Customer Behavior and Loyalty in Insurance: Global Edition 2016 Creating Opportunities Beyond Basic Coverage

CUSTOMER BEHAVIOR AND LOYALTY
IN INSURANCE: GLOBAL EDITION 2016

Creating opportunities beyond basic coverage
Key contacts in Bain’s Global Financial Services practice
Americas
Rodrigo Maranhao in São Paulo (rodrigo.maranhao@bain.com)
Antonio Rodrigues in Toronto (antonio.rodrigues@bain.com)
Diego Santamaria in Mexico City (diego.santamaria@bain.com)
Andrew Schwedel in New York (andrew.schwedel@bain.com)
David Whelan in Chicago (david.whelan@bain.com)
Asia-Pacific
Alfred Shang in Beijing (alfred.shang@bain.com)
Harshveer Singh in Singapore (harshveer.singh@bain.com)
Peter Stumbles in Sydney (peter.stumbles@bain.com)
Matt Sweeny in Tokyo (matt.sweeny@bain.com)
Youngsuh Cho in Seoul (youngsuh.cho@bain.com)
Europe, Middle East and Africa

Andrew Carleton in London (andrew.carleton@bain.com)
Camille Goossens in Paris (camille.goossens@bain.com)
Vincenzo Gringoli in Milan (vincenzo.gringoli@bain.com)
Christian Kinder in Munich (christian.kinder@bain.com)
Nicolás Lopez in Madrid (nicolas.lopez@bain.com)
Henrik Naujoks in Zürich (henrik.naujoks@bain.com)
Kazimierz Stanczak in Warsaw (kazimierz.stanczak@bain.com)
Chris Stokes in London (chris.stokes@bain.com)
Acknowledgments
This report was prepared by Henrik Naujoks, Camille Goossens, Gunther Schwarz, Harshveer Singh,
Andrew Schwedel and David Whelan, who are partners with Bain’s Financial Services practice, and a team
led by Tanja Brettel, a practice area director, and Shilpi Goel, a practice area consultant. Team members are
Rahul Agarwal, Vidisha Agarwal, Sourish Gue, Vaibhav Kalani and Pranav Singh. The authors thank Bain
partners in each of the countries covered in the report for their valuable input and John Campbell for his
editorial support.
Net Promoter Score® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Copyright © 2016 Bain & Company, Inc. All rights reserved.

Customer Behavior and Loyalty in Insurance: Global Edition 2016 | Bain & Company, Inc.
Contents
Executive summary: The consumer is sovereign . . . . . . . . . . . . . . . . . . . . pg. 3
1. The imperative to earn greater loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 11
2. Creating delight through mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 17
3. Mastering the customer-switching game in P&C . . . . . . . . . . . . . . . . . . . pg. 25
4. Capturing greater share of wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31
Appendix: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 36
Page i
Page 2
The consumer is sovereign
From tracking drivers’ braking behavior to installing wearable devices on factory workers and funding medical-
advice mobile apps, many insurance companies are trying to become more present in their customers’ lives. They
know that improving the long-term economics of the business will require interacting more and delivering more
value to customers. A customer-centered approach has finally gained the attention of many insurance executives
as an alternative to the traditional, internal focus on products, agents and in-year financial considerations.
What accounts for this shift in perspective? The low-interest-rate environment has depressed investment returns
for paid-in premiums, and in mature markets, there has been almost no growth in product penetration, forcing
insurers to rethink their economic models for their core businesses. Regulators in some countries, including the
UK and Australia, have also been questioning whether fee structures for financial advisers generate acute conflicts
of interest that harm consumers. These macroeconomic and regulatory forces make earning customer loyalty
more important now than ever.
More broadly, many executives now realize that a business built around customer loyalty and advocacy can yield
substantial long-term benefits. Customers who are loyal promoters of their insurers stay longer, buy more, recommend
the company to friends and family, and usually cost less to serve, Bain & Company analysis shows, with the mix
of these forces dependent on the particular market and type of insurance.
Bain’s new survey of 164,421 consumers in 19 countries, through Research Now, sheds light on how various cus-
tomer segments perceive their P&C and life carriers, what customers want from their carriers and how different
distribution and interaction channels influence loyalty.
The survey data shows that loyalty remains tough for many insurers to come by. One structural reason is that
insurers have far fewer interactions with customers than, say, retail banks. In some markets, interactions are even
dwindling with the rise of online aggregators (also known as comparison sites).
Another reason stems from the fact that most insurers don’t have or have just begun to install a full-fledged system
to analyze their customer feedback and take actions that will improve customers’ experience. Feedback that
doesn’t lead to action is meaningless.
In some of the countries surveyed, though, one or two carriers in life and P&C manage to excel in earning con-
sumers’ advocacy. Most loyalty leaders have found ways to generate more meaningful interactions by redefining
what it means to be a provider. For example, HUK-Coburg, the loyalty leader in Germany, has continually redefined
its value proposition around auto insurance since launching its network of partner car repair shops in 2005. Over the
years since then, it has improved its claims experience and added services such as inspections, all at attractive prices.
While earning loyalty is necessary, it is insufficient for generating superior revenue growth. Insurers must also
motivate customers to actively promote the company and learn to monetize loyalty. Bain’s new survey analysis
and our work with insurance companies worldwide suggest four important themes for insurers to keep in mind
as they build out a customer-centered distribution and service model.
Page 3
Fight to get closer to the customer
Being in touch more frequently with consumers contributes to loyalty, in both the life and P&C sectors. The
level of contribution varies—with France and Spain at the low end and China, Indonesia and Malaysia at the
high end—but it is significant in every country surveyed. Interactions that are complex and attract more
multichannel behavior, such as getting advice and a quote on a life insurance product or initially filing a
claim, have the biggest potential to delight customers. But even raising the number of simple digital interac-
tions can advance the cause of loyalty; as a bonus, each interaction allows an insurer to learn more about the
individual consumer and to set the stage for customized future offerings.
Current digital tools, moreover, expand the universe of possible interactions. Links between insurers’ IT
systems, customers’ smartphones and connected devices in cars, homes and workplaces now enable more
product and service innovations, not just a convenient channel to interact through.
That universe includes a range of services that extend well beyond traditional insurance coverage. A large
share of consumers in our survey expressed interest in such services, and an even larger group would be
willing to share their financial, health or other personal data with insurers. These findings signal consumers’
trust in their carriers, opening the door to stronger relationships with customers.
A strategy of adding services might not strictly aim to raise revenues, but rather to deliver value by earning
greater loyalty and lifetime value of customers. Some insurers are starting to create an ecosystem of such
services, with emerging initiatives taking many forms:
• AIG has invested in Human Condition Safety, a technology start-up developing wearable devices, analytics
and systems to improve worker safety. These tools help workers, managers and worksite owners prevent
injuries in manufacturing and construction.
• AXA Germany has teamed up with RWE, using RWE’s SmartHome automation system to minimize
flood damage and provide fast support—an example of AXA’s stated shift “from payer to partner.”
• Many ancillary services for drivers depend on a telematics box installed in the vehicle (see Figure 1)—
for example, a street-sweeping alert from Metromile and stolen-vehicle tracking and recovery from Discovery.
• A few insurers have experimented with “gamification” and found that it stimulates customer engage-
ment in vertical markets such as auto and health. In South Africa, Discovery used a mobile app devel-
oped by Cambridge Mobile Telematics for a nationwide safe-driving contest, in which tens of thousands
of drivers competed for prizes. Findings show that safe driving increased by more than 30% during
the contest.
Competition has intensified as fintechs redefine how customers experience insurance and aggregators and
brokers interact directly with consumers. Expanding services—often in concert with third-party providers—
offers a powerful means for insurance providers to use their customer assets so they don’t get sidelined into
the lower-value role of a utility.
Page 4
Figure 1: A broad array of connected car services is using telematics and smartphone apps
Live concierge Antitheft service if the box Weather alert based

