as consumers change, insurers need to change too€¦ · 27/05/2015 · the main sales channel has...
TRANSCRIPT
As consumers change, insurers need to change tooBased on a survey of 500 Japanese insurance policy holders
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IntroductionThe Japanese insurance market is a typical mature market, with a higher insurance product purchase rate than other countries, as well as a declining birth rate and an aging population, therefore it has been a challenge for insurers simply to maintain policy numbers. While consumers in the past were largely dependent on sales agents and brokers to help them select and buy insurance, the lacklustre economy and consumption tax hikes have caused them to become hyperaware of product features and prices. Internet use, on social networks in particular, has increased in recent years resulting in the possibility that insurers that fail to include these channels in their communications strategy may lose customers.
The 2013 Accenture Consumer-Driven Innovation Study surveyed more than 6,000 insurance policy holders in 11 countries, including Japan, to identify the changes and trends in consumer awareness and attitudes regarding insurance. This report contains the key findings from more than 500 Japanese consumers, and proposes that insurers consider three key actions:
Action 1Aggressively develop a seamless, personalized-interaction capability across all distribution channels
Action 2Collect customer data more thoroughly and develop personalized products and services
Action 3Develop a strategy for engaging and acquiring young customers
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The Japanese insurance market and the challenges it facesLife insurance industryThe life insurance industry in Japan, based on premiums at the end of 2012, accounts for approximately 43 trillion yen, representing 20 percent of the worldwide total. This positions Japan as the second largest market in the world after the United States.1 Japan boasts a 91 percent2 product purchase rate, which shows that nine out of ten households own at least some insurance, and a life insurance penetration rate, which is the ratio of total insurance premiums to GDP, of 9 percent, well above the second-placed 4 percent rate of the United States3. All of these point to a very mature market.
The outstanding feature of the Japanese life insurance market, apart from its maturity, is its fragmentation. Seventy percent of premium revenue is generated by the top 10 companies, with a further 43 companies, including foreign firms, competing for the remaining 31 percent.
The main sales channel has traditionally been sales agents and brokers. A policy-holder survey4 shows that two-thirds of new policies (68 percent in 2012) are purchased through personal interaction. However, when the same respondents were asked about the sales channels they are likely to prefer in the future, only 31 percent selected the agent channel.
While the insurance market in Japan cannot expect growth under the current circumstances, the market is embarking on a new chapter that will be characterized by changes in the conventional channel configuration. Consumers have made their intentions clear. The responses of providers may significantly change the insurance landscape and impact market share.
P&C insurance industryThe P&C insurance market in Japan is extremely large, accounting for more than 10 trillion yen. It is the third largest in the world5 based on premium revenue, but its penetration rate, at only 2 percent of GDP, is below the global average of 3 percent.6 The compensation offered by the government for losses caused by large-scale natural disasters and occupational injuries – which exceeds that provided by most other governments – would be one of the reasons for the low penetration, but government finances are currently under severe pressure and consumers may be forced to take protective actions themselves. This is expected to result in latent demand for P&C insurance.
In the P&C insurance industry, in 2012, 92 percent of sales7 were made by agencies that had representative rights. Many of these run other businesses as their primary business, such as automobile
dealerships or real estate agencies, and have developed sales networks that are tailored to consumer purchase behavior.
While the Japanese P&C market comprises of a total of 53 companies, the three largest organisations account for 90 percent of insurance premiums. Market shares have long been stable, and oligopolistic control is a feature of the market.
The prevailing sales format is B2B2C dominated by agencies. However, insurers are seeing a rise in direct sales, without the aid of agencies, as the needs of Japanese consumers change (described later). Those providers that cannot respond effectively may be driven out of the market.
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Insights from the consumer surveyIn 2013, Accenture conducted a global survey of 6,000 consumers in 11 countries, including Japan. The survey sought to identify the changes and trends in consumer awareness and attitudes regarding insurance, and to help insurers identify transformation requirements to keep pace with customer expectations. The following discussion is based on the analysis of more than 500 responses in Japan.
Consumers are more 'digitally-savvy' than providers acknowledge
As Figure 1 illustrates the impact of digitization in the insurance industry extends throughout the value chain. This indicates the extent of transformation required.8
To date digitization has been implemented with the objective of improving the insurer’s operational efficiency and quality. Targeting internal operations as the first step to the introduction of digital was the simplest approach, and it has had some success, including cost reduction as a benefit of shortened cycle times and the reduction of operational mistakes. However, because of the stability of the market and of the sales channel, for both life and P&C insurance, no importance was placed on identifying consumer trends.
