heavily skewed by South Korea (47%), in contrast to Singapore (74%) and Hong Kong SAR (69%). While the actual evaluations of trust may vary in absolute numbers, their relative ranking remains stable: fifth in developing markets and sixth (last on the list) in mature markets. Level of trust (percentage of consumers citing complete trust and moderate trust ) by type of business Asia-Pacific Global Total Global Mature Markets Global Developing Markets Total Asia-Pacific China Australia Asia Mature Markets SEA Developing Markets Insurance companies 70% 62% 75% 70% 70% 53% 52% 76% Supermarkets 84% 86% 84% 83% 85% 78% 58% 86% Online shopping sites 78% 77% 79% 78% 82% 72% 57% 65% Banks 82% 69% 90% 92% 94% 71% 74% 94% Car manufacturers 80% 74% 84% 79% 81% 74% 55% 82% Pharmaceutical companies 68% 62% 72% 67% 65% 69% 56% 80% 5
Key finding 1: High turnover and low trust signal serious relationship issues. Reasons to switch vary by product line Customers were asked to indicate their top reasons to close or replace a policy. Globally, they indicate that their primary reasons to switch centered on cost/terms and policy benefits/coverage, though experiential factors such as communications and service levels were also common reasons. While the Asia-Pacific customers mostly echo this pattern, their reasons do differ to some degree. Cost/ terms remain at the top, but this is cited less frequently than globally. Non-life customers in this region, in particular, appear to place greater relative emphasis on policy benefits/ coverage, communications, the level of service received and recommendations by broker or friends. Although, surprisingly, Australia is an outlier in this latter aspect, with only 8% of auto insurance customers citing recommendations of others, compared to 37% of auto customers in Asia-Pacific. Also, brand reputation and claims handling play a far more frequent role in decision making among home insurance customers in the region. 70% of all customers in the Asia-Pacific region express complete or moderate trust in insurance companies, lagging behind other industries. Figure 2: Top reasons for closing or replacing a policy Asia-Pacific Global Total Asia-Pacific Total Cost/terms Policy benefits/coverage Recommended by broker, friends Frequency/relevance of communication Level of service received Policy did not align to my life circumstances Research I conducted Experienced personal/ family milestones Brand reputation Did not like the way claim was handled Customer loyalty benefits Life Auto Home 50% 45% 47% 46% 38% 40% 28% 27% 28% 27% 26% 25% 25% 24% 24% 21% 24% 26% 22% 23% 20% 19% 16% 19% 14% 12% 11% 12% 20% 20% 17% 21% 18% 21% 17% 19% 29% 37% 26% 31% 57% 46% 42% 47% 59% 54% 48% 55% 39% 43% 34% 39% 31% 36% 26% 25% 30% 33% 25% 28% 29% 35% 26% 31% 26% 30% 6
Brand reputation and financial stability most valued Customers were asked to indicate the most important characteristics in their relationship with their insurer. Globally, they placed the greatest importance on value for money, clear communications and being easy to deal with (in that order). In contrast, Asia-Pacific consumers rated strong brand reputation and financial stability as the top two most valued aspects, closely followed by communications, value for money and being easy to deal with. While regional results remain largely consistent across product type and sales channel, there are variations within the Asia-Pacific region: In China, the two most important relationship characteristics are brand reputation (49%) and financial stability (43%) In Australia, value for money (64%) and easy to deal with (57%) rank as the top two characteristics for a relationship The remaining markets, both mature and developing, each place the strongest emphasis on easy-to-understand communications and recommend policy best for needs/budget For multinational insurers operating in Asia-Pacific region, this indicates a clear requirement for diverse customer engagement and marketing strategies for different markets. Figure 3: Most important characteristics during ongoing relationships Value for the money Global Total 47% Asia-Pacific Total China Australia 36% 36% 64% Asia Mature Markets 34% SEA Developing Markets 33% Most valued Next three most valued Easy to understand, clear communication 43% 40% 38% 49% 52% 46% Easy to deal with 42% 35% 33% 57% 45% 37% Strong brand reputation 40% 46% 49% 36% 29% 38% Financial stability of insurance company 36% 41% 43% 37% 40% 31% Recommended policy best for my needs/budget 36% 33% 31% 29% 47% 39% Provided information the way I wanted it 33% 34% 34% 21% 35% 37% Responsive 33% 27% 25% 31% 44% 30% * Participants were asked to indicate the five most important characteristics regarding their relationship with their purchase source (for example, insurer or broker) 7
Key finding 1: High turnover and low trust signal serious relationship issues. Quality of engagement and customer service matters More detailed analysis of what matters most to consumers and their satisfaction with these characteristics, across different distribution channels, identifies relationship strengths and vulnerabilities. Customers across all channels, in their own way, point to a need to improve the quality of engagement and customer service. Independent agents and brokers: results indicate vulnerabilities regarding being easy to deal with and providing choice regarding how consumers interact with them. Dedicated agents: being easy to deal with and demonstrating value for money appear to be the key vulnerabilities for this channel. Direct from insurer: in addition to value for money and being easy to deal with, direct channel customers also show dissatisfaction with a lack of 24/7 access, loyalty bonuses and special deals. Notably, the latter characteristic is something that can be viewed as both a way to increase customer engagement and perceptions of value for the money. 8
