BAIN REPORT Customer Behavior and Loyalty in Insurance PDF

CUSTOMER BEHAVIOR AND LOYALTY
IN INSURANCE: GLOBAL EDITION 2016

Creating opportunities beyond basic coverage
Key contacts in Bains Global Financial Services practice

Americas
Rodrigo Maranhao in So Paulo (rodrigo.maranhao@bain.com)
Antonio Rodrigues in Toronto (antonio.rodrigues@bain.com)
Diego Santamaria in Mexico City (diego.santamaria@bain.com)
Andrew Schwedel in New York (andrew.schwedel@bain.com)
David Whelan in Chicago (david.whelan@bain.com)
Asia-Pacic
Alfred Shang in Beijing (alfred.shang@bain.com)
Harshveer Singh in Singapore (harshveer.singh@bain.com)
Peter Stumbles in Sydney (peter.stumbles@bain.com)
Matt Sweeny in Tokyo (matt.sweeny@bain.com)
Youngsuh Cho in Seoul (youngsuh.cho@bain.com)
Europe, Middle East and Africa
Andrew Carleton in London (andrew.carleton@bain.com)
Camille Goossens in Paris (camille.goossens@bain.com)
Vincenzo Gringoli in Milan (vincenzo.gringoli@bain.com)
Christian Kinder in Munich (christian.kinder@bain.com)
Nicols Lopez in Madrid (nicolas.lopez@bain.com)
Henrik Naujoks in Zrich (henrik.naujoks@bain.com)
Kazimierz Stanczak in Warsaw (kazimierz.stanczak@bain.com)
Chris Stokes in London (chris.stokes@bain.com)
Acknowledgments
This report was prepared by Henrik Naujoks, Camille Goossens, Gunther Schwarz, Harshveer Singh,
Andrew Schwedel and David Whelan, who are partners with Bains Financial Services practice, and a team
led by Tanja Brettel, a practice area director, and Shilpi Goel, a practice area consultant. Team members are
Rahul Agarwal, Vidisha Agarwal, Sourish Gue, Vaibhav Kalani and Pranav Singh. The authors thank Bain
partners in each of the countries covered in the report for their valuable input and John Campbell for his
editorial support.
Net Promoter Score is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Copyright 2016 Bain & Company, Inc. All rights reserved.
Customer Behavior and Loyalty in Insurance: Global Edition 2016 | Bain & Company, Inc.
Contents
Executive summary: The consumer is sovereign . . . . . . . . . . . . . . . . . . . . pg. 3
1.
The imperative to earn greater loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 11
2.
Creating delight through mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 17
3.
Mastering the customer-switching game in P&C . . . . . . . . . . . . . . . . . . . pg. 25
4.
Capturing greater share of wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31

Appendix: Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 36
Page i
Page 2
The consumer is sovereign

