Life insurers – the advance of the rear-guard

Earlier this year Grant Thornton published its fifth annual Customer Loyalty and Experience Index (CLIX), a measurement of customers’ feelings of loyalty and experience across a variety of sectors and brands.

The findings showed promising signs that the financial services sector is finally starting to make ground on the retail industry (the industry that consistently tops CLIX). For life & pensions (L&P) firms it shows that, though they remain behind all other financial services sub-sectors, they have advanced their scores to within a whisker of their general insurance counterparts.

Despite the good progress made, we will see that life & pensions firms need to do more of the following in order to challenge their sector leaders:

  1. Improve customer experience and the ease of interaction, focusing on under-performing products.
  2. Build trust through consistently positive and relevant engagements to increase loyalty.
  3. Keep a watchful eye over their competitors.

What is the Customer Loyalty and Experience Index (CLIX)?

CLIX is a Grant Thornton proprietary index that maps 21,000 customer responses across 103 leading UK and Global brands (c.200 responses per brand) against a series of questions about loyalty, experience, sentiment, happiness, value for money and various aspects of brand affinity. CLIX has been running since 2013 and gives Grant Thornton the unique ability to offer our clients our own data driven strategic insight.

The index majors on the financial services, technology, media and retail sectors.

L&P – customer experience 

Customer experience within the life & pensions sub-sector has never been class-leading. In fact, until 2017, our index showed consistently negative customer experience scores. Two important developments are perceived to be driving this improvement in customer experience:

  1. L&P firms are abandoning the approach of simply issuing policy documents to meet regulatory obligations and are now seeking to engage customers – perhaps unsurprisingly the poorest performing brands in our index are closed back book providers.
  2. Investments in digital infrastructure and data management aimed at improving customer experience.

An important part of any customer experience is the ease of interaction with the brand. As can be seen from the diagram below, L&P firms are way behind their financial services sub-sector counterparts, particularly regarding the ease of use of their website and the ease of processing a financial transaction.

There is also great disparity in experience and interaction scores between the L&P products, thus any remedial action should prioritise the most underperforming products, which at present, as might be expected, is critical illness cover.

L&P – customer loyalty

The customer loyalty scores for the life & pensions sub-sector remained in negative territory. A key driver of loyalty is trust. Our data shows that, despite the negative public perception of the retail banks, the life & pensions firms, quite remarkably, are the least trusted within the financial services sector. As trust is built through continually delivering positive engagements, the challenge for L&P firms is how to design and deliver a customer engagement strategy that focuses on creating positive touchpoints.

There are life insurance firms in the market focusing on doing things differently, creating more frequent and engaging touchpoints in accessible channels through a greater range of connected devices.

Re-arranging the chess board

One of the most interesting insights from the CLIX data is the positive growth in performance by historically poor performers and what they have done to ‘move the dial’. These firms, by putting the customer first in the design of their interactions and products, have leapfrogged their competitors – one firm improving from the bottom quartile to a sub-sector leading position. Clearly the competition is heating up and there should be no complacency from any firm in this changing industry.

How could we help you?

We would be delighted to talk you through the findings in more detail and if there were any particular hypotheses or insights that you would like to explore within the detailed data set, please do let me know by contacting myself (samuel.c.church@uk.gt.com) or Grant Thornton’s Head of Insight and Peer Analysis, Paul Willis (paul.a.willis@uk.gt.com).