Insurance customers want convenience, are open to new services that mitigate risks and believe that insurers should be tackling climate change proactively.
That is according to a recent report by Guidewire which also found that the issue of data collection – needed to deliver the above – will be tricky and will only become reality if insurers can convince customers on data collection benefits.
Guidewire observed that insurance customers are starting to think about how their insurance policy fits with their lifestyle. While only 12% of those surveyed had a Usage-Based Insurance (UBI) policy, 54% of people could see the value of one.
Of those that did have a UBI policy, the fact that the policy fitted with their lifestyle was the main reason (37%) they had chosen it.
When it comes to proactive services that mitigate risks, such as leak detection, 61% of the people surveyed said that they would want access to such a service if their insurer offered it, according to the report.
In terms of other types of risks that might be mitigated, Guidewire added, having access to real time data about plumbing to detect leaks (21%), driving (20%), and home heating systems (19%), rose to the top.
Additionally, the report found that customers would feel most comfortable sharing their data with their insurer regarding these risks.
Nevertheless, Guidewire highlighted, data collection would be tricky for insurers to manage as UK customers are more cautious regarding how they share their data compared to people in Europe.
According to the report, 24% of those surveyed believe that insurers collecting more data will be a good thing that improves services and reduces prices, with 28% unable to understand why insurers feel that they need this level of data on their customers; regarding this as an invasion of privacy.
Over a third, 36%, can see why insurers might want to collect the data but would rather they not do so. Insurers need to earn the trust of consumers on the fence about data collection if they are to be successful. While 44% believe UBI represents too big a loss of privacy for them, 46% neither agree nor disagree as to whether it does.
René Schoenauer, Director, Product Marketing – EMEA, Guidewire, commented: “Consumers are far better educated now on their privacy and how data about them is being collected, which means that insurers need to build trust fast if they want to maintain and grow their business.
“Insurers are looking at new services or tighter segmentation to improve profits, but without the permission to collect the data needed to underpin these services they will not be truly successful. Helping customers understand how collecting and using their data will help them and educating them on the benefits, such as personalisation, is as important an investment as developing advanced AI models or IoT solutions. You cannot have one without the other.”
Additionally, Guidewire also found that insurance customers are beginning to think that insurers should be acting on climate change, yet UK customers are less willing to assume increased costs as opposed to their counterparts in other European countries.
Compared to Spain for example, 33% of UK customers are most likely to believe that insurers should invest more of their profits into supporting environmental projects and sustainable start-ups.
According to the report, this is the most popular option in Spain, with 37%, whereas in Germany 31% of insurance customers are most likely to think that insurers should use their position in global markets to influence the actions of polluting companies but not disassociate from them.
UK consumers are at least twice as likely to think that combatting climate change is not the responsibility of insurers, with 30% of UK respondents holding this view compared to the next highest, France, at 15 %, Germany 14% and Spain 13 % lower still.
Guidewire said that, in the UK, this translates to a lower willingness to assume increased costs themselves, 31%.The other three European countries are far more likely to buy an eco-insurance policy – whereby the policy is more expensive, and the extra money is used to offset carbon emissions incurred during the insured activity, the report found.
Schoenauer added : “With severe weather events across Europe and the world in the past twelve months, insurers clearly need to play a role in combatting climate change. Whatever course of action insurers take, they should be clear and transparent about it and show the difference they are making. In this way they can demonstrate the positive role insurance companies play in our lives, something that all too often goes largely unnoticed.”