From tracking drivers braking behavior to installing wearable devices on factory workers and funding medicaladvice mobile apps, many insurance companies are trying to become more present in their customers lives. They
know that improving the long-term economics of the business will require interacting more and delivering more
value to customers. A customer-centered approach has nally gained the attention of many insurance executives
as an alternative to the traditional, internal focus on products, agents and in-year nancial considerations.
What accounts for this shift in perspective? The low-interest-rate environment has depressed investment returns
for paid-in premiums, and in mature markets, there has been almost no growth in product penetration, forcing
insurers to rethink their economic models for their core businesses. Regulators in some countries, including the
UK and Australia, have also been questioning whether fee structures for nancial advisers generate acute conicts
of interest that harm consumers. These macroeconomic and regulatory forces make earning customer loyalty
more important now than ever.
More broadly, many executives now realize that a business built around customer loyalty and advocacy can yield
substantial long-term benets. Customers who are loyal promoters of their insurers stay longer, buy more, recommend
the company to friends and family, and usually cost less to serve, Bain & Company analysis shows, with the mix
of these forces dependent on the particular market and type of insurance.
Bains new survey of 164,421 consumers in 19 countries, through Research Now, sheds light on how various customer segments perceive their P&C and life carriers, what customers want from their carriers and how different
distribution and interaction channels inuence loyalty.
The survey data shows that loyalty remains tough for many insurers to come by. One structural reason is that
insurers have far fewer interactions with customers than, say, retail banks. In some markets, interactions are even
dwindling with the rise of online aggregators (also known as comparison sites).
Another reason stems from the fact that most insurers dont have or have just begun to install a full-edged system
to analyze their customer feedback and take actions that will improve customers experience. Feedback that
doesnt lead to action is meaningless.
In some of the countries surveyed, though, one or two carriers in life and P&C manage to excel in earning consumers advocacy. Most loyalty leaders have found ways to generate more meaningful interactions by redening
what it means to be a provider. For example, HUK-Coburg, the loyalty leader in Germany, has continually redened
its value proposition around auto insurance since launching its network of partner car repair shops in 2005. Over the
years since then, it has improved its claims experience and added services such as inspections, all at attractive prices.
While earning loyalty is necessary, it is insufcient for generating superior revenue growth. Insurers must also
motivate customers to actively promote the company and learn to monetize loyalty. Bains new survey analysis
and our work with insurance companies worldwide suggest four important themes for insurers to keep in mind
as they build out a customer-centered distribution and service model.
Page 3
Fight to get closer to the customer

Being in touch more frequently with consumers contributes to loyalty, in both the life and P&C sectors. The
level of contribution varieswith France and Spain at the low end and China, Indonesia and Malaysia at the
high endbut it is signicant in every country surveyed. Interactions that are complex and attract more
multichannel behavior, such as getting advice and a quote on a life insurance product or initially ling a
claim, have the biggest potential to delight customers. But even raising the number of simple digital interactions can advance the cause of loyalty; as a bonus, each interaction allows an insurer to learn more about the
individual consumer and to set the stage for customized future offerings.
Current digital tools, moreover, expand the universe of possible interactions. Links between insurers IT
systems, customers smartphones and connected devices in cars, homes and workplaces now enable more
product and service innovations, not just a convenient channel to interact through.
That universe includes a range of services that extend well beyond traditional insurance coverage. A large
share of consumers in our survey expressed interest in such services, and an even larger group would be
willing to share their nancial, health or other personal data with insurers. These ndings signal consumers
trust in their carriers, opening the door to stronger relationships with customers.
A strategy of adding services might not strictly aim to raise revenues, but rather to deliver value by earning
greater loyalty and lifetime value of customers. Some insurers are starting to create an ecosystem of such
services, with emerging initiatives taking many forms:
AIG has invested in Human Condition Safety, a technology start-up developing wearable devices, analytics
and systems to improve worker safety. These tools help workers, managers and worksite owners prevent
injuries in manufacturing and construction.
AXA Germany has teamed up with RWE, using RWEs SmartHome automation system to minimize
ood damage and provide fast supportan example of AXAs stated shift from payer to partner.
Many ancillary services for drivers depend on a telematics box installed in the vehicle (see Figure 1)
for example, a street-sweeping alert from Metromile and stolen-vehicle tracking and recovery from Discovery.
A few insurers have experimented with gamication and found that it stimulates customer engagement in vertical markets such as auto and health. In South Africa, Discovery used a mobile app developed by Cambridge Mobile Telematics for a nationwide safe-driving contest, in which tens of thousands
of drivers competed for prizes. Findings show that safe driving increased by more than 30% during
the contest.
Competition has intensied as ntechs redene how customers experience insurance and aggregators and
brokers interact directly with consumers. Expanding servicesoften in concert with third-party providers
offers a powerful means for insurance providers to use their customer assets so they dont get sidelined into
the lower-value role of a utility.
Page 4
Figure 1: A broad array of connected car services is using telematics and smartphone apps
Antitheft service if the box
registers an unusual style
of driving
Live concierge
supporting navigation
Stolen vehicle
recovery
Antitheft service
if the box is
removed or
uninstalled
Weather alert based