supporting navigation registers an unusual style on geolocation
of driving
Stolen vehicle
recovery
While driving
Highway
Alert when speed Alert if the vehicle exits a “safe” tolls and
Antitheft service limits are exceeded neighborhood as defined by parking
if the box is the customer (parental controls) fees
removed or
uninstalled While
parked Road or
Alert if the car medical
is hit while assistance
parked Street-sweeping Simplified claim notification,
alerts including automatic form fill-in Customer
based on telematics data assistance and
personalized
Alert when
After an accident case
vehicle is
management
moved or towed
in the event
of a crash
Parking Claims Automatic assistance

locations certification if severe accident occurs
Source: Bain & Company/ANIA Observatory on Telematics, Connected Insurance & Innovation
Fix the basics and accelerate the mobile channel
Customers want to be able to use the channel that’s convenient to the moment, whether that’s a website, an in-
person meeting, a phone call, a video chat with an agent or, increasingly, a mobile device. The expectation of using
any channel pervades all customer segments, regardless of age, income or insurance needs. And the share of
consumers using digital channels to complement other channels keeps growing: almost one-third of consumers
in Hong Kong and two-thirds in mainland China now use digital channels when purchasing a P&C product.
Mobile’s role, in particular, continues to expand though it’s well below what many banks have offered their cus-
tomers. As a quick indicator, consider that when Bain asked consumers if they would miss more their mobile
phones or physical wallets for a day, more than half chose their phones, with the share reaching 79% in China (see
Figure 2). Mobile clearly has advanced past the tipping point, though the rate of adoption varies significantly
among countries. Multinational companies thus will need a thorough understanding of the digital dynamics in
each country of operation; they cannot simply roll out a mobile app worldwide.
Companies that get mobile design right can reap huge benefits. Our survey shows that mobile can create delight
among customers in many countries (see Figure 3).
Some of the most creative and promising mobile apps originated in China. For example, Ping An, one of China’s
largest insurers, in 2009 launched the first online financial management service in China, linking customers to
Page 5
Figure 2: Most consumers in most countries would miss their phones more than their wallets
Percentage of people who would miss their phones more than their wallets, 2015
100%
80
60
40
20
0
China South Hong Brazil Poland France Mexico Spain US Singapore UK Australia Germany Canada Japan
Korea Kong
Under age 25
Average
Age 55 or over
Source: Bain/Research Now NPS survey, 2015
dozens of websites, including insurance, banking, payments and airlines. More recently, it built a mobile platform
called Ping An Good Doctor, which now has 77 million registered users and more than 50,000 doctors on board.
Mobile-led service provision allows insurers to differentiate themselves from competitors. But the loyalty leaders
also excel at the basics of business: accuracy, reliability and ease of use in every channel and during every interaction.
Mastering the basics—engaging customers seamlessly across channels—requires coordination among different
functions within the organization. It’s critical to have a unified, complete view of the customer across all business
lines, which can be a challenge for traditional insurers, whose underwriting, claims, marketing, sales and call-
center departments make their own investment decisions and whose different businesses, such as P&C, life and
health, operate separately. Another common challenge stems from underinvestment in mechanisms to ensure
that the customer interactions in one channel flow through to the other channels. Isolated, uncoordinated invest-
ments create major inefficiencies and make for a disjointed customer experience. To deliver a seamless experi-
ence, these walls must come down.
Raise the game in customer acquisition and retention
Performance on acquisition and retention of customers varies widely among P&C insurers—and only a very few
companies excel at both, our survey shows.
That’s true for several reasons. Acquisition leaders tend to attract customers who are highly price sensitive and
thus more likely to defect when they are presented with a lower-priced offer; price-sensitive customers in the US
Page 6
have a defection rate of 2.6 times that of other customers. Customers of acquisition leaders tend to be younger and
lower income, and have fewer insurance needs. These companies spend more on advertising, and some skew
toward direct distribution channels, using no or few agents. Their structurally lower expense ratios allow them to
deliver on a low-price promise.
By contrast, companies that lead in retention have more customers who value peace of mind. Their customers
tend to be less price sensitive, older and more affluent, and have more complex insurance needs. One payoff for
these companies is that retention correlates strongly with higher loyalty.
The acquisition-retention divide often gets reinforced by company culture and business model. Some firms have
set up to excel in acquisition with a low-cost, convenient, advertising-heavy, direct-to-consumer business model.
Such P&C firms may have a more difficult time with customer retention given that the customers they attract
tend to be more price sensitive and more prone to switching in the future.
Whatever an insurer’s initial tendency, a few practical implications flow from our survey:
• Refine marketing campaigns to be more selective in choosing customers. Attracting only price-sensitive
customers will likely generate higher churn down the road, so carriers that take this route will have to con-
tinually manage costs down to attract an outsize share of new customers and maintain their market positions.
As the advertising arms race escalates, there may come a point of diminishing returns, so insurers should
make advertising and direct marketing more effective today.
Figure 3: China’s P&C insurance companies have created remarkable digital experiences
Share of P&C customers in China, 2016
0
Reliable Delightful
1
Decreasing likelihood to annoy
Online
2
In-person
Mobile
3
Phone
4 Bubble size
shows frequency
Annoying of interactions
Variable
5%
0 35 36 37 38 39 40 41 42 43 44%
Increasing likelihood to delight