Figure 4: Analysis of strengths and vulnerabilities by distribution channel, based on satisfaction with the most important characteristics during relationship phase Asia-Pacific Directly from the insurer Relative satisfaction Average satisfaction Relative importance Vulnerabilities (below average satisfaction, relatively high importance) Dedicated agents Independent agents and brokers 9
Key finding 2: Just because they leave you doesn t mean they don t love you. The global report raises the issue of the tenuousness between advocacy and attrition. 10
While there may be some association of the two measures within more mature markets, there does not appear to be a strong relationship between the two in the global aggregate. Although insurance customers who are unlikely and very unlikely to recommend do appear to leave their insurer in greater numbers, those with neutral or positive levels of advocacy often report similar levels of attrition. Figure 5: Policy closure rates (attrition) with last 18 months, by advocacy level (likelihood to recommend) for key markets and sectors, Asia-Pacific Asia Mature Markets Attrition (Closed a policy in last 18 months) 48% 63% 32% 26% 44% Very unlikely Unlikely Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 83% SEA Developing Markets Attrition (Closed a policy in last 18 months) 66% 45% 43% 45% Very unlikely Unlikely Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 11
Key finding 2: Just because they leave you doesn t mean they don t love you. Asia-Pacific consumers largely confirm these findings. Australian consumers, in fact, are the only ones to show a slightly stronger positive relationship, indicating that attrition reduces in line with advocacy. The remaining sub-regions in Asia-Pacific do not show strong correlation between these measures for neutral and positive advocates; indeed the opposite seems to be the case. This is also the case across life and non-life sectors in Asia- Pacific. In non-life, there is no difference in levels of attrition between strong advocates and neutral customers and the life sector actually shows an inverse trend, similar to global life findings. More generally, however, the Asia-Pacific region has far higher absolute levels of attrition for advocating customers across both sectors, compared to global data. China Attrition (Closed a policy in last 18 months) 58% 55% 43% 48% 51% Very unlikely Unlikely Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 70% Australia Attrition (Closed a policy in last 18 months) 43% 34% 26% Very unlikely Unlikely 12% Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 12
Asia-Pacific has far higher absolute levels of attrition for advocating customers compared to global data. Asia-Pacific Life Attrition (Closed a policy in last 18 months) 52% 49% 37% 44% 51% Very unlikely Unlikely Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 76% 71% Asia-Pacific Non-life Attrition (Closed a policy in last 18 months) 47% 47% 47% Very unlikely Unlikely Neutral Likely Very likely 0% 20% 40% 60% 80% 100% Advocacy likelihood to recommend 13
Key finding 3: Insurers have so few interactions with their customers that each one becomes a critical moment of truth. In general, Asia-Pacific customers are more likely than their global counterparts to both interact with their insurer and report a recent moment of truth. 14
High regional levels of interaction More than two-thirds of Asia-Pacific current customers report at least one contact with their insurer over the past 18 months significantly greater than reported among global consumers. The mature markets within the region also report higher levels of interaction than the corresponding global benchmark. Chinese customers engage at a level similar to those in developing markets globally, but customers in SEA developing markets engage at an exceptionally high level (82%). Given these higher regional levels of interactions, it is not unexpected that customers are more apt to report experiencing moments of truth. Overall, the incidence of moments of truth at the regional level is much higher than reported globally (67% vs. 58%). Relatively higher incidence levels can also be found within the developing countries and among mature regional markets, with the exception of Australia. Consistent with the global findings, customers using brokers are more likely to report a moment of truth (80%). However, what is unique in this region is that those using a broker are more likely than their global counterparts to cite a negative outcome. Overall, the incidence of moments of truth in Asia-Pacific region is much higher than reported globally. Moments of truth An interaction or experience that positively or negatively changed the customer s perception of their insurer or broker Positive outcomes Coverage increases, new policies or higher favorability ratings Negative outcomes Coverage reductions, policy closures or lower favorability ratings 15
