Key findings from the EY Global Consumer Insurance Survey 2014 · Key findings from the EY Global...

Reimagining customer relationshipsKey findings from the EY Global Consumer Insurance Survey 2014

Japan

3Reimagining customer relationships | Key findings from the EY Global Consumer Insurance Survey 2014 | Japan

24,000

consumers

30

countries

Executive summaryTwo years after EY’s inaugural Global Consumer Insurance Survey, results from the 2014 survey confirm that the insurance industry faces the same type of digital-driven and consumer-led disruption that retail, banking, media and entertainment and other sectors have experienced. Indeed, it seems clear that insurers have much work to do in delivering the customized experiences, intuitive toolsets and easy information access that today’s informed and empowered customers require.

Our survey results confirm that insurance customers are unique in many ways. In Japan, “value for money” is viewed as the most important characteristic for ongoing customer relationships–ranking higher than the global average. There are huge differences in response to customer interaction, frequency of communication and customer satisfaction, with the Japanese reporting lower levels of satisfaction than either global or mature markets.

This regional overview is to be read in conjunction with the Global Consumer Insurance Survey 2014 report – responses from 24,000 consumers in 30 countries. It provides a snapshot of more detailed findings for Japan and compares some of our global findings with the survey data.

Look for the report at ey.com/insurance/GCIS2014 and check out our interactive tool to dip deeper into the findings.

Nobuaki Nakata Japan Managing Director Financial Advisory Services

50 questions

4

Key finding 1:

High turnover and low trust signal serious relationship issues. Nearly three-in-four Japanese insurance customers (72%) express complete or moderate trust in insurance companies.


Nearly three-in-four Japanese insurance customers (72%) express complete or moderate trust in insurance companies, which is higher than the global average. While this represents the strong majority of customers, insurance companies overall register a lower level of trust than other targeted industries. And, this finding is consistent with results across all mature markets.

Figure 1: Percentage of consumers citing “complete trust” and “moderate trust” by type of business

Japanese customers offer fewer reasons than their global counterparts to close or replace their insurance policy. Depending on the product in question, the Japanese cite between 1.5 (auto) and 2.0 (homeowners) reasons, while the figures for global customers, on average, are nearly twice as high (auto 2.7 vs. homeowners 3.7).

70%Insurance companies

84%

78%

82%

80%

68%

62%

86%

77%

69%

74%

62%

72%

83%

73%

82%

85%

72%

Supermarkets

Online shopping

sites

Banks

Car manufacturers

Pharmaceutical companies

JapanGlobalMature Markets

Global total

6

Japan:Reimagining customer relationships

Reimagining customer relationships | Key findings from the EY Global Consumer Insurance Survey 2014 | Japan

Clearly, “value for money” represents the most frequently expressed reason to close or replace a policy (which is consistent with global findings). However, other top reasons appear more driven by obtaining products that were a better fit (such as policy benefits/coverage, 22%; research conducted, 21%; and a policy that was not aligned to life circumstances, 19%) than with the experiences provided by the insurer.

When asked about the most important characteristics in a relationship with insurers, three stand out among the rest. “Value for money” was the most important among a majority of customers (54% vs. 47% global), while “easy to understand, clear communications” and being “easy to deal

with” ranked second and third (50% and 45%, respectively). “Value for money” was considered even more important for relationships regarding life products (57%) and when purchasing directly from an insurance company (59%).

The ability to provide information in a manner consistent with customer preferences is more important to Japanese customers than global customers (39% vs. 33%) – and cuts across products and sales channels. In contrast, a strong brand reputation appears less important to Japanese customers, though life customers (35%) place greater value on brand reputation than do non-life customers (26%).