Notes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider”; responses were scored on
a scale from −5 to 5, and interactions that were given scores of ≥4 were considered likely to delight; interactions given scores of ≤−1 were considered likely to annoy
Page 7
• Use advanced analytics to improve consideration among less price-sensitive segments. Once the customer is
on board, intensify tailored marketing to provide services and information that customers value or to reas-
sure them that “we’ve got your back.”
• To boost conversion of new prospects, make it easy for people to find the right information, get a quote or get
confirmation. While instant online quotes now are routinely offered in auto lines in some countries, online
quotes have only begun to appear for home coverage. Agents or contact center reps should also follow up
with people who abandon online applications.
• To help improve retention, build predictive models that better match tailored products to target segments.
USAA, for example, mines customer data to inform targeted marketing that is triggered by a life event, such as
offering additional auto insurance to a family when a child turns 16. Few insurers systematically track such
triggers: Bain’s digital insurance benchmarking study in 2015 found that fewer than 50% of P&C carriers and
35% of life carriers track any customer buying signals (such as buying a house or car) using digital technologies.
• Invest in delighting, not simply satisfying, customers at key moments of truth. In P&C, claims handling offers
a huge opportunity to delight. Some carriers, for instance, have achieved greater loyalty and retention by
developing a network of certified auto repair centers that provide higher-caliber repair at lower cost.
Retention rates often can be raised through some straightforward tactics, not expensive new capabilities. Con-
sider recent changes at Farmers, a US multiline insurer. A few years ago, its operating model was geared to acqui-
sition, and the company was losing up to 25% of its customers every year. Stepping back to examine why, Farmers
learned that its top-decile customers were worth significantly more than those in the bottom decile, and what
accounted for that difference was customers’ tenures with Farmers and the number of policies they held. Yet
Farmers had no loyalty program for its long-time customers.
Farmers turned its attention to creating better experiences, focusing on its highest-value customers. For example,
key drivers of defection were a complex pricing system and poor communication around renewal pricing. A
household that had six policies with Farmers could go through 6 to 12 renewal periods in a year, each with its own
notice of price change—yet no explanation of why the price moved. Armed with this knowledge, Farmers
recently refined its scripts and communications for agents and call centers, and is testing innovative price-
stabilizing products that received early positive feedback.
Expand your share of wallet
One of the most effective methods to retain more customers is to sell them more products. Customer churn drops
sharply as an insurer sells customers another one or two products, our survey finds. And many insurance firms
have ample room to expand their share of the customer’s wallet. A large group of life insurance customers, par-
ticularly in Asia, expressed a need for more products or more coverage, and would likely buy from their primary
insurers. Finding profitable growth through current customers typically is less expensive and yields a higher
return on investment than acquiring new customers.
Fortunately for marketers, some of the barriers to cross-selling have fallen in recent years. The proliferation of
customer data with rich contextual information and greater computing power to analyze this data make it feasible
Page 8
to learn more about customers, create more compelling value propositions and target with more precise offers at
the most opportune time.
Here again, insurers can use a variety of tactics. Some tactics are relatively basic, such as adding a sales compo-
nent to inbound calls, freeing up time for agents to actually sell or offering online diagnostic tools that show
consumers how to optimize their coverage. In the UK, Admiral gives customers and their immediate family
members a strong incentive to insure their cars with the company. Even if family members reside at different
places, they can be insured on one policy and receive Admiral’s MultiCar benefits and discounts. Customers have
insured more than 3 million cars through this program since 2005.
Other tactics depend on more sophisticated analytics techniques, such as automatically generating a next-best
offer or integrating the insurer’s P&C, life and health customer databases in order to see which products are con-
sumed by a single household. In the US, Progressive uses analytically optimized pricing to raise cross-selling
rates, and it prepopulates renewal application forms with discounts for customers adding products. Some 40% of
Progressive customers have both auto and home insurance, and an average lifetime value that is two to four times
as high as customers with only one product.
Executives committed to raising their cross-selling and upselling rates should first ask, which of our products are
lagging—for example, how many of our auto policyholders don’t hold a second product, and how does that com-
pare with the market leader? Answering this question determines the priorities in terms of product and customer
segment. Second, executives should ask, what tactics can we use to reach our target?
•••
Consumer sovereignty has only grown stronger with choices for less expensive insurance coverage just a few
clicks away. But most consumers don’t want to defect. To the contrary, they often want to simplify their lives and
do business with a single company that gives them reasons to stay. For most insurers, then, reigniting organic
growth involves a heightened focus on earning customers’ loyalty by understanding their needs, interacting with
them more intensely and delivering more value in the core insurance offering, and beyond. Digital tools now
allow companies to get there faster, at scale and with more precision.
Page 9
1.
• Most insurers, especially in the life sector, rarely
interact with customers—a major impediment to
earning loyalty. Being in touch with customers
has a large positive effect on loyalty, for both life
and P&C.
• Across all of the countries analyzed, there is a