on geolocation
While driving
Alert if the vehicle exits a safe
neighborhood as defined by
the customer (parental controls)
Alert when speed

limits are exceeded
While
parked
Alert if the car

is hit while
parked
Road or
medical
assistance
Street-sweeping
alerts
Simplified claim notification,

including automatic form fill-in
based on telematics data
Alert when
vehicle is
moved or towed
After an accident
Parking
locations
Highway
tolls and
parking
fees
Customer
assistance and
personalized
case
management
in the event
of a crash
Automatic assistance
if severe accident occurs
Claims
certification
Source: Bain & Company/ANIA Observatory on Telematics, Connected Insurance & Innovation
Fix the basics and accelerate the mobile channel

Customers want to be able to use the channel thats convenient to the moment, whether thats a website, an inperson meeting, a phone call, a video chat with an agent or, increasingly, a mobile device. The expectation of using
any channel pervades all customer segments, regardless of age, income or insurance needs. And the share of
consumers using digital channels to complement other channels keeps growing: almost one-third of consumers
in Hong Kong and two-thirds in mainland China now use digital channels when purchasing a P&C product.
Mobiles role, in particular, continues to expand though its well below what many banks have offered their customers. As a quick indicator, consider that when Bain asked consumers if they would miss more their mobile
phones or physical wallets for a day, more than half chose their phones, with the share reaching 79% in China (see
Figure 2). Mobile clearly has advanced past the tipping point, though the rate of adoption varies signicantly
among countries. Multinational companies thus will need a thorough understanding of the digital dynamics in
each country of operation; they cannot simply roll out a mobile app worldwide.
Companies that get mobile design right can reap huge benets. Our survey shows that mobile can create delight
among customers in many countries (see Figure 3).
Some of the most creative and promising mobile apps originated in China. For example, Ping An, one of Chinas
largest insurers, in 2009 launched the rst online nancial management service in China, linking customers to
Page 5
Figure 2: Most consumers in most countries would miss their phones more than their wallets
Percentage of people who would miss their phones more than their wallets, 2015
100%
80
60
40
20
0
China
South
Korea
Hong
Kong
Brazil
Poland
France
Mexico
Spain
US
Singapore
UK
Australia Germany Canada
Japan
Under age 25
Average
Age 55 or over
Source: Bain/Research Now NPS survey, 2015
dozens of websites, including insurance, banking, payments and airlines. More recently, it built a mobile platform
called Ping An Good Doctor, which now has 77 million registered users and more than 50,000 doctors on board.
Mobile-led service provision allows insurers to differentiate themselves from competitors. But the loyalty leaders
also excel at the basics of business: accuracy, reliability and ease of use in every channel and during every interaction.
Mastering the basicsengaging customers seamlessly across channelsrequires coordination among different
functions within the organization. Its critical to have a unied, complete view of the customer across all business
lines, which can be a challenge for traditional insurers, whose underwriting, claims, marketing, sales and callcenter departments make their own investment decisions and whose different businesses, such as P&C, life and
health, operate separately. Another common challenge stems from underinvestment in mechanisms to ensure
that the customer interactions in one channel ow through to the other channels. Isolated, uncoordinated investments create major inefciencies and make for a disjointed customer experience. To deliver a seamless experience, these walls must come down.
Raise the game in customer acquisition and retention