Figure 2: Top reasons for closing or replacing a policy

Figure 3: Most important characteristics in ongoing relationships

50%Cost/terms

47%

38%

28%

28%

26%

Life*

25%

24%

24%

22%

20%

40%

22%

19%

12%

13%

19%

21%

8%

7%

57%

42%

29%

16%

26%

14%

20%

11%

17%

18%

17%

52%

17%

11%

7%

13%

11%

22%

11%

4%

4%

4%

2%

1%

59%

48%

39%

34%

31%

26%

30%

25%

29%

26%

26%

48%

24%

15%

9%

16%

20%

33%

13%

7%

8%

4%

Policy benefits/coverage

Recommended by broker, friends

Frequency/relevance of communication

Level of service received

Policy did not align to my life circumstances

Research I conducted

Experienced personal/family milestones

Brand reputation

Did not like the way claim was handled

Customer loyalty benefits

*

Auto Home

Global totalIncludes life insurance and annuities Japan

47%Value for money

Total

Easy to understand, clear communication

Easy to deal with

Strong brand reputation

Financial stability of insurance company

Recommended policy best for my needs/budget

Provided information the way I wanted it

Responsive

43%

42%

40%

36%

36%

33%

33%

54%

50%

45%

31%

36%

37%

39%

37%

Life products

Non-life products

Independent broker

Dedicated agent

Direct from the insurance company

45%

44%

40%

41%

43%

35%

33%

29%

57%

50%

42%

35%

44%

40%

41%

28%

50%

43%

45%

39%

30%

35%

32%

37%

51%

49%

48%

26%

28%

34%

38%

46%

43%

40%

43%

34%

28%

40%

32%

40%

51%

45%

33%

34%

35%

45%

47%

41%

38%

46%

44%

42%

33%

40%

35%

39%

42%

60%

42%

28%

31%

36%

45%

41%

54%

44%

42%

42%

36%

32%

31%

31%

59%

44%

48%

32%

39%

38%

40%

32%

Global total Japan

8

Key finding 2:

Just because they leave you doesn’t mean they don’t love you.Only 30% to 40% of Japanese customers are willing to recommend their insurance to friends and relatives.


Key finding 2:

Just because they leave you doesn’t mean they don’t love you. Overall, there does not appear to be a strong association

between the levels of advocacy expressed by Japanese customers and reported attrition, particularly when evaluated within the context of other mature markets and among life product customers. Further, the level of advocacy reported is extremely low, especially for life customers. Only 30% to 40% of Japanese customers are willing to recommend their insurance to friends and relatives. These results continue to support the suggestion that advocacy may be an insufficient measure for products in which customers have minimal interaction or engagement.

Figure 4: Global policy closure rates (attrition) within last 18 months, by advocacy level (likelihood to recommend)

AdvocacyLikelihood to recommend

Att

riti

onCl

osed

a p

olic

y in

the

last

18

mon

ths

38%38%37%

59%58%

0% 100%25% 50% 75%


Att

riti

onCl

osed

a p

olic

y in

the

last

18

mon

ths

19%21%28%

51%55%

0% 100%25% 50% 75%


Att

riti

onCl

osed

a p

olic

y in

the

last

18

mon

ths

24%17%

29%

38%43%

0% 100%25% 50% 75%Very Likely

Likely

Neutral

Unlikely

Very Unlikely

Global total Global mature markets

Japan

10



Figure 5: Global policy closure rates (attrition) within last 18 months, by advocacy level (likelihood to recommend) – life vs. non-life


29%

12%

24%

28%

36%

Att

riti

onCl

osed

a p

olic

y in

the

last

18

mon

ths

0% 100%25% 50% 75%Very Likely

Likely

Neutral

Unlikely

Very Unlikely


17%20%

34%

48%

54%

Att

riti

onCl

osed

a p

olic

y in

the

last

18

mon

ths

0% 100%25% 50% 75%Very Likely

Likely

Neutral

Unlikely

Very Unlikely

Total life

Total non-life

12

Key finding 3:

Insurers have so few interactions with their customers that each one becomes a critical moment of truth. Japanese customers report experiencing a “moment of truth” at comparable rates with customers across other mature markets.


Compared to both global (56%) and mature markets (44%), few Japanese customers (only 26%) report interactions with their insurer. Given this low number, each interaction to gather information about policy and coverage becomes a more important opportunity to leave a lasting impression on the customer. These experiences can be described as “moments of truth.”

Japanese customers report experiencing a moment of truth at comparable rates with customers across other mature markets (44% vs. 45%, respectively). The percentage is higher by 9% compared to other markets when obtaining information about an existing policy and lower by 10% when obtaining information about a potential “new” policy. Claims-related inquiries had a low 7%, compared to 17% in other mature markets.