The survey posed questions about consumer intentions to purchase insurance products online. Remarkably, 67 percent of respondents answered that
they are ready to buy online (Figure 2). Of this group, 20 percent indicated they are ready to purchase life insurance online. Considering the current online purchase rate of life insurance is 11 percent, this highlights significant room for further growth. With regard to P&C insurance, while more consumers state they are ready to buy online, this most likely reflects product characteristics such as the simplicity of product features and the brevity of policy terms compared to life insurance.
A nuance worth noting is there are many consumers who prefer to make a final decision after talking to a person – they will not purchase an insurance product, especially a life insurance product, via the internet alone. This reality, and the current prevalence of agent / broker channels, are what holds insurers back from investing in online channels.
There are many consumers who prefer to make a final decision after talking to a person.
Accenture has identified the following three dominant consumer trends for insurance providers in Japan:
These trends will be described in detail in the following sections.
Trend 1Consumers are more digital than providers acknowledge
Trend 2Consumers prefer personalized products and services
Trend 3Young consumers are most reliant on digital channels but are the least targeted by insurers
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Value chain
Marketing Sales & Distribution
Product development
Underwriting Policy Administration
InvestmentClaims
Key areas of digitization from now on Key areas of digitization to date
Relationshipsat Scale
Design for Analytics
Beyond the Cloud
Seamless Collaboration
Software-Defined
Networking
DataVelocity
Seamless Collaboration
Active Defense
Beyond the Cloud
Figure 1: Areas of digitisation in the insurance value chain
37%
67%
36%
20%
20%
16%
16%
14%
10%
8%
33%
Extended warranty
Travel and assistance insurance
Life insurance
Long-term car insurance
Short-term car insurance
Event ticket cancellation
Home insurance
Winter sports insurance
Eye-glasses and lenses insurance
None of the above
Which products or services would you be ready to purchase online?(i.e. provide the necessary information to create your contract, select and accept terms and initiate payment)
Source: Accenture 2013 Consumer-Driven Innovation Survey
Figure 2: Consumer purchase preference by channel
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In relation to consumer preferences regarding communicating with insurance providers, please refer to Figure 3.
Whereas 67 percent prefer to make address changes and the like online, only 48 percent prefer to receive advice online. On the other hand, while 44
percent desire face-to-face advice, only 29 percent want to make policy changes face-to-face. The finding makes it clear there are many consumers who prefer to use different channels depending on the communication content and form of engagement.
How would you prefer dealing with your insurance provider(s) for each of the following if these options were proposed to you?
Update your personal details
Get information on insurance
products / services
Obtain a quote
Change the terms of
your policy
Apply for / purchase an insurance product
Make a claim
*Cancel/close a contract
Get advice
67%
29%
20%
9%
63% 63%59% 59%
53%51%
48%
39% 38% 38%43% 43% 43%
44%
29%25%
27%
21%
41%29%
34%
12% 11% 10% 11% 12% 12%
6%
*Only for Life Insurance
Online (PC, smartphone, tablet) Meeting with a representative
Phoning telephone customer services / call centers Sending, receiving a letter
Source: Accenture 2013 Consumer-Driven Innovation Survey
Figure 3: Consumers expect access to multiple channels depending on their needs
There are many consumers who prefer to use different channels depending on the communication content and form of engagement.
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The survey also addressed the development of social media as the most recent digital trend. Approximately 40 percent of all respondents indicated they would refer to comments and evaluations on social media when selecting insurance companies and products. Despite this, most insurance providers have been content to simply populate their Facebook pages with content lifted from their website home pages. Yet consumers have made it clear: they want social media to play a different role to their providers’ commercial websites.
With regard to the information expected on social media, respondents revealed a general interest in interactive communication (Figure 4). This refers not to the static information about products, but to personalized responses to queries and comments from consumers. This is a wake-up call for insurers: social media provides a key platform for creating a real-time, personalized experience to build consumer trust.
Figure 4: Respondents interest in services offered by insurance providers on social media
49%
Would you be interested in any of the following services that your insurance provider may propose on social media (e.g. Facebook, Twitter, blogs and consumer review sites)?