The imperative to
significant gap between loyalty leaders and lag-
earn greater loyalty gards—up to 60 points and 80 points in the P&C
and life sectors in the US, respectively. Many of
the leaders in 2014 continue to lead today: in
the P&C sector, for example, Liverpool Victoria in
the UK and HUK-Coburg in Germany; in the life
sector, USAA in the US and Prudential (UK) in
some Asian markets.
• Many customers trust insurers to serve them beyond

basic coverage, as providers of platforms offering
ancillary services related to car, home, health
and life. These services range from auto sales
and leasing sites to fitness club memberships and
flood monitoring in home basements. Many
involve partnerships with third parties.
• Of those customers who value such services,

about 50% in Germany and 80% in South Korea
and France view their primary insurers as potential
platform providers.
• Furthermore, most customers would share their

health, financial and other personal data with insurers.
About 60% of customers in Japan and 95% in
China are willing to share at least one type of
personal data.
Figure 4: In most American and European markets, there is a large gap in customer loyalty between leaders
and laggards in the P&C sector
Primary P&C insurer’s Net Promoter Score® relative to loyalty leader, 2016 (indexed to zero)
−100 −80 −60 −40 −20 0
Canada No clear leader

Americas
Mexico No clear leader
US USAA
France MAIF
Germany HUK-Coburg
Italy Genialloyd
Europe
Spain Mutua Madrileña
Switzerland Schweizerische Mobiliar
UK Liverpool Victoria
Lowest score Highest score

Average
Note: Net Promoter Score® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Figure 5: In most Asia-Pacific markets there is a large gap in customer loyalty between leaders and
laggards for the P&C sector
Primary P&C insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
−100 −80 −60 −40 −20 0
Australia Apia
China PICC
Hong Kong Prudential (UK)

Asia-Pacific
Indonesia Allianz
Japan Sony
Malaysia Etiqa, Zurich
Singapore NTUC Income
South Korea Samsung

Average
Page 12
Figure 6: In most American and European markets there is a large gap in customer loyalty between leaders
and laggards in the life sector
Primary life insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
−100 −80 −60 −40 −20 0
Canada No clear leader

Americas
Mexico Seguros Monterrey
US USAA
France MAIF
Germany HUK-Coburg
Italy Allianz, UnipolSai

Europe
Spain MAPFRE
Switzerland No clear leader
UK Prudential (UK)

Average
Figure 7: In most Asia-Pacific markets there is a large gap in customer loyalty between leaders and laggards in the
life sector
Primary life insurer’s Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
−100 −80 −60 −40 −20 0
Australia Allianz
China China Life
Hong Kong Prudential (UK)

Asia-Pacific
Indonesia Allianz, Prudential (UK)
Japan Sony
Malaysia Prudential (UK)
Singapore No clear leader
South Korea Shinhan

Average
Page 13
Figure 8: Being in touch contributes to loyalty
Percentage point difference in Net Promoter Scores between customers who had an interaction in the past 12 months and those who did not
70
63
60
50
43 42
40
33 35
32 31 32 32
30 27
26 28 27 27 27 25 26
26 24 24 25 23 23
23 23 22 23 20
21 21 20
20 19 18
15 17 18
14 12
10
0
China Malaysia Mexico Brazil Switzerland Japan Australia US UK France
Indonesia Singapore Hong Poland South Italy Germany Canada Spain
Kong Korea
Life P&C
Figure 9: Customers would value a platform for services beyond insurance coverage …
Share of customers saying they would value a platform for services in four areas
100%
80
60
40
20
0
Mexico Brazil Indonesia Poland Spain France Switzerland Germany UK Japan
China US Canada Malaysia Singapore Australia Italy Hong Kong South Korea
Auto Home Health Life
Such as monitoring driving Such as advice and discounts Such as health advice and Such as health advice/monitoring,
behavior, platform to buy or sell on home monitoring systems, monitoring, fitness-plan provider, estate planning and legal advice
cars, getting advice on auto repair recommendations for repair doctor recommendations
shops, antitheft services providers, real estate sales,
flood monitoring
Page 14
Figure 10: … and customers view insurers as potential providers of additional services
Among P&C and life customers interested in a platform for services that extend beyond insurance coverage, the share who can imagine an insurance
company providing the platform
100%
80
60
40
20
0
South Japan Malaysia Indonesia Italy Australia Hong US Canada Germany
Korea Kong
France Mexico Spain China Brazil Singapore Switzerland Poland UK
Figure 11: Most customers would share personal data with insurers
P&C and life customers aged 25–34, ranked by willingness to share personal financial, health or other data with insurers
100%
80 Not willing to share
60
Selective sharers
40
Open sharers
20
0
China Indonesia Malaysia Singapore Germany US Australia Spain Poland Japan
Hong Kong Mexico Italy Switzerland Brazil Canada France UK South Korea
Notes: Open sharers are willing to reveal personal data to insurers; independent of the type of data; selective sharers would only share some personal data
Page 15
2.
• Customers are increasingly embracing digital
channels, both online and mobile, for their insurance
interactions. The share of digitally active customers
has increased everywhere over the past two
years, though the rate of change varies by country.
China, Brazil and Mexico have seen the greatest
Creating delight growth in digital use.
through mobile • Digital does not replace other channels but rather
complements them, as customers are using more
channels than they did two years ago. Digital
raises the level of interactions, and a significant
share of customers now use digital channels for
purchasing P&C products.
• Multichannel interactions tend to be more effective