Figure 6: Customer interactions during the last 18 months – global totals

Figure 6:

None 44%

At least one 44%

None 56%

At least one 26%

None 74%

At least one 56%

Figure 6:

None 44%

At least one 44%

None 56%

At least one 26%

None 74%

At least one 56%

Global current Global mature

Japan current

14



In contrast to global results, Japanese customers are less likely to have a moment of truth with a positive outcome. Instead, they are more likely to report outcomes considered “neutral” as opposed to “negative.” Local results indicate customers are more critical of events that occur later in the customer experience (claims and close or renewal) than those found earlier.

Overall, about one-in-four (24%) Japanese customers experiencing a moment of truth report a positive, sales-related outcome. These levels may be slightly lower than results from all mature market customers (28%). Life customers (20%), as well as those buying directly from insurers (22%), report lower levels of sales-related outcomes than their global counterparts.

Definitions throughout the report:

Moments of truth = an interaction or experience that positively or negatively changed the customer’s perception of their insurer or broker

Positive outcomes = coverage increases, the opening of new policies or higher favorability ratings from the consumer

Negative outcomes = coverage reductions, policy closures or lower favorability ratings


Figure 8: Moment of truth outcomes

Figure 7: Reasons for contact and outcomes across different phases of the customer life cycle relationshipFigure 7:

57%

Positive

Neutral

Negative

Inquire about obtaining a new type of insurance

Education and research Decision and purchase Maintenance and service Claims Close or renewal

Inquire about switching a policy from another provider

Obtain a new policy

Obtain information about the policy

Update information, such as my address

Follow up on the status of a claim

Dispute the resolution of a claim

Inquire about replacing an existing policy

Questions about a premium increase

25%

18%

58%34%

8%

63%

20%

17%74%

26%

52%35%

13%

31%

35%

34%

6%

41%54%

59%20%

21%

46%

9%

44%

Figure 8:

6%

11%

41%

7%

10%

28%

13%

7%

24%

16%

7%

20%

14%

3%

22%

8%

20%

28%

9%

9%

31%

9%

6%

24%

9%

11%

27%

9%

7%

22%

15%

8%

30%

Positive outcome Negative outcome Neutral

Global total

Global mature

Japan Current Former Life andannuities

Auto Home Broker Agent Direct

Japan

16

Key finding 4:

Consumers want more frequent, meaningful and personalized communications. In general, Japanese customers are highly critical of the communications they receive from their insurers–only one-in-25 (4%) express a high level of satisfaction.


In general, Japanese customers are highly critical of the communications they receive from their insurers–only one-in-25 (4%) express a high level of satisfaction. One way in which communications can be improved is to increase the frequency. Globally, most customers report a preference to receive at least two communications per year. While Japanese customers prefer to receive more frequent, relevant communications from their insurers, the most common frequency level is annually. And, nearly half of Japanese customers prefer not to receive any communications regarding general information or

special deals and promotions. The implication for insurer communications is similar to customer-based interactions: they will not occur frequently. Therefore, every connection needs to deliver a strong, positive message.

Globally, there appears to be an association between the level of communication frequency and satisfaction. That association does not appear to exist among Japanese customers, as satisfaction does not appear to be influenced by the frequency of communication.

Figure 9: Consumer satisfaction with outbound communications

60% 60%

40%37%

43%

28%

42%45%

38%

46%

39%

Global total

Global mature

Japan Current Former Life andannuities

Auto Home Broker Agent Direct

18



Figure 11: Percentages of consumers preferring semiannual communications vs. delivery of actual communications (by purchase source or distribution channel)

Figure 10: Percentages of consumers very satisfied (by frequency of communication)

Figure 10:

More than once a year Once a year or less Never

Current Preferred Current Preferred Current Preferred Current Preferred Current Preferred Current Preferred

40%

34%

26%

27%

43%

30%

44%

29%

27%

24%

45%

31%

27%

27%

46%

13%

43%

44% 62%

17%

21%

48%

22%

30%

63%

14%

23%

46%

19%

35%

44%

7%

49%

34%

11%

55%

General information

Policy updatesSpecial deals/promotions

General information

Policy updatesSpecial deals/promotions

6%More than once a year

Japan

Once a year or less 3%

6%

4%

5%

4%

Independent broker

Dedicated agent

Direct

4%

3%

4%

4%

1%

0%

3%

1%

0%

2%

9%

5%

9%

4%

11%

7%

5%

8%

More than once a year

Once a year or less

More than once a year

Once a year or less

General information

Special deals/promotions

Policy updates

20

Key finding 5:

As consumers embrace digital, insurers must rethink their distribution strategies and partner relationships. The phone was the primary contact method most frequently mentioned by Japanese customers, and was cited in seven-in-13 transactions or inquiries.


