Engaging people with protection – a behavioural economics approachBrendan Folan, Protection Business Manager, Wesleyan William Trump, Customer Behaviour Consultant, Swiss Re

Applying behavioural science to insurance

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Customers are not only affected by rational factors (price, features, information) but also by context – we all are.

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Only by running rigorous trials can we discover what truly drives customers behaviour

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We have proven that small contextual changes (“nudges”) can make a big difference to customer behaviour

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Traditional Economics: how people should behave

Behavioural Economics: how people actually behave

Fruit or chocolate?

Read & van Leeuwen (1998)

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Some findings we've obtained about the consumer from our 94 trials with insurers

1/3rd the proportion of our trials that show no change in customer behaviour (not everything works!)

relative decrease in lapses for health insurance when we changed the letter (Irish Health Insurer) 33%

81%open-rate of an email achieved by personalising the subject line - control message was 35% (Malaysian motor insurer)

65%relative increase in number of people who chose the up-sell when we made a small change to the script (Irish Life Insurer)

2%absolute increase in smoker disclosure when we changed the response options (Australian insurer)

Wesleyan & Swiss Re partnership

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Working together on Wesleyan’s customer interactions – specific focus on customer experience throughout the life of the policy

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Since Jan 2015, we’ve run 7 trials looking at the different touch-points in the customer journey.

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We present on 2 of the case studies 3

Trial 1: Policy Issue letter

• Policy Issue letter when students sign up - free Income Protection whilst at university

• 4 pages pack – of which 2 on cancellation policy

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Trial 1: Test letter

• Less emphasis on cancelling, more on the benefits of this (free) policy

• Results: drop in cancellations from 4.2% to 1.6% (statistically significant)

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Trial 2: “Paying” lettersWhen the customer switches from free policy to £28/month

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before

• Behavioural insight being tested: Enhanced Active Choice

• Results:

– previous jump in cancellations was 114%

– new letter “only” observing 70% increase (significant)

after

Environment: seeking confirmation that customer still lives at address. And if not, asking new resident to take action and confirm this

Behavioural intervention: testing a message on the envelope (“Salience”)

Case study 3: Pensions communications (“gone-aways”)

Control Test

Test design: • Sample split randomly Control and TestResults:• 7% response rate Control• 24% response rate Test• significant at 99% confidence level

Conclusion

▪ Behavioural Economics can help us improve our interactions with customers in sales, retention, underwriting & claims environments

▪ Small, inexpensive contextual changes (“nudges”) can make disproportionate differences to customer behaviour

▪ By running rigorous trials can we truly establish what works (and it’s not always what we think)

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Legal notice

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