Technology is crucial for customer acquisition and retention

The adoption of new technology and better leveraging of legacy systems is crucial for acquiring and retaining new customers, according to a new insurance industry study by Bain and Co.

The consulting firm claimed insurance firms have previously taken a low-touch approach to customer service. It said that they needed to change and insurers should improve their ability to obtain and mine customer data in order to improve customer experience.

The study said better use of data will enable companies to offer more bespoke and targeted products.

The report said: “Success hinges on selecting the right customer segments, offering them a tailored proposition, then delighting them with innovative products and superior service at the key moments of truth.”

The report said that as insurers chase new business they are tending to target younger consumers who are more price-sensitive and less aware of established players in the market. It warned, however, that younger consumers are more likely to switch to the next best offer from a competitor when it becomes available. The report said that more than half will switch when there are savings of 20% off the premium and one quarter when the saving is 10% or less.

“Defection rates (are highest) among customers who are young and lower-income, have fewer insurance needs and use only digital channels,” the report added.