There appears to be some strong, clear connections regarding the type of contact method that should be used for different transactions or inquiries. Global customers place significant emphasis on single contact methods (most often in-person contact); however, Japanese customers identified three different primary contact methods across the 13 transactions or inquiries shown in figure 12.

The phone was the primary contact method most frequently mentioned by Japanese customers, and was cited in six-of-13 transactions or inquiries. For most of these, there is a 20-point gap between telephone levels and those expressed for the next common contact method. In-person contact was identified as the most frequently used contact method for four of the 13 transactions or inquiries. While there were fewer instances in which this option is considered

“primary,” the gap between the first and second most frequently used option is nearly 30 points. For the remaining two transactions or inquiries, websites were listed as the preferred contact method. The usage gap between this and the next most frequently used option, which in both instances is in-person contact, is nine percentage points.

Given their very strong habits and preferences, Japanese customers appear far more resistant to consider alternate digital or remote options for a specific transaction or inquiry. Depending on the nature of these, between one-quarter (claims assistance, 25%) and two-fifths (policy cancellation, 41%; and seeking financial advice, 43%) would not select any digital/remote option. Among those who would consider such an option, email and a 24-hour telephone hotline consistently ranked as the top two, with the former selected as the primary option for seven-of-eight transactions and inquiries.

Figure 12: Consumer use of channels/information sources for different types of transactions and inquiriesFigure 12:

26%

3%

23%

44%

Gen

eral

info

rmat

ion

abou

t pol

icy

In person Website

55%

24%

21%

19%

22%

29%

28%49%

29%

3%

8%

78%

18%

3%

34%

27%

39%

17%

48%

23%

12%58%

3%

29%

10%

31%

44%

4%

22%

33%

44%

3%2%

18%

27%

65%

4%

4%

38%

23%

39%

75%

25%

Incr

ease

cov

erag

e

Chan

ges

to

pers

onal

det

ails

File

cla

im

Opt

ions

to

redu

ce

prem

ium

s

Soug

ht fi

nanc

ial

advi

ce

To le

arn

abou

t ot

her

non-

insu

ranc

e pr

oduc

t off

erin

gs

Chan

ges

how

po

licy

is p

aid

Rese

arch

ed

polic

ies

to

repl

ace

curr

ent

Dec

reas

e co

vera

ge

Chan

ging

ve

hicl

es o

n po

licy

Chan

ges

to

port

folio

Repo

rted

a

prob

lem

with

po

licy

Phone

Mail Email

4%11%

2%

22



Figure 13: Percentages of consumers who would consider using these contact methods (assuming they were available) when interacting with their insurance company

Inquire about new insurance policy

Questions about an existing policy

Seeking financial advice

Assistance with a claim

Researching different types of insurance

Managing your current policy

Renewing your policy

Cancel my policy

Web chat 21% 20% 21% 23% 13% 18% 12% 10%

Email 35% 43% 27% 35% 29% 38% 33% 30%

24-hour telephone hotline

27% 39% 25% 44% 22% 29% 27% 28%

Mobile app 10% 12% 9% 13% 14% 13% 9% 7%

Interactive support

18% 19% 14% 18% 16% 21% 14% 10%

Video tutorials and guides

13% 10% 7% 12% 15% 11% 6% 3%

None of the above

35% 26% 43% 25% 35% 29% 35% 41%

Shaded areas indicate areas of interest, relatively high percentage of consumer consideration.

EY | Assurance | Tax | Transactions | Advisory

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EYG No. EG02101405-1259278ED 0115

This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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ContactsNobuaki NakataJapan Managing DirectorFinancial Advisory [email protected]+813 3503 1100

Peter R. GaydonPartner - EY JapanFinancial Services Office [email protected]+813 3503 2998

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