None of the above – I have no interest in my insurance provider leveraging social media
Your insurance provider o�ers customer service assistance
Your insurance provider responds to complaints / comments made by customers on service 25%
24%
20%
19%
13%
11%
8%
8%
7%
5%
51%
Your insurance provider o�ers promotions and discounts
Your insurance provider uses customer feedback to improve / create new products
Your insurance provider shares information on new products and services
Your insurance provider creates personalized product or service recommendations based on your individual information or data
Your insurance provider interacts with its customers via live chats (text or video) for personalized support or advice
Your insurance provider provides a full “agency” service: you are able to get all the services via instant messaging, applications, videos
Your insurance provider o�ers its customers the ability to participate in insurance-related games
Your insurance provider shares information on insurance and risk management to improve customer’s knowledge of insurance and how they can mitigate risks
Source: Accenture 2013 Consumer-Driven Innovation Survey
The survey revealed a general interest in interactive communication.
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Consumers prefer personalized products and services
The second trend identified is the consumers’ preference for personalized products and services.
For example, more than 70 percent of respondents expressed an interest in auto insurance premiums that fluctuate month-to-month based on how much or how little they use their cars (Figure 5). In the
past, collecting the required information for this type of insurance assessment and pricing posed both technological and psychological challenges, making it difficult to implement. Now, the concept has become technologically feasible thanks to in–car terminals that automatically collect and transmit driving information. Consumer resistance also
seems to diminishing, and not only because the policy holder would have to approve the installation of the terminal. According to the survey, more than 80 percent of consumers would be comfortable providing personal information to benefit from personalized products and optimized premiums (Figure 6).
Figure 5: Interest in innovative and tailored services
Your life insurance rate is, in part, based on your activity level and other indicators which are recorded through a wearable device such as Jawbone, Nike Plus or Garmin***
Your auto insurance premiums are, in part, optimized by a device in your car or an application on your smartphone that monitors your driving patterns**
Your auto insurance premiums are based on how much, or how little you use your car each month**
% Very interested + Somewhat interested
72%
68%
67%
67%
65%
58%
57%
50%
46%
38%
33%
Providing coaching to help customers become a better, safer driver – and reducing your insurance premium**
Your home insurance rate is reduced if you visit your insurer's website regularly to read articles on how to protect your assets*
Your auto insurance provider sends you information on tra�c and car accidents**
Your insurance provider proactively o�ers you personalized products based on your usage/behavior****
Your home insurance rate is reduced if you install a set of alarms or cameras in your home which you can monitor through your PC or smartphone*
Receiving text messages when your children ignore agreed driving limits such as a maximum speed, excessive braking, or going to a specific location**
Your auto insurance provider provides the best itinerary based on your location and destination**
You allow your life insurance company to access your medical records so that it may reduce your premium if and when your health and fitness improve***
*Home Insurance **Auto Insurance ***Life Insurance ****Home or Auto Insurance
How interested are you, or would you be, in the following services that may be proposed by insurance providers?
Source: Accenture 2013 Consumer-Driven Innovation Survey
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Figure 6: Usage information to optimize premiums and more personalized products
Would you be comfortable for your insurance provider to access information on your usage/behavior to optimize your insurance premium as well as o�er you more personalized products?
Yes
It depends on theinformation
To optimize your insurance premium
To o�er more personalized products
No
88%
37% 33%
53%
14%12%
51%
86%
Source: Accenture 2013 Consumer-Driven Innovation Survey
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Figure 7: Life insurance purchasing rate (by gender and age)
Figure 8: Smartphone and tablet usage rate (by gender and age)
As indicated in Figure 7, the insurance product purchase rate of those in their twenties is generally low. Young consumers, being healthier than the elderly, do not feel the necessity of life insurance to the same degree. In addition, because sales agents and brokers are themselves aging, they struggle to establish a rapport with the youth sector, and hence fail to tap the potential which
these consumers represent. For P&C insurance, youth ownership of vehicles, houses and other insurable assets is relatively low, resulting in a low insurance enrollment rate.
On the other hand, the survey clearly reveals greater advances in digitization among youth (Figures 8 and 9). While the high overall penetration of mobile
terminals in Japan is outstanding by global standards, the ownership rate among the younger demographic far outstrips that of their older counterparts.9
The survey also shows they are more dependent on social media information than the elderly (Figure 10).
