What's changed about how consumers buy insurance over the past decade?

The world around us is changing, and the past 10 years alone have brought significant change in consumer behaviour. But how is this affecting the way people approach life insurance? We wanted to find out by asking UK customers – but not in the usual way.

So, we partnered with YouGov to research, for the first time, how life insurance buyers’ behaviour has been changing over the past 10 years. We asked them to tell us not only who they eventually purchase from, but also to describe what happened during the different phases of research, quotes, and final purchase.

What we’ve uncovered is that it’s a very complex picture – one which we in the industry often tend to oversimplify – and this report uncovers the different behaviour at each stage in the process.

By comparing the picture from 10 years ago to today, we've been able to identify key insights into how customer behaviour is changing, how the industry is adapting, and what providers and distributors can do going forward in order to succeed. What’s surprising is that, whilst some things have changed radically in the past 10 years, other things have not.

Allow me to draw out what I think are some key take-aways:

You can’t afford NOT to have a strong online presence. This is because research into life insurance is now happening overwhelmingly online – with 7 out of 10 customers now doing research online, compared to just a third 10 years ago. This replaces face-to-face sales avenues, which have declined by 50% over the past 10 years. More and more consumers are going online to get quotes and buy policies. In fact, over half of applications are now started online.

However, don’t get frustrated when not everyone buys a policy immediately – many people online are still in the initial exploratory phase, which on average takes 10 days. Remember that this is not a regular, transactional task – people are in unfamiliar territory. We need to give them the tools to find out what life insurance is, work out whether they need it, and how much. Therefore, maybe we should tweak our websites away from purely “Buy now” to also allowing customers to come back later, think about it, submit a phone number etc.

Customers explore many avenues along the way – they will jump from one price comparison website to another then back again: on average, online researchers will visit 1.6 price comparison websites and 3.1 insurer websites. An increasing proportion of customers submit their details online and then speak to a broker, but most have forgotten who that broker was.

The proactive bird gets the worm! Because this exploration phase takes some time and involves multiple different channels and touchpoints, not letting the “conversation” grow cold is key. Therefore, to win consumers’ business, there needs to be a whole marketing strategy focussed around gathering people’s details, following up with proactive emails, re-targeting, or even outbound calls. If you don’t do it, someone else will!

Human interaction is still important. Perhaps surprisingly, of the customers who choose to purchase online, the proportion who seek human interaction at some point during the process has remained stable over the past 10 years. The main reason they do this is for reassurance that they’re doing the right thing and that the policy is right for them. So, with face-to-face contact on the decline, the telephone is increasingly a means by which customers obtain human interaction throughout the purchase process. What does this mean for providers? For a start, allow customers to get in touch – because insisting on only online purchase options will not be suitable for everyone. In addition, new technology is offering us the possibility of creating human-like interactions. If a chatbot or virtual assistant can “hold the customer’s hand” throughout the process, we may be able to achieve the best of both worlds.

There is significant growth to be unlocked: our market scan shows that, in addition to the 5% of UK adults aged 25–55 who intend to buy life insurance in the next 12 months, a further 11% know that they should take out cover but haven’t got around to it – that’s over 4.5 million people in the UK alone! As an industry, we should embrace the challenge of how to engage with these people and help them get “over the line” by taking out the protection they know they need.

So, has the life insurance industry caught up? Well, reflecting on the progress made in the past 10 years, I think we're getting there. What customers have become accustomed to with their other insurance products is now increasingly available online for life insurance: accessible information and educational tools, the ability to get quotes and increasingly good customer journeys for buying a policy. Maybe this is why we see that today over 80% of customers are satisfied with how easy it was to buy a policy, and the time the process took.

While progress has been made, we – the entire insurance industry – should not rest on our laurels, but instead seek opportunities to further improve the customer experience. 

The bottom line is that the winning formula for life insurance distribution is found via a combination of providing great customer experience through the latest technologies, understanding customer behaviour and utilizing an effective multi-channel marketing strategy. When these things are brought together, players can capture a bigger slice of the pie. We know that’s the case, because we’re one of them.

If you are ready to learn the key insights, please go to https://www.iptiq.com/uk-distribution-report/?lang=GB and download the report.

Enjoy reading the report – and do get in touch if you would like to delve deeper into the insights or talk about partnering with iptiQ

Marco Kamerling