Insurance policies

Many UK customers are looking to downsize their insurance policies to cut costs

Almost half (48%) of UK consumers would consider cutting costs by eliminating voluntary insurance cover, according to a survey commissioned by insurance software developer Guidewire.

The survey also found that travel insurance was the type of cover identified by respondents as most likely to be dropped, with almost one in five respondents (18%) indicating that this type of insurance was “likely” to be deleted. The other most popular types of insurance targeted for discounts were home contents (17%) and bicycle insurance (16%).

This sentiment reflects the increasingly poor economic outlook for the UK and the global economy as a whole – 86% of survey respondents said they were concerned about the current cost of living crisis.

The survey also revealed that many customers still have a negative view of insurers, seeing them as troublesome, mysterious and prone to selling expensive products.

More than a third (36%) of respondents said they felt insurers were “necessary but impractical, while a quarter said they felt they were selling” overpriced products and were reluctant to pay a claim”.

Guidewire pointed out that the second claim was of particular concern given that most respondents (88%) had not had to make a claim in the past year. This was compounded by the fact that more than a quarter of respondents said their “view of insurers was negative and has not changed in the past 12 months” – suggesting that negative views of insurers insurers were beginning to sink into the public consciousness, with the potential to “undermine the good work the industry is doing for its customers”.
Guidewire recommended that “insurers must ensure that headlines and hearsay during the Covid-19 pandemic do not become entrenched opinions about the industry.”

The survey was carried out by market researcher Censuswide, which surveyed 1,000 UK insurance customers aged 18-55 in May 2022, and is part of Guidewire’s annual survey of insurance consumers in Europe, Middle East and Africa (EMEA). Guidewire has also commissioned concurrent and parallel reports for the French, German, and Spanish markets, but those results have not yet been released.

Insurers “struggle to demonstrate their value”

Responding to the findings, René Schoenauer, EMEA Product Marketing Manager at Guidewire, said, “The combination of people’s financial pressure and their low opinion of insurers threatens to widen the insurance gap in ways that could make consumers much more open to prejudice. It appears that insurers struggle to demonstrate the value they offer to customers, and this translates into notions that insurers are impractical or unwilling to pay claims. Insurers need to think about how they can play a bigger role in the lives of their customers to show them the importance of the products and services they offer and the benefits customers derive from them.

The company recommended that improvements in customer engagement could allay people’s concerns about insurers – it pointed out that almost four in ten respondents had “never spoken to their insurer”, highlighting what it called “highly transactional and limited relationships” between company and customer. .

Guidewire also warned traditional insurers that such an approach could leave them vulnerable to new entrants to the insurance industry, with 45% of respondents saying they would be comfortable buying insurance like Amazon, Tesla or IKEA, and an additional 30%. be impartial to the idea.

However, on a positive note, when customers interacted with their supplier, it was found that almost half (49%) believed that the customer service agents they spoke to had “all the information they needed to help them”. .

The survey also suggested there were opportunities for insurers to be more proactive in the lives of their customers, through risk prevention services. Six in 10 people (61%) said they would welcome a service that “sends warnings about problems to prevent damage before it happens.”

“We have seen different big brands start offering integrated insurance products and this trend will continue. Given that consumers seem comfortable with the idea of ​​buying from a mainstream brand, even at this nascent stage, insurers need to start planning now for what kind of role they will play in this economy. ecosystem. Are insurers fighting to preserve their brand and investing to become more customer-centric? Or do they choose to invest in technology that allows them to seamlessly integrate with these mainstream brands and thereby expand their business volume? There are no right or wrong answers here, but it does require a commitment to a clear strategy either way,” Schoenauer added.