New research from Roy Morgan has confirmed why life insurers are using direct channels and the degree to which the smaller players are winning the race with respect to consumer satisfaction.
The research, release this week, found that overall satisfaction with risk and life insurers declined marginally over the last year from 67.5 per cent down to 66.2 per cent, but some insurers defied the trend and showed some improvement.
It said the biggest improvers were AIA Australia (up 6.6 per cent), Insuranceline (up 5.4 per cent) and Allianz (up 2.0 per cent).
The research said the major brands to show declines were Asteron (down 12.2 per cent), Zurich (down 9.9 per cent), Comminsure (down 4.2 per cent) and OnePath (down 3.7 per cent).
The analysis said the results showed that it was generally the smaller players in this market that had the highest satisfaction, with none of the majors being among the top five for customer satisfaction and noted that although around 80 per cent of risk and life insurance policies were renewed automatically without shopping around, there was a risk associated with having below average satisfaction as this has the potential to discourage renewal and new clients.
It said the link between satisfaction and likely renewal levels had been shown to be very positive and as such it had the real potential to increase long term profitability through its impact on customer retention and acquisition.
Commenting on the research, Roy Morgan industry communications director, Norman Morris said the channel used to purchase risk and life insurance had the potential to impact satisfaction and retention.
“The most frequent method used to purchase this type of insurance is directly from an insurance company, which has been steady at around 40 per cent for the last five years,” he said.
“The most common way people purchase directly with their insurance company is by telephone.”
“At this stage purchasing online is relatively small and has only shown a marginal upward trend over recent years. The biggest increase in the purchasing channel used over the last five years has been from employers as part of superannuation. The other major purchasing channel is the use of insurance brokers and financial planners which now account for around 20 per cent of the market.
“The use of these third parties to purchase risk and life insurance has the potential to take the customer relationship away from the insurance company and as a result have less control over satisfaction and retention levels,” Morris said.