in garnering loyalty. In most countries, digital-
only customers give lower loyalty scores than cus-
tomers who use phone-only, in-person or multiple
channels. Customers want easy, fast, convenient
websites and mobile apps, and few insurers have
been able to design digital tools that meet these
expectations.
• Mobile usage is coming on strong, however,

even outpacing online usage in some Asian
markets, such as Singapore, Hong Kong and
Australia. And despite the low loyalty scores for
digital on average, mobile offers huge potential
to delight, especially for claims. Among some
loyalty-leading companies, for example, customers
give the highest loyalty scores for their mobile
experience. USAA, whose banking arm invented
remote check deposit in 2009, has been in the
forefront of mobile innovation, in large part be-
cause it serves members of the military who are
deployed to bases around the world.
Figure 12: The share of digitally active customers has risen, and China and the UK lead with about 77%
Share of digitally active P&C and life customers, 2016*
100%
UK China
80 Australia
South
Indonesia Brazil
Germany Korea
Malaysia Mexico
60 US
Canada
Italy Poland Spain France
40 Singapore
Hong Kong
Japan
20
0
0 5 10 15 20 25 30 35
Percentage point increase in share of digitally active customers,* 2016 vs. 2014
*Respondents who used digital channels for their most recent research to find insurance-related information and for their most important interaction with their insurance providers
Notes: 2014 data for Switzerland is unavailable; Switzerland had a 53% share of digitally active customers in 2016
Sources: Bain/Research Now NPS surveys, 2013–14 and 2016; Bain/SSI NPS surveys, 2013–14
Figure 13: Customers increasingly use digital channels in combination with other channels
Share of digital-only P&C customers, 2014 and 2016
20%
UK
15
Japan Germany
Italy Australia
10
US
Singapore
5 Poland South Korea China

France Brazil
Spain
Canada
Hong Kong Malaysia Indonesia
Mexico
0
0 20 40 60 80%
Share of P&C customers using digital and other channels, 2014 and 2016
2014 2016
Page 18
Figure 14: Almost one-third to two-thirds of customers use digital channels when purchasing a P&C product
Share of customers using digital channels to purchase a P&C product in past 12 months
100%
80
66
60 59 58
53 52 51
47 46 45
42 42 41 40
40 39 38
30 30 29
20
0
China Indonesia Australia South Germany Italy Spain France Poland
Korea
UK Brazil US Singapore Malaysia Mexico Japan Canada Hong

Kong
Note: Includes digital-only and hybrid-channel customers

Figure 15: The use of digital channels for purchasing has increased significantly, complementing, not replacing,
physical channels in most countries
Change in number of channels used per customer for P&C product purchase, 2016 vs. 2014
200%
150
100
50
−50
Mexico France Spain Brazil Canada Malaysia Poland Germany Italy
China Japan Indonesia South Korea US Australia UK Singapore Hong

Kong
Channel categories
Digital (email, browser through computer Phone (customer service In-person (agent,
or mobile device, mobile app) center, personal adviser) broker, bank)
Page 19
Figure 16: P&C customers interacting only through digital channels give relatively lower loyalty scores in
most countries
Net Promoter Scores of P&C customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)
15
10 10
10
10
6 7
6
5 5 5
4
1
0
0
−5
−5
−10
Australia China France US
Digital-only customers In-person or phone-only customers Multi-channel customers
Figure 17: Life insurance customers interacting only through digital channels give relatively lower
loyalty scores in most countries
Net Promoter Scores of life insurance customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)
30
22
20
17 16
13
12
10 9 8
6
3
−4
−10 −8
−14
−20
Australia China France US
Digital-only customers In-person or phone-only customers Multi-channel customers
Page 20
Figure 18: For research, customers still use online more than mobile in most markets
Share of customers using browser on desktop or laptop for P&C insurance research
50%
Australia UK Online exceeds mobile
40
Mobile exceeds online
Germany
30 US
Poland
Italy
China
Switzerland Spain Mexico
20 Japan
Singapore
Indonesia
France Canada Brazil
Malaysia
Hong Kong
10 South
Korea
0
0 10 20 30 40 50%
Share of customers using browser or app on smartphone or tablet for P&C insurance research
Figure 19: Online interactions are less frequent for customized advice, although mobile has become rele-
vant in many markets
Share of P&C customers using browser on desktop or laptop for customized advice
50%
Online exceeds mobile
40
Mobile exceeds online
30
South
20 Korea China
Australia UK
Indonesia
Germany Mexico
Poland US Malaysia
10 France Brazil
Italy Spain Singapore
Hong Kong
Switzer- Japan
0 land Canada
0 10 20 30 40 50%
Share of P&C customers using browser or app on smartphone or tablet for customized advice
Page 21
Figure 20: In-person interactions still provide a better P&C experience in some countries, but Asian markets show
that mobile can delight
Channel experience score for P&C, relative to leading channel, 2016 (indexed to zero)
Americas Asia-Pacific Europe

