Global Insurers Shift From Delivering Risk Coverage to Reducing and Preventing Risk

Today’s consumers want more from their insurance companies. Following several years of turbulence, including extreme weather, the COVID-19 pandemic and disease, significant disruption is radically changing the risk landscape for consumers with more and different risks. With this reality, consumers want their insurance companies to more than just help them when there is disruption, but help them reduce and prevent risk too. Bain & Company‘s new report, launched today, Customer Behavior and Loyalty in Insurance: Global Edition 2023, gives insight into the changing approaches of insurers and needs of consumers.

Bain’s new research, powered by Dynata, surveyed 28,765 consumers in 14 countries, confirming that consumers want more from their insurers than delivering coverage. Consumers overwhelmingly want risk prevention and mitigation services from their insurers. In Brazil 97% of survey respondents indicated interest in risk prevention as well as 81% of respondents from Japan. Additionally, more than 40% of millennials are willing and interested in paying for life insurance that includes risk prevention. Changing customer behavior also means a shift for insurance agents, who historically pushed out offerings with a pitch, and now need to pull in customers by addressing their priorities at the right moments. Technology, including digital tools and advanced analytics, will allow insurance companies and their agents shift away from a transactional role to a broader relationship-based consumer interaction.

“The consumer demand for more risk-prevention beyond traditional insurance services has led to new services,” said Henrik Naujoks, a partner at Bain & Company. “For example, a European health insurer has launched new services and enlisted partners, such as health coaching and doctors. In some cases, the new services can lead to developing stronger relationships with consumers as in Southeast Asia, where a life insurer launched health and parent online forums that led to 300,000 customers signing up in the first year, with one-fifth of active users having then met with their insurance broker.”

Insurers will need to deliver on the promise to address elements that consumers value most, including being a purpose driven company, as well as incorporating risk prevention and mitigation.

Surveys, like this report from Bain & Company, can help insurance companies listen to consumers and stay on this transformation from functional product excellence to serving the social/ emotional needs of customers. The following outlines Bain’s recommended path forward for insurance companies:

The next frontier – risk-prevention: Most customers across regions are open to risk-prevention services from insurance companies. The customers also wanted to be rewarded by the insurers for their risk-prevention habits. For example, consumers want to be rewarded for safe driving by their auto insurers. However, to date, many consumers are not currently using risk-prevention services. There is opportunity to improve as consumers are open to sharing data with insurers and there is growing infrastructure to leverage consumer data to motivate and reward risk-prevention habits.

Insurers need to be purpose-driven: Mirroring corporate expectations across industries, insurance companies are also being expected by consumers to have a higher purpose. Eighty percent of global consumer survey respondents want insurers to embed environmental, social, and corporate governance (ESG) initiatives into their proposition. As insurers enact a strategy focused on purpose, this will also strengthen loyalty and relationship with their customers.

Digital usage has increased, but still needs to be improved and seamlessly embedded into the omnichannel approach: While the pandemic increased the access to digital tools in the insurance industry, use still lags behind. Consumers often use digital tools to research and for simple episodes. However, consumers rely on a hybrid approach for more complex episodes.