Key finding 3: Insurers have so few interactions with their customers that each one becomes a critical moment of truth. Figure 6: Customer interactions with their current insurer during the last 18 months Asia-Pacific Global Total Asia-Pacific Total None 44% At least one 56% 56% None 32% At least one 68% Global Mature Markets Australia Asia Mature Markets None 56% At least one 44% None 50% At least one 50% None 41% At least one 59% Global Developing Markets China SEA Developing Markets None 30% At least one 70% None 33% At least one 67% None 18% At least one 82% 16
Need for more positive customer engagement Moments of truth can have positive (coverage increases, new policies or higher favorability ratings) or negative outcomes (coverage reductions, policy closures or lower favorability ratings). Customers in the Asia-Pacific region routinely report a positive outcome across most types of these interactions. In particular, however, customers are most likely to ascribe a positive moment of truth to contact relating to managing their policy, such as updating information or obtaining information about the policy. Outcomes regarding potential sales opportunities resulted in mixed results: while more than four-in-five indicated that they had a positive experience in obtaining a new policy (81%), much higher levels of negative outcomes were reported in the region regarding inquiries about switching a policy from another provider (45% vs 32% globally) or a new type of insurance (18% vs 10% globally). The inference is clear: the manner in which insurers engage with customers on matters regarding potential new business fails to consistently meet customer expectations. Positive moments of truth were further analyzed based on whether they specifically led to sales or non-sales outcomes. Developing countries within Asia-Pacific are more likely to have a positive moment of truth generate additional sales. In China, more than half (53%) indicated sales-based outcomes, and other developing markets reported a comparable level (48%). These compare to mature markets, such as Australia (37%) and other Asia mature markets (30%), which in themselves are consistent with equivalent global mature markets. Figure 7: Percentages of consumers reporting a moment of truth by key markets, products and channels, Asia-Pacific region Participants were asked, In the past 18 months, did you have a positive or negative experience that fundamentally changed how you thought of your provider/purchase source? 58% 45% 67% 67% 68% 40% 52% 73% Positive outcome Negative outcome Neutral Global total 66% Global Mature 70% Global Developing 66% Asia-Pacific Total 80% 69% China 67% Australia Asia Mature markets 63% 65% SEA Developing markets Life Auto Home Broker Agent Direct Employer Bank 17
Key finding 4: Consumers want more frequent, meaningful and personalized communications. Our global survey found large communication gaps between what customers want and what they currently receive. 18
Most customers across the region express a clear preference for more frequent communications from their insurer. Implied within their request, of course, is that the communications should be considered personally relevant. This pattern of clear communication gaps holds across many different types of communications, such as general information, special deals and promotions, policy updates and statements. It also remains consistent across most sales channels in the region, with direct to consumer channels, in particular, showing some of the largest communication gaps (54% currently receive general information more than once a year, but 69% would prefer to do so; similarly, 41% currently receive policy updates this frequently, although 60% would prefer to). There is a very positive association for Asia-Pacific customers between the frequency of communications received and their satisfaction levels Figure 8: Frequency of outbound communications current vs. preferred levels, Asia-Pacific region Current Preferred Current Preferred Current Preferred 57% 66% 59% 70% 44% 60% 36% 28% 24% 24% 22% 30% 15% 10% General information 17% 8% Special deals/promotions 20% Policy updates 10% More than once a year Once a year or less Never 19
Key finding 4: Consumers want more frequent, meaningful and personalized communications. Not only do customers seek more frequent communications, but they want it to be better and more valuable. In the absolute, customers clearly indicate low levels of satisfaction with all types of communications. Overall, about 11% of all Asia-Pacific customers indicate a high level of satisfaction with the communications they currently receive. While those using brokers report higher levels of satisfaction (23%), these levels provide a clear indication that improving communications with customers remains critical. Figure 9: Consumer satisfaction with outbound communications Asia-Pacific region 44% 46% 44% 46% 44% 44% 48% 45% 43% 42% 44% 41% 44% 45% 53% 31% 14% 16% 13% 11% 12% 14% 11% 11% 13% 12% 4% 23% 12% 8% 8% 5% Global Total Global Mature Global Developing Asia- Pacific Total China Australia Asia Mature Markets SEA Developing Markets Life Auto Home Broker Agent Direct Employer Bank Very satisfied Satisfied 20