US Brazil Singa- Hong Australia China Malaysia South Indonesia Germany France UK Italy Spain
pore Kong Korea
−5
−10
−15
−20
Mobile Online (including email) In-person Phone
Note: Channel-experience score is calculated by subtracting “likelihood to annoy” percentage from “likelihood to delight” percentage
Figure 21: For the P&C sector in the US, in-person interactions generally create a strong experience, but
customers appreciate mobile for claims
Channel experience score for P&C in the US, relative to leading channel, 2016 (indexed to zero)
Learn about
P&C market Seek customized
provider Purchase product Seek services Submit claims
average advice
or product
−5
−10
−15
−20
Mobile Online (including email) In-person Phone
Note: Channel experience score is calculated by subtracting "likelihood to annoy" percentage from "likelihood to delight" percentage
Page 22
Figure 22: The mobile channel offers a major opportunity to delight P&C customers
Share of P&C customers in US, 2016

0%
Reliable Delightful
Mobile Mobile
2
Decreasing likelihood to annoy
Online
Online Phone
4 Mobile
Online
In-
Phone
person
6 Phone
In-person
Bubble size
8
shows frequency
of interactions
Annoying Variable
10
0 35 40 45%
Increasing likelihood to delight
Net Promoter Score leader (USAA) Top 5 digital insurers* Market average
*Based on share of digitally active customers

Notes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider"; responses were scored on
a scale from −5 to 5; interactions that were given scores of ≥4 were considered likely to delight, and interactions given scores of ≤−1 were considered likely to annoy
Page 23
3.
• In both auto and home, most new customers have
switched from another carrier, rather than being
first-time buyers. The UK, with its strong presence
of aggregators, has by far the highest share of
switchers among the people who bought a policy
in the past year. Customer churn is most problematic
Mastering the customer- for carriers in countries where an older demo-
graphic, combined with high insurance penetra-
switching game in P&C tion, limits the number of first-time buyers.
• Insurers typically compete aggressively to acquire

new customers or to retain current customers.
Very few manage to excel in both activities, and
some underperform in both.
• Before customers switch auto or home policies,

they tend to engage in comparison shopping,
which heightens competition and crimps profit-
ability. Aggregator platforms have emerged in
all markets, and they have become the main
channel for comparison-shopping research in a
few markets, such as Japan, Germany and the UK.
• Acquisition hinges on generating and converting

leads, and many companies have ample room to
improve in one or both of those activities to win
their fair share of shoppers.
• Companies that lead in acquisition attract more

price-sensitive customers than companies that excel
in retention. These customers naturally are more
difficult to retain, having high defection rates—
up to 2.6 times that of other customers—as they
hunt for the next price deal.
• Earning greater loyalty puts the brakes on defection,

but as companies still need to acquire new cus-
tomers, it’s essential for insurers to pursue three
streams simultaneously: to attract and convert more
customers who value peace of mind, to drive
down the cost of acquisition and to give new cus-
tomers good reasons to stay.
Figure 23: The majority of new customers have switched from another insurer
Auto Home
Customers who purchased an auto policy from new provider in past Customers who purchased a home policy from new provider in past
12 months 12 months
100%
100%
90
80 80
70
60 60
50
40 40
30
20 20
10
0 0
UK
US
Japan
Poland
France
Singapore
Australia
Spain
Brazil
Canada
South Korea
Malaysia
Mexico
Switzerland
China
Indonesia
UK
Australia
France
Canada
US
Italy
Germany
Germany
Switchers First-time buyers
Figure 24: P&C carriers tend to perform better on either customer acquisition or retention, but not both
Auto insurance in the US Auto insurance in the UK
Customer-loss index Customer-loss index

Better 0 Better 0
Better on both Better on both
0.5 0.5
Average
Average
1.0 1.0
1.5 1.5
Worse on both Worse on both

Worse 2.0 Worse 2.0
0 0.5 1.0 1.5 2.0 0 0.5 1.0 1.5 2.0
Worse Average Better Worse Average Better
Customer acquisition index Customer acquisition index
Page 26
Figure 25: Most P&C customers comparison shop before buying coverage
Share of customers who comparison shopped before purchasing auto insurance in past year
100%
80
60
40
20
0
UK Italy Poland US Mexico Japan Canada Switzerland Singapore
Brazil Spain Australia Germany France South Malaysia Indonesia China
Korea
Figure 26: Aggregators have the strongest role for P&C comparison shopping in Japan, Germany
and the UK
Comparison-shopping research for auto insurance in past 12 months
Aggregator shopping
exceeds traditional Traditional shopping exceeds aggregator shopping
shopping
100%
80
60
40
20
0
Japan Germany UK Poland Switzer- Spain Brazil Mexico Italy France South Australia Canada US Malaysia
land Korea
Aggregator shopping Traditional shopping
Page 27
Figure 27: Many carriers have room to improve their lead generation and conversion, each of which contributes
to winning a fair share of shoppers
Auto insurance in Germany Auto insurance in Australia
High High
Winning more Winning more
than market share than market share
Winning fair Winning fair

