Key Customer Trends in the Insurance Industry
By Institute of Service Excellence, SMU Posted 12mth(s) ago Reading Time: A few minutes
The Customer Satisfaction Index of Singapore (CSISG) is an annual benchmarking study of service levels across eight industry sectors and Singapore’s only cross-industry Customer Satisfaction measurement.
A total of 6,030 respondents were surveyed for the Finance & Insurance Sector and the results were recently released earlier this year.
In 2019, the Life Insurance sector scored 74.0 points (+1.2% compared to 2018), the Health & Medical Insurance scored 73.0 points (+1.1% compared to 2018), while the Motor & Personal Insurance sub-sector scored 73.2 points (+0.9% compared to 2018). All 3 sub-sectors recorded their highest ever reported scores since they were first measured in 2008.
Let’s take a look at some of the key findings that are driving customer satisfaction in the insurance sector.
Besides measuring customer satisfaction, the CSISG model also studies 3 primary drivers of customer satisfaction. They are:
Perceived Value: the level of perceived quality relative to the fees,
Customer Expectations: the level of quality or performance the respondent predicted to receive with the product/service prior to their experience
Perceived Overall Quality: the level of quality evaluated through their experience with the company's products or services.
For the Life Insurance, customer expectation saw a significant increase in 2019 to score 75.9 points, its highest since 2015. This increase in customer expectation is good for the industry as research has shown that a higher customer expectation usually has a positive effect on customer satisfaction if the level of quality they received meet or exceed their expectation.
However, the perceived overall quality score had stagnated which narrowed its gap from over customer expectation to just 0.4-points in 2019. If we continue to see this trend of rising customer expectation but the perceived quality they received remained the same, it is likely there will be a dip in customer satisfaction. Thus, the life insurers should continue to manage customer expectations while improving the quality of products and services provided to customers.
The report showed that it is important that customers’ perceived overall quality can match their expectation of their insurers. So how can the insurers improve customers’ perception of quality? When impact analysis was done to find out the top 3 attributes that drove Customer Satisfaction of the Insurance sub-sectors, they were:
Innovative & forward-looking
Range of products that meet your needs
Health & Medical insurance
Fulfils its promise at the promised time
Has your best interest at heart
Gives you individual attention
Motor & Other Personal insurance
Feels assured that things will be taken care of
Performs services right the very first time
Range of products meet your needs
Comparing to the main drivers in 2018 when it was all service-related attributes, more product-related attributes appeared to be driving customer satisfaction in 2019 for Life Insurance, and Motor & Other Personal Insurance.
Thus it is more important now for insurers to understand their customers and their needs, and to cater products for their needs. Equally important is for customers to understand the products well so that they are confident that the products will meet their needs.
As digital transformation starts to shape purchase behavior in many of Singapore’s service industries, the CSISG study set out to understand purchasing behavior for insurances as well.
The 2019 study found that insurance policyholders were much less willing to purchase life or health insurance policies through an online channel, with less than one in eight saying they would consider buying such policies online. This was in contrast to motor and travel insurance products whereby customers indicated relatively greater willingness to purchase these policies online.
Compared with the developments in the banking industry, there appeared to be continued resistance with insurance customers when it comes to purchasing life and health insurance policies online. This is possibly due to the relative complexity of such insurance products, as well as the more limited distribution of such policies through online sales channels; many are still distributed through agent representatives. This suggests that there are opportunities for insurers to leverage its digital channels to improve interactions with their customers in the online space.
The Customer Satisfaction Index of Singapore (CSISG) has been conducted by the Institute of Service Excellence (ISE) since 2007, and our findings through the years showed that customer expectations of their bank and credit card issuers have been constantly evolving. What the customer wants and needs 10 years ago, maybe even 5 years ago, are starkly different from today.
As we continue to see satisfaction with the insurance industry rising, rising Customer Expectations is expected and insurance companies should constantly improve their products and services to meet these expectations.
And with many other service industries in Singapore seeing rapid growth in digital interactions, the insurance sector should be ready to meet an increasing digital-savvy customer.
Can you imagine what the insurance industry would be like 5 years down the road?