79.579.0
52.851.3
79.782.388.889.0 85.489.5
91.178.6
AllN: 1848N: 2228
MaleFemale
Source: Japan Institute of Life Insurance
Male
Female(Unit: %)
Twenties228250
Thirties339428
Forties345484
Fifties370453
Sixties519572
17.4
76.3
20.5
60.7
21.6
51.7
20.2
40.2
15.720.7 20.1
49.8
(Unit: %)
Smartphone
Tablet
10-Twenties Thirties Forties Fifties Sixties Total
Source: IDC Japan, June 2013
Young consumers are most reliant on digital, but are the least targeted by insurers
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Figure 9: Digital usage amongst youth segment
Figure 10: Youth segment use of social media sites
Have you used your mobile device (smartphone, mobile phone, tablet) to deal with your Auto, Home, Life insurance provider(s) online in the past 2 years?
% Used smartphone /mobile phone
% Used tablet
18-24
25-34
35-54
55+
26%
32%
25%
13%
84%
67%
39%
20%
Base size: Respondents having a smartphone/tablet
Source: Accenture 2013 Consumer-Driven Innovation Survey
If you were to consider buying insurance, how important would the comments and recommendations on social media sites (e.g. Facebook, Twitter, blogs and consumer review sites) be in helping you decide which product and provider to choose?
Very important
Somewhat important
34%
60%
18-24 25-34 35-54 55+
57%
29%
47% 48%
32%27%
13% 9%
2%
2%
Source: Accenture 2013 Consumer-Driven Innovation Survey
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Consumers in Japan are adopting digital channels much more rapidly than most insurance providers realize. Additionally, the need for digitization clearly differs at each of the insurance purchase processes and for each subsequent maintenance process.
Confronted by change, very few insurers have successfully digitized their interactions with customers to meet consumer needs. While some have sequentially and individually digitized processes that enable online customer engagement, this is not enough. In the sales process from the collection of insurance product
information to policy signing, payment, and maintenance, the insurer needs to integrate its digital and other channels to increase final policy numbers. Furthermore, they need to utilize the data acquired from digitization across all channels to increase customer numbers.
Three actions insurers should consider to capture customersAccenture believes that, given these important shifts in consumer behavior, attitudes and intentions, insurers need to become significantly more customer-centric in order to succeed in the future. To achieve this, there are three key actions they need to take:
Japanese consumers are interested in personalized products and services, and are willing to provide their information in exchange. Advances in digitization make it easier to acquire detailed consumer data, while analytics have made it possible to effectively utilize this data. Insurers can achieve differentiation by utilizing the data in insurance premium calculations and product development to quickly diversify into this sector
and win the hearts of growing numbers of consumers.
The first step is to develop a strategy to obtain customer and prospect data by channel, and to start collecting this information from the earliest stage possible, based on consumer needs. At the same time, insurers need to consider how to align their efforts to optimize contact points with customers, as addressed earlier.
Insurers also need to devise ways of utilizing the data under the assumption that the data will be collected – the delay caused by conducting one study after another in the quest for perfection may result in lost potential customers. Again, moving fast by following cutting-edge examples and using existing software applications may result in a substantial advantage.
Action1: Establish a seamless, personalized interaction capability across all distribution channels
Action 2: Collect customer data more thoroughly and develop personalized products and services
Aegon N.V. is an insurance agency that distributes the products of other carriers. It launched Kroodle on Facebook as a specific channel for mobile devices. This venture, which is complemented by the firm’s PC support page, was intended to facilitate access via mobile devices and enable the completion of all processes on the mobile itself. Targeting the youth and mobile technology-savvy consumer segment,
Aegon’s marketing takes advantage of the fact that word-of-mouth is a powerful sales channel. It also capitalizes on Facebook’s social network marketing functions. Aegon provides discounts to consumers who introduce others to their products via social media. They also offer a service where points can be earned for participating in social activities and then exchanged for a discount on product purchases. In
the Japanese market, the effectiveness of such a service may be limited by the strict regulatory environment which currently prohibits the offering of points or discounts. Nonetheless, Kroodle is a useful example of how an innovative concept utilizing mobile devices and social media can be used as a powerful communication and marketing platform.
Kroodle: The social channel of Aegon, one of the leading insurance companies in The Netherlands
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Tokio Marine & Nichido Fire Insurance Co., Ltd. developed an innovative product for young motorists who do not own a vehicle but often either rent or borrow one from a friend. One-day Auto Insurance is a simple product that can be bought, online via a mobile device, immediately prior to driving a vehicle. The program also offers discounts for those who purchase regular auto insurance after buying their own vehicle,
on condition that they have no accident record. One-day Auto Insurance is a product of deep strategic interest that targets the previously inaccessible youth market with an approach that utilizes online and mobile terminals, and locks in potential customers using an embedded product-purchase history feature.