Performance on acquisition and retention of customers varies widely among P&C insurersand only a very few
companies excel at both, our survey shows.
Thats true for several reasons. Acquisition leaders tend to attract customers who are highly price sensitive and
thus more likely to defect when they are presented with a lower-priced offer; price-sensitive customers in the US
Page 6
have a defection rate of 2.6 times that of other customers. Customers of acquisition leaders tend to be younger and
lower income, and have fewer insurance needs. These companies spend more on advertising, and some skew
toward direct distribution channels, using no or few agents. Their structurally lower expense ratios allow them to
deliver on a low-price promise.
By contrast, companies that lead in retention have more customers who value peace of mind. Their customers
tend to be less price sensitive, older and more afuent, and have more complex insurance needs. One payoff for
these companies is that retention correlates strongly with higher loyalty.
The acquisition-retention divide often gets reinforced by company culture and business model. Some rms have
set up to excel in acquisition with a low-cost, convenient, advertising-heavy, direct-to-consumer business model.
Such P&C rms may have a more difcult time with customer retention given that the customers they attract
tend to be more price sensitive and more prone to switching in the future.
Whatever an insurers initial tendency, a few practical implications ow from our survey:
Rene marketing campaigns to be more selective in choosing customers. Attracting only price-sensitive
customers will likely generate higher churn down the road, so carriers that take this route will have to continually manage costs down to attract an outsize share of new customers and maintain their market positions.
As the advertising arms race escalates, there may come a point of diminishing returns, so insurers should
make advertising and direct marketing more effective today.
Figure 3: Chinas P&C insurance companies have created remarkable digital experiences
Share of P&C customers in China, 2016
0
Reliable
Delightful
Decreasing likelihood to annoy
1
Online
2
In-person
Mobile
3
Phone
4
Annoying
Bubble size
shows frequency
of interactions
Variable
5%
0
35
36
37
38
39
40
41
42
43
44%
Increasing likelihood to delight

Notes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider; responses were scored on
a scale from 5 to 5, and interactions that were given scores of 4 were considered likely to delight; interactions given scores of 1 were considered likely to annoy
Page 7
Use advanced analytics to improve consideration among less price-sensitive segments. Once the customer is
on board, intensify tailored marketing to provide services and information that customers value or to reassure them that weve got your back.
To boost conversion of new prospects, make it easy for people to nd the right information, get a quote or get
conrmation. While instant online quotes now are routinely offered in auto lines in some countries, online
quotes have only begun to appear for home coverage. Agents or contact center reps should also follow up
with people who abandon online applications.
To help improve retention, build predictive models that better match tailored products to target segments.
USAA, for example, mines customer data to inform targeted marketing that is triggered by a life event, such as
offering additional auto insurance to a family when a child turns 16. Few insurers systematically track such
triggers: Bains digital insurance benchmarking study in 2015 found that fewer than 50% of P&C carriers and
35% of life carriers track any customer buying signals (such as buying a house or car) using digital technologies.
Invest in delighting, not simply satisfying, customers at key moments of truth. In P&C, claims handling offers
a huge opportunity to delight. Some carriers, for instance, have achieved greater loyalty and retention by
developing a network of certied auto repair centers that provide higher-caliber repair at lower cost.
Retention rates often can be raised through some straightforward tactics, not expensive new capabilities. Consider recent changes at Farmers, a US multiline insurer. A few years ago, its operating model was geared to acquisition, and the company was losing up to 25% of its customers every year. Stepping back to examine why, Farmers
learned that its top-decile customers were worth signicantly more than those in the bottom decile, and what
accounted for that difference was customers tenures with Farmers and the number of policies they held. Yet
Farmers had no loyalty program for its long-time customers.
Farmers turned its attention to creating better experiences, focusing on its highest-value customers. For example,
key drivers of defection were a complex pricing system and poor communication around renewal pricing. A
household that had six policies with Farmers could go through 6 to 12 renewal periods in a year, each with its own
notice of price changeyet no explanation of why the price moved. Armed with this knowledge, Farmers
recently rened its scripts and communications for agents and call centers, and is testing innovative pricestabilizing products that received early positive feedback.
Expand your share of wallet

