Consumers find life insurance products too complicated and are willing to switch to providers that are more transparent and communicate better, an international survey of insurance customers has found.
The Ernst and Young study found that Brits are more demanding in their expectations of customer service and rewards for loyalty than consumers from other countries.
Yet, despite being some of the most proactive in educating themselves about products, Brits still find them too complex.
However, there is evidence that customers trust the industry and are willing to pay extra for a recognised stable brand.
Ernst & Young surveyed 24,000 life and non-life insurance customers across 23 countries, including 2,000 in the UK.
More than a third of consumers surveyed in the UK found the life and pensions products on the market too complicated and confirmed they would like to see simple and more transparent products.
More than a quarter of consumers in every region surveyed said that they would reconsider switching provider if they could guarantee more transparency on the products and better communication about product performance.
For life and investment product switching the UK matches the global average – around 10% of those surveyed have changed their provider in the last five years, but in the UK this number is set to double with 20% of consumers considering switching provider in the next five years.
While price was the top reason for changing non-life insurance provider (70%), life and pensions providers were primarily dropped for not being able to meet the changing needs of consumers.
Most consumers across the globe believe the insurance industry is trailing in rewarding customer loyalty and general customer service, but this trend is particularly marked in the UK.
The vast majority (84%) of life and pensions customers (and 88% of non-life customers) who had an opinion agreed that insurers trail other industries in rewarding customer loyalty.
This compared to 65-75% of consumers globally.
And three quarters (75%) of life and pensions customers (83% of non-life customers) who had an opinion agreed that service levels in insurance lagged other industries, compared to 60-70% of consumers globally.
This was highlighted by 55% of UK life and pensions consumers saying they were not contacted by their insurer when the policy approached renewal.
Fortunately, customers still trust the industry and satisfaction levels were high, with the UK market scoring 7.3/10 in satisfaction, while 30% of consumers in the UK were also willing to pay a premium for a financially stable brand.
Shaun Crawford, global insurance leader at Ernst & Young, said the expectations of consumers were constantly evolving and driven by online information and the rise of customer service standards in other industries.
“The UK has led the way in the move online, and some of the frustrations being voiced by UK consumers about levels of service, reward for loyalty and lack of transparency around products will be useful for other mature markets to learn from,” he said.
“The need for clarity and transparency in the buying process is not driven purely by customer preferences.”
He noted that regulators were increasingly focusing on protecting consumer interests more than ever, with major new rules being introduced in the EU and many other locations.
“Insurers that align themselves to a customer centric model will find the transition to the new regulatory environment less painful, and may gain competitive advantage.
“Consumers are clearly looking for more contact and are keen for insurers to make it easier for them,” he concluded.
