Motor insurance companies need to start putting customers at the heart of their future strategies or they face extinction – that’s according to new research from By Bits, the software-as-a-service insurance platform. It reveals that over three quarters (77%) of motor insurance companies admit to having put profit above customers for too long and accept they need to redress the balance if they are to succeed in the future.
The research, conducted by Insight Avenue in January and February 2021, is part of a new report launched today, ‘A customer-first future for motor insurance’. It also found that 75% of motor insurers claim that increasing levels of customer satisfaction has now become a critical priority – even more so than driving profit.
However, despite clearly recognising the need to meet rapidly evolving driver needs during the pandemic, only 11% of insurers say that they are planning to make significant changes to their approach to business in order to meet customer demands.
“The motor insurance industry is on the brink of a major pivot, putting the driver at the heart of its future strategy”, said Callum Rimmer, founder, By Bits. “Customers are becoming increasingly dissatisfied with their experiences – especially since the start of the pandemic – and unhappy about what they perceive to be unfair pricing and poor customer service. They will inevitably vote with their feet and turn to insurers that are meeting their changing needs.”
The By Bits research found that, despite 97% of insurers stating that drivers have been demanding fairer, usage-based pricing during the pandemic, only a fifth (20%) have made any changes to their motor insurance pricing models in the last 12 months. Almost half (47%) admit that they have made no significant changes to their product portfolios in the last two years.
And it’s not just on pricing where motor insurers are failing to address driver needs – they are also not providing the level of communication that customers are asking for. The research found that 81% of motor insurers admit that they typically only engage with their customers once a year, at renewal time.
According to McKinsey, COVID-19 has ‘irrevocably altered our driving habits’. Analysis of official MOT data from the Department for Transport from 2020 found that the average annual mileage of a UK driver dropped from a predicted 6,970 to 5,960 with UK drivers cutting around 550 million miles a week by working from home. By Miles – the pay-as-you-go insurer found the number of people travelling to work by car fell by 3.5 million in 2020 to 11.4 million, decreasing from a total of 14.8 million before Covid-19.
Rimmer concluded, “There is no doubt that the motor insurance industry needs to put the customer at the heart of digital transformation – and the time to do so is now. Failure to keep pace with the market changes will inevitably see the innovation-driven brands that are emerging steal market share, consumer trust and loyalty.”