Lead share of
Lead share of
generation comparison generation comparison
relative to shoppers relative to shoppers
market market
share share
Winning less Winning less

than market share than market share
Low Low
Low High Low High
Conversion of leads Conversion of leads
Carrier
Notes: Traditional shoppers only, not aggregators; fair share is defined as market share
Figure 28: P&C acquisition leaders attract more price-sensitive customers than retention leaders
Australia Germany US
Customers who purchased an auto policy from a new provider in past 12 months, by key purchasing criteria
Other Other
Prior relationship Prior relationship Prior relationship
100% 100% 100%
Reputation
Reputation
Service/claims Reputation
Service/claims
80 80 80
Service/claims
Product Product
60 60 60 Product
Advice/ease
of purchase Advice/ease Advice/ease
of purchase of purchase
40 40 40
20 Price 20 Price 20 Price
0 0 0
Acquisition leaders Retention leaders Acquisition leaders Retention leaders Acquisition leaders Retention leaders
Page 28
Figure 29: Price-sensitive P&C customers tend to churn more; their defection rate is up to 2.6 times
that of other customers
Defection rate of price-sensitive auto customers relative to other auto customers (past 12 months)
Lower or similar
Higher defection rate
defection rate
3x
2.6 2.6 2.5
2.4
2.2 2.2
2.0
2
1.8 1.8
1.6 1.5 1.5
1.4
1.2
1.0
1 0.9 0.8 0.8
0
US France Brazil Poland Germany South Mexico Japan Malaysia
Korea
Italy Australia UK Canada Indonesia Switzerland Spain Singapore China
Figure 30: P&C insurers with higher loyalty scores have lower defection rates
Customer-loss index for US auto insurance
Worse 2.0 R2=0.51
1.5
Average
1.0
0.5
Better 0
0 20 40 60 80
Net Promoter Scores for P&C insurers in US, 2016
US insurance company
Page 29
4.
• Improvements in cross-selling can generate huge
value in both P&C and life. Customers owning
more insurance products stay longer, as evidenced
by a much lower churn rate at any stage of the
relationship for people who have multiple contracts
relative to those with just one. And finding profit-
Capturing greater able growth through existing customers typically
is easier and less expensive than acquiring new
share of wallet customers, and yields a higher return on investment.
• There is a massive gap between cross-selling

leaders and laggards among P&C, life and multi-
line insurers in each country. Leaders sell up to
twice as many products as laggards. The gap
between multiline insurers is widest in Hong Kong,
the US and France, and narrowest in Australia,
Mexico and Switzerland.
• Opportunities abound to expand share of wallet.

Many life insurance customers express a need for
more coverage and more products, particularly
in China, Indonesia, Malaysia and South Korea.
Moreover, in most countries, the majority of customers
are likely to buy from their primary insurers. Many
carriers have earned the right to an additional
sale—but they have to ask.
• Insurers have opportunities to engage with cus-

tomers through live and digital channels. Many
customers expect insurers to be proactive about
contacting them with advice about such things as
planning for savings and investments.
• Leaders in cross-selling often have higher loyalty

scores, longer customer tenures and favorable
customer demographics. Proficiency in cross-selling
thus offers a route to growth: directly, by selling
more products per customer, and indirectly, as
customers with more products stay longer.
Figure 31: Cross-selling products reduces customer churn and generates significant value for carriers
Customer churn, by number of contracts held and as a share of total number of P&C and life insurance customers
20%
0
0–1 1–2 2–3 3–4 4–5 5–6 6–7 7–8 8–9 9–10 10+
Length of relationship (years)
1 contract 2 contracts 3 contracts