One of the most effective methods to retain more customers is to sell them more products. Customer churn drops
sharply as an insurer sells customers another one or two products, our survey nds. And many insurance rms
have ample room to expand their share of the customers wallet. A large group of life insurance customers, particularly in Asia, expressed a need for more products or more coverage, and would likely buy from their primary
insurers. Finding protable growth through current customers typically is less expensive and yields a higher
return on investment than acquiring new customers.
Fortunately for marketers, some of the barriers to cross-selling have fallen in recent years. The proliferation of
customer data with rich contextual information and greater computing power to analyze this data make it feasible
Page 8
to learn more about customers, create more compelling value propositions and target with more precise offers at
the most opportune time.
Here again, insurers can use a variety of tactics. Some tactics are relatively basic, such as adding a sales component to inbound calls, freeing up time for agents to actually sell or offering online diagnostic tools that show
consumers how to optimize their coverage. In the UK, Admiral gives customers and their immediate family
members a strong incentive to insure their cars with the company. Even if family members reside at different
places, they can be insured on one policy and receive Admirals MultiCar benets and discounts. Customers have
insured more than 3 million cars through this program since 2005.
Other tactics depend on more sophisticated analytics techniques, such as automatically generating a next-best
offer or integrating the insurers P&C, life and health customer databases in order to see which products are consumed by a single household. In the US, Progressive uses analytically optimized pricing to raise cross-selling
rates, and it prepopulates renewal application forms with discounts for customers adding products. Some 40% of
Progressive customers have both auto and home insurance, and an average lifetime value that is two to four times
as high as customers with only one product.
Executives committed to raising their cross-selling and upselling rates should rst ask, which of our products are
laggingfor example, how many of our auto policyholders dont hold a second product, and how does that compare with the market leader? Answering this question determines the priorities in terms of product and customer
segment. Second, executives should ask, what tactics can we use to reach our target?
Consumer sovereignty has only grown stronger with choices for less expensive insurance coverage just a few
clicks away. But most consumers dont want to defect. To the contrary, they often want to simplify their lives and
do business with a single company that gives them reasons to stay. For most insurers, then, reigniting organic
growth involves a heightened focus on earning customers loyalty by understanding their needs, interacting with
them more intensely and delivering more value in the core insurance offering, and beyond. Digital tools now
allow companies to get there faster, at scale and with more precision.
Page 9
1.
Most insurers, especially in the life sector, rarely

interact with customersa major impediment to
earning loyalty. Being in touch with customers
has a large positive effect on loyalty, for both life
and P&C.
The imperative to
earn greater loyalty
Across all of the countries analyzed, there is a

signicant gap between loyalty leaders and laggardsup to 60 points and 80 points in the P&C
and life sectors in the US, respectively. Many of
the leaders in 2014 continue to lead today: in
the P&C sector, for example, Liverpool Victoria in
the UK and HUK-Coburg in Germany; in the life
sector, USAA in the US and Prudential (UK) in
some Asian markets.
Many customers trust insurers to serve them beyond
basic coverage, as providers of platforms offering
ancillary services related to car, home, health
and life. These services range from auto sales
and leasing sites to tness club memberships and
flood monitoring in home basements. Many
involve partnerships with third parties.
Of those customers who value such services,
about 50% in Germany and 80% in South Korea
and France view their primary insurers as potential
platform providers.
Furthermore, most customers would share their
health, nancial and other personal data with insurers.
About 60% of customers in Japan and 95% in
China are willing to share at least one type of
personal data.
Figure 4: In most American and European markets, there is a large gap in customer loyalty between leaders
and laggards in the P&C sector
Primary P&C insurers Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
Europe
Americas
100
80
60
40
20
Canada
No clear leader
Mexico
No clear leader
US
USAA
France
MAIF
Germany
HUK-Coburg
Italy
Genialloyd
Spain
Mutua Madrilea
Switzerland
Schweizerische Mobiliar
UK
Liverpool Victoria
Lowest score
Highest score
Average
Note: Net Promoter Score is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Figure 5:
In most Asia-Pacic markets there is a large gap in customer loyalty between leaders and
laggards for the P&C sector

