When it comes to insurance, Americans -- and indeed, people in the rest of the world -- are becoming fickle, frugal consumers.
Despite the warm-fuzzy TV entreaties from Allstate's "good hands people," Geico's absurd chain-of-events-with-hillbilly-punch-line spots and the droll, strolling Farmers guy, our wallet increasingly speaks louder than these attempts to spark brand romance.
So it should come as little surprise that a recent survey by Accenture of 6,000 insurance customers in 11 countries finds that two-thirds (67 percent) of us would entertain buying our insurance from nontraditional sources, including Amazon, Google and even car dealers.
Insurance agents, look out!
While 43 percent of those surveyed would prefer a bank as their nontraditional source, almost a quarter (23 percent) find online service providers acceptable, 20 percent would consider insurance offers from their telecommunications or home security provider, 14 percent would trust retailers such as Wal-Mart for their insurance needs, and 12 percent would brake for coverage at their local auto dealership.
The insurance world has become obsessed of late with "switching risk," its term for the likelihood that you'll see a better offer elsewhere and take it. Switching risk has thus far thrown cold water on the prospect of banks and traditional retailers selling insurance. But any concerns about competition from such brick-and-mortar businesses have been dwarfed by the explosion of online retail and its potential, if allowed, to move swiftly and smoothly into the insurance market.
"Competition in the insurance industry could quickly intensify as consumers become open to buying insurance not only from traditional competitors such as banks, but also from Internet giants,” says Accenture's Michael Lyman.
4 in 10 are up for a switch
He rates the potential switching risk from all competing insurance sources at $400 billion over the coming year. Accenture research finds that 40 percent of us are likely to switch our auto insurance or home insurance in the next 12 months, 25 percent will likely cancel a life insurance contract and 35 percent will probably purchase a new life policy in the coming year.
That's a whole lot of mayhem if you're a traditional insurance agent.
"The switching risk is important in western markets, but even more so in emerging countries such as China and Brazil, where insurance customers are even more likely to change providers," Lyman adds.
It's not all doom and gloom on the agent front. Accenture finds that 80 percent of respondents would switch for more personalized service, and 41 percent are willing to pay a little more for it.
Go mobile or go home
Lyman says traditional agents need to make effective use of mobile technology to provide that personalized service and thus minimize their switching risk.
"The real game-changer has been the growth in mobile," he says. "The mobile channel offers insurers the opportunity to take customer experience to the next level, enabling them to become partners of their customers' everyday life by tailoring offers and interactions to the physical context, as location-based services can be highly relevant in insurance."
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