Source: Bain analysis
Figure 32: For multiline firms, there is a large gap in cross-selling between leaders and laggards
Average number of P&C and life insurance products per household and provider, 2016 (indexed to market average)
150
AIA Desjardins
AIA USAA MAIF NTUC PZU LVM
125 Ping Samsung
An Income MAPFRE Meiji Sun-
Allianz Aviva
Yasuda corp GNP AXA
100
75
50
Hong France Singapore Poland Canada South UK Australia Switzer-
Kong Korea land
US China Malaysia Germany Spain Italy Japan Mexico
Number of products, 1.9x 1.8 1.8 1.7 1.7 1.7 1.7 1.7 1.7 1.6 1.5 1.5 1.3 1.2 1.2 1.2 1.2
leader relative to
laggard Maximum
Market average indexed to 100
Minimum
Page 32
Figure 33: The gap between cross-selling leaders and laggards extends to P&C as well
Average number of P&C products per household and provider, 2016 (indexed to market average)
150
NRMA Schwei-
MAIF AIA NTUC NFU La
125 USAA LVM Sam- zerische
Income MAPFRE AIA Uni- Mutual Person-
PZU sung Mobiliar Ping Mitsui
polSai nelle
An Sumitomo AXA Allianz
100
75
50
US Australia Singapore Spain Poland UK Canada China Mexico
France Hong Germany Malaysia Italy South Switzer- Japan Indon-
Kong Korea land esia
Number of products, 2.2x 2.1 1.8 1.8 1.7 1.7 1.5 1.5 1.4 1.4 1.4 1.4 1.3 1.3 1.2 1.2 1.2 1.2
leader relative to
laggard Maximum
Market average indexed to 100
Minimum
Figure 34: Life insurers have a huge opportunity to upsell and cross-sell more, especially in
emerging markets
Share of life insurance customers expressing need for more products or coverage, 2016
100%
80
60
40
20
0
China Malaysia Mexico Brazil Poland Japan Spain US Canada Germany
Indonesia South Hong Singapore Italy France UK Australia Switzerland
Korea Kong
Need more coverage and more products Need more products Need more coverage
Note: More coverage refers to changing an existing policy, such as raising the amount insured or adding an annuity
Page 33
Figure 35: Most customers would likely buy a new life product from their primary insurers
Share of customers likely to buy new life insurance product from primary insurer
100%
86
80 79 79 78
80 76
72
67 67 66
63 62 61 61
60 60
56 54
41
40 38
20
0
China Malaysia Brazil Spain Poland Hong Kong Canada Germany UK Japan
Mexico Indonesia Italy Switzerland Singapore US France Australia South
Korea
Likely Highly likely
Figure 36: Many customers are open to getting advice from insurers on coverage and related services
Share of customers expecting insurers to provide advice, ranked by country
0 20 40 60 80%
Planning for better savings/investments Japan Singapore
Suffering from a severe disease Italy South Korea
Being hospitalized France Singapore
Buying a house Japan US
Purchasing a new car Hong Kong Brazil
Going for a medical checkup Canada Indonesia
Planning to travel Japan Australia
Planning for a healthier lifestyle France China
Having a child Japan Indonesia
Getting married Japan US
Starting a new job Japan Mexico
Minimum Maximum
Average of all countries
Page 34
Page 35
Appendix: Methodology
Bain & Company partnered with Research Now, the online global market research organization, to survey consumer
panels in 19 countries: Australia, Brazil, Canada, China, France, Germany, Hong Kong, Indonesia, Italy, Japan, Malaysia,
Mexico, Poland, Singapore, South Korea, Spain, Switzerland, the UK and the US. The survey’s purpose was to gauge P&C
and life insurance customers’ loyalty to their main insurance providers and to understand the underlying reasons for their
views. Conducted between March 2016 and June 2016, the survey polled 164,421 consumers of P&C and life insurance.
For our analysis of individual insurance providers, we included only those in the Americas, Australia and Europe
that received at least 200 valid survey responses and those in Asia, Mexico and Poland that received at least 100
responses. In many cases, sample sizes exceeded these thresholds.
Survey questions
Respondents were first asked to list the P&C and life insurance products they purchased and to name the corre-
sponding insurance providers. They then indicated their primary P&C and life insurance providers. Based on
their responses, participants completed either the P&C or life insurance questionnaire.
They also responded to two questions to assess their loyalty to their primary insurance providers:
• On a scale of zero to 10, where zero represents “not at all likely” and 10 represents “extremely likely,” how
likely are you to recommend your primary insurance provider to a friend or colleague?
• Why did you give your primary insurance provider the score you did?
Based on the scores they gave, respondents were classified as promoters (9–10), passives (7–8) or detractors (0–6).
The Net Promoter Score® is the percentage of promoters minus the percentage of detractors.
We asked which channels respondents currently use for the following: to gather information about an insurance
provider or insurance products, to seek advice, to purchase a product, to seek service and to submit and settle a
claim. We then asked respondents how their channel usage had influenced their likelihood to recommend their
primary insurance providers. We also asked whether they would be interested in platforms provided by insurers
that offer ancillary services related to car, home, health and life. Finally, we asked participants about their willing-
ness to share personal data with insurance companies.
In the survey, we included different questions for P&C respondents and life insurance respondents. We asked
P&C respondents about switching behavior in auto and home insurance. For life insurance respondents, we included
questions to understand the potential for cross-selling and upselling. Finally, we asked for demographic information:
household income, age and region of residence.
The results of our data analysis are robust. Our measurements for insurance carriers’ Net Promoter Scores in
each country and for respondents’ Net Promoter Scores for each demographic category were statistically significant.
For each carrier, these scores were statistically significant to an 80% confidence level, with a one-tailed test ranging
from ±1.3% (n=4,956) to ±10% (n=100).
Page 36
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they want results.
Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisitions. We develop
practical, customized insights that clients act on and transfer skills that make change stick. Founded in 1973, Bain has 53 offices
in 34 countries, and our deep expertise and client roster cross every industry and economic sector. Our clients have outperformed
the stock market 4 to 1.
What sets us apart
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CUSTOMER BEHAVIOR AND LOYALTY

IN INSURANCE: GLOBAL EDITION 2016

Europe, Middle East and Africa

Copyright © 2016 Bain & Company, Inc. All rights reserved.

Executive summary: The consumer is sovereign . . . . . . . . . . . . . . . . . . . . pg. 3

1. The imperative to earn greater loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 11

2. Creating delight through mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 17

3. Mastering the customer-switching game in P&C . . . . . . . . . . . . . . . . . . . pg. 25

4. Capturing greater share of wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31

Appendix: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 36

The consumer is sovereign

Fight to get closer to the customer

Live concierge Antitheft service if the box Weather alert based

Parking Claims Automatic assistance

Fix the basics and accelerate the mobile channel

Raise the game in customer acquisition and retention

Share of P&C customers in China, 2016

Increasing likelihood to delight

Expand your share of wallet

• Across all of the countries analyzed, there is a

• Many customers trust insurers to serve them beyond

• Of those customers who value such services,

• Furthermore, most customers would share their

Canada No clear leader

Mexico No clear leader

Spain Mutua Madrileña

Switzerland Schweizerische Mobiliar

Lowest score Highest score

−100 −80 −60 −40 −20 0

Hong Kong Prudential (UK)

Malaysia Etiqa, Zurich

Singapore NTUC Income

South Korea Samsung

Lowest score Highest score

Source: Bain/Research Now NPS survey, 2016

−100 −80 −60 −40 −20 0

Canada No clear leader

Mexico Seguros Monterrey

Italy Allianz, UnipolSai

Switzerland No clear leader

Lowest score Highest score

Source: Bain/Research Now NPS survey, 2016

−100 −80 −60 −40 −20 0

China China Life

Hong Kong Prudential (UK)

Indonesia Allianz, Prudential (UK)

Malaysia Prudential (UK)

Singapore No clear leader

South Korea Shinhan

Lowest score Highest score

Source: Bain/Research Now NPS survey, 2016

Figure 8: Being in touch contributes to loyalty

Source: Bain/Research Now NPS survey, 2016

Auto Home Health Life

Source: Bain/Research Now NPS survey, 2016

France Mexico Spain China Brazil Singapore Switzerland Poland UK

Source: Bain/Research Now NPS survey, 2016

80 Not willing to share

• Multichannel interactions tend to be more effective

• Mobile usage is coming on strong, however,

Share of digitally active P&C and life customers, 2016*

Share of digital-only P&C customers, 2014 and 2016

5 Poland South Korea China