One-day Auto Insurance by Tokio Marine & Nichido Fire Insurance Co., Ltd.
Accenture has been working with an insurance company that sells its products through agents, brokers and call centers, supported by mass marketing. Accenture assisted with the introduction of a system that made it possible for the company
to utilize information, acquired from exchanges with customers at two call centers. With the introduction of the new system, customer information is now centralized, making it possible for operators to respond appropriately to customer needs
in areas such as maintenance, claims and sales. In the next phase, the insurer plans to utilize the accumulated data through analytics, and provide support to more aggressive sales activities such as cross-selling and outbound call campaigns.
CRM enhancement at an Asia-based insurance company
Telematics is a service provided by using data collection and communication systems in automobiles. One example of telematics applied to auto insurance is usage-based insurance, where the premium fluctuates based on how much or how little the vehicle is used. Detailed driving data is recorded and transmitted via an in-vehicle device, and the data is then applied to insurance premium calculations. In Japan, Sompo Japan launched "Dra-Log" (coined from
"drive" and "log" to represent the features of the product), a usage-based product that sets customers’ insurance premiums in accordance with distance travelled, starting the second year after the recording device is installed. In the United States and Europe, advanced products are being developed with even greater added value – premiums reflect not only distance but also driving behavior such as speed, and braking frequency and intensity. The in-vehicle device may also
provide anti-theft functions. These are self-segmenting products that attract low-risk (low-premium) customers. Higher-risk customers, such as young drivers, also have the assurance of knowing that their premiums reflect the actual risk they personally represent rather than that of their market segment. It is important to develop services capable of not only reducing insurance premiums for customers but also providing long-term added value.
Telematics: advanced personalized products developed in Europe and the United States
Action 3: Develop a strategy for engaging and acquiring young customers
The younger generation is more advanced in terms of digitization and mobile use. In particular, providers need to pro-actively and strategically pursue approaches using digital channels such as mobile devices and
social media that target potential customers in their twenties who currently exhibit a low product purchase rate and are virtually unreachable through traditional channels.
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ConclusionInsurance companies in Japan need to enhance their digital strategies, optimize and integrate the channels that serve as contact points with customers, and use analytics to quickly make advances in the development of personalized products and services that meet customer needs. The key to market share expansion is the proactive use of data, mobility and social media, and a strategic approach to digitization to attract the customer segment.
References
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Insurance global surveyThe global consumer survey addressed in this report was implemented by Accenture in July 2013. The online survey targeted 11 countries and 6,135 auto insurance, household insurance, and life insurance policy holders.10
The data introduced in this report is taken from the valid findings of 500 respondents in Japan from the above population, unless otherwise indicated. The respondent attributes are as shown below.
1, 3, 5, 6: Swiss Re, ‘World Insurance in 2012’, June 20132, 4: Japan Institute of Life Insurance, September 20127: General Insurance Association of Japan, September 20138: “Accenture Insurance Technology Vision 2013”9: IDC Japan, October 201310: “The Digital Insurer: Accenture 2013 Consumer-Driven Innovation Survey”
500 insurance policy holders were surveyed online in Japan in July 2013
Total : 500 (100%)
Respondent age
Respondent gender group
18-24 year
25-34 year
35-44 year
45-54 year
Over 55 year
49 (10%)
(24%)
(24%)
(20%)
(22%)
Men251
(50%)
Women249
(50%)
120
100
111
120
175answered the surveyregarding theirauto insurance
175answered the surveyregarding theirhome insurance
150answered thesurvey regardingtheir life insurance
Figure 11: Accenture 2013 Consumer-Driven Innovation Survey
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ContactMark Halverson, Managing Director Global Distribution Lead Accenture
Takero Hayashi Managing Director Insurance Group Financial Services Accenture Japan
About AccentureAccenture is a global management consulting, technology services and outsourcing company, with approximately 289,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page is www.accenture.com.
About Accenture ResearchAccenture Research is Accenture’s global organization devoted to economic and strategic studies. The staff consists of 200 experts in economics, sociology and survey research from Accenture’s principal offices in North America, Europe and Asia/Pacific.
Mika Magoshi Accenture Research Japan Lead Insurance