Asia-Pacific customers confirm there is a positive association between the frequency of communications received and their satisfaction with these communications. Those who report receiving at least two communications a year have a satisfaction level nearly three times greater than those reporting a single communication. This pattern remains broadly consistent across all sales channels. Figure 10: Percentages of consumers very satisfied, by frequency of communication, for key channels Asia-Pacific region Asia-Pacific Total Independent broker Dedicated agent Direct Employer Bank General information More than once a year 16% 23% 21% 9% 9% 7% Once a year or less 4% 1% 8% 1% 1% 6% Special deals/promotions More than once a year 11% 24% 10% 8% 3% 6% Once a year or less 3% 3% 2% 2% 16% 0% Policy updates More than once a year 19% 33% 17% 14% 19% 9% Once a year or less 6% 17% 6% 6% 4% 1% 21
Key finding 5: As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships. Customers within the Asia-Pacific region report a more equally distributed use of inbound contact methods than found globally. 22
Across all transaction types, use of in-person remains the most common method, with the phone generating a very comparable level of use. Additionally, with few exceptions (making changes to a portfolio and increasing coverage), the level of in-person vs. phone usage tends to be very comparable. Similar to global findings, digital methods are the preferred option to research potential new policies. Across all transaction types, use of in-person remains the most common method, with the phone generating a very comparable level of use Figure 11: Consumer use of channels/information sources for different types of transactions and inquiries Asia-Pacific region 8% 11% 3% 4% 11% 19% 1% 43% 3% 1% 7% 24% 1% 4% 6% 21% 4% 3% 31% 2% 2% 4% 39% 2% 2% 1% 40% 2% 1% 44% 2% 2% 48% 2% 2% 30% 3% 5% 25% 2% 3% 5% 35% 30% 8% 12% 12% 11% 28% 35% 22% 23% 14% 17% 7% 30% 26% 39% 50% 45% 37% 32% 40% 31% 41% 37% 41% 35% 59% 30% Reported a problem with policy Changes to portfolio Changing vehicles on policy Decrease coverage Researched policies to replace current Changes how policy is paid To learn about other non-insurance product offerings Sought financial advice Options to reduce premiums File claim Changes to personal details Increase coverage General information about policy In person Website Phone Mail Email Mobile app 23
Key finding 4: As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships. Given the higher use of other in-bound channels, it is not surprising to find that customers from Asia-Pacific generally express a much higher level of willingness to consider using remote and digital contact methods. For example: 55% of Asia-Pacific consumers would consider using web chat to inquire about a new insurance policy, compared to 41% globally; and 37% would use it to seek financial advice, versus 29% globally 33% of regional consumers would use a mobile app to research different types of insurance, compared to 27% globally However, Asia-Pacific customers appear to prefer email slightly less than global consumers; for example, only 33% would use email to ask questions about an existing policy, compared to 41% globally. Across most types of inquiries or transactions, more than 90% of customers would consider at least one digital/ remote option, with a 24-hour call center representing the most preferred option for six of the eight transaction types measured. However, only 16% of Asia-Pacific consumers say they would use only the phone hotline (16%). In fact, 28% are willing to try other digital contact methods but still need the phone as a fall back option. An even larger 44% would actually prefer to use any other digital option except for the phone (44%). 24
Figure 12: Percentages of consumers who would consider using these contact methods (assuming they were available) when interacting with their insurance company Asia-Pacific region Inquire About New Insurance Policy Questions about an existing policy Seeking Financial Advice Assistance With a claims Researching different types of insurance Managing your current policy Renewing your policy Cancel my policy Web chat 55% 47% 37% 29% 35% 31% 23% 13% Email 39% 33% 33% 28% 36% 35% 28% 22% 24 hour telephone hotline 45% 57% 42% 52% 37% 41% 41% 39% Mobile app 29% 29% 28% 24% 33% 31% 21% 16% Interactive support* 23% 27% 29% 27% 32% 28% 26% 12% Video tutorials and guides 23% 24% 26% 29% 30% 24% 17% 10% None of the above 7% 7% 11% 10% 9% 9% 13% 27% * Note: Interactive Support is defined as combined phone and remote control of your computer screen to assist with navigating online materials Shaded areas indicate areas of interest/relatively high % consumer consideration.
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Key contacts in Asia-Pacific Australia Asia, Hong Kong SAR and Singapore markets China Singapore Indonesia Malaysia South Korea Walter Poetscher Tel: +61 2 9248 5145 walter.poetscher@au.ey.com Shaun Warren Tel: +65 9147 5879 shaun.warren@sg.ey.com Arthur Bi Tel: +86 10 58153818 arthur.bi@ cn.ey.com Patrick Menard Tel: +33 1 46 93 67 70 patrick.menard@sg.ey.com Chew Lik Chang Tel: +65 63098380 chew-lik.chang@sg.ey.com Brandon Bruce Tel: + 6 03 74958762 brandon.bruce@@my.ey.com Young-Suk Kim Tel: + 82 2 3787 4278 young-suk.kim@kr.ey.com 27
EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. 2014 EYGM Limited. All Rights Reserved. SCORE No. EG0211 Document reference no. S1427093 ED 0115 This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. www.ey.com