“Where is the vehicle parked?” “Is the building of standard construction?” Sound familiar? It is if you're in the middle of renewing your insurance! But do we as the consumer actually care about the complexities of the industry, or trust that those annoying questions are being asked to ensure we get the best product available?

Yes it’s true that domestic insurance products are created through sophisticated actuarial analysis of risks and claim data that creates estimates of the likely losses, which has served the industry well.

Whilst insurers use a sophisticated analysis of risks to generate a suitable quote, they're also applying it to wider customer information in recognition of the need to develop customer-centric propositions.

While the common view is that most insurance is now sold to consumers through price comparison sites the real picture is somewhat more complex, with some interesting figures being brought to light:

• Around two thirds of consumers shop around for their insurance each year...

• ...but less than 20% of customers switch annually

• Consumers typically use two price comparison sites, not trusting just the one • A typical purchase journey has 7 different steps...

• ...and for some insurers, over 20% of sales are still made over the phone even where consumers start on a comparison site.

So it’s clear that consumers are looking for something more than the lowest price, and brand is a key factor with consumers, who are now much more concerned about the stability of financial services companies than ever before.

Service is key; consumers want to be sure their package of insurance is tailored for them covering their risks as well as being guaranteed a good post-sales service when they need it.

The long line of ceaseless questions the consumer has to answer is all about the insurer, not about trying to help the consumer choose the right insurance for them and it leaves consumers the feeling that the insurer is only interested in covering their backs; rather than doing the right thing for me.

The most advanced insurers now draw on a range of techniques from the research and marketing industries, hoping to understand their different consumer groups, their needs and aspirations in much more detail than ever before, and combining this with insights from behavioural economics to understand the social, cognitive and emotional factors involved when consumers make their choices.

By combining these with their traditional risk information the insurer can create a proposition that their target consumer groups want to buy rather than just offering the risk products they want to sell.

Meanwhile, social media is an increasingly important part of the marketing mix with the most advanced insurers using it to engage their audiences and have a two way conversation.

In summary, to transform the insurance market, it takes a holistic analysis of consumers’ needs and motivations plus a real understanding of their journey for choosing and buying insurance.

Image with thanks to alancleaver_2000