Primary P&C insurers Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
Asia-Pacific
100
80
60
40
20
Australia
Apia
China
PICC
Hong Kong
Prudential (UK)
Indonesia
Allianz
Japan
Sony
Malaysia
Etiqa, Zurich
Singapore
NTUC Income
South Korea
Samsung
Lowest score
Average
Page 12
Highest score
Figure 6: In most American and European markets there is a large gap in customer loyalty between leaders
and laggards in the life sector
Primary life insurers Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
Europe
Americas
100
80
60
40
20
Canada
No clear leader
Mexico
Seguros Monterrey
US
USAA
France
MAIF
Germany
HUK-Coburg
Italy
Allianz, UnipolSai
Spain
MAPFRE
Switzerland
No clear leader
UK
Prudential (UK)
Lowest score
Highest score
Average
Figure 7: In most Asia-Pacic markets there is a large gap in customer loyalty between leaders and laggards in the
life sector
Primary life insurers Net Promoter Score relative to loyalty leader, 2016 (indexed to zero)
Asia-Pacific
100
80
60
40
20
Australia
Allianz
China
China Life
Hong Kong
Prudential (UK)
Indonesia
Allianz, Prudential (UK)
Japan
Sony
Malaysia
Prudential (UK)
Singapore
No clear leader
South Korea
Shinhan
Lowest score
Average
Page 13
Highest score
Figure 8: Being in touch contributes to loyalty

Percentage point difference in Net Promoter Scores between customers who had an interaction in the past 12 months and those who did not
70
63
60
50
43
42
40
33
32
30
35
26
26
31
28
32
27
32
27
27
23
25
24
27
23
20
24
22
25
23
19
26
23
21
21
23
20
15
20
18
17 18
14
12
10
0
China
Malaysia
Mexico
Singapore
Indonesia
Hong
Kong
Brazil
Japan
Switzerland
South
Poland
Korea
Life
Italy
US
Australia
Germany
UK
France
Canada
Spain
P&C
Figure 9: Customers would value a platform for services beyond insurance coverage
Share of customers saying they would value a platform for services in four areas
100%
80
60
40
20
0
Brazil
Mexico
China
Indonesia
US
Poland
Canada
Spain
Malaysia
France
Singapore
Switzerland
Australia
Italy
Germany
Hong Kong
UK
Japan
South Korea
Auto
Home
Health
Life
Such as monitoring driving

behavior, platform to buy or sell
cars, getting advice on auto repair
shops, antitheft services
Such as advice and discounts

on home monitoring systems,
recommendations for repair
providers, real estate sales,
flood monitoring
Such as health advice and

monitoring, fitness-plan provider,
doctor recommendations
Such as health advice/monitoring,

estate planning and legal advice
Page 14
Figure 10: and customers view insurers as potential providers of additional services
Among P&C and life customers interested in a platform for services that extend beyond insurance coverage, the share who can imagine an insurance
company providing the platform
100%
80
60
40
20
0
Japan
South
Korea
France
Malaysia
Mexico
Indonesia
Spain
Italy
China
Australia
Brazil
Hong
Kong
Singapore
US
Switzerland
Canada
Poland
Germany
UK
Figure 11: Most customers would share personal data with insurers
P&C and life customers aged 2534, ranked by willingness to share personal financial, health or other data with insurers
Not willing to share
100%
80
Selective sharers
60
Open sharers
40
20
0
China
Indonesia
Hong Kong
Malaysia
Mexico
Singapore
Italy
Germany
Switzerland
US
Brazil
Australia
Canada
France
Spain
Poland
UK
Notes: Open sharers are willing to reveal personal data to insurers; independent of the type of data; selective sharers would only share some personal data
Page 15
Japan
South Korea
2.
Creating delight
through mobile
Customers are increasingly embracing digital

channels, both online and mobile, for their insurance
interactions. The share of digitally active customers
has increased everywhere over the past two
years, though the rate of change varies by country.
China, Brazil and Mexico have seen the greatest
growth in digital use.
Digital does not replace other channels but rather
complements them, as customers are using more
channels than they did two years ago. Digital
raises the level of interactions, and a signicant
share of customers now use digital channels for
purchasing P&C products.
Multichannel interactions tend to be more effective
in garnering loyalty. In most countries, digitalonly customers give lower loyalty scores than customers who use phone-only, in-person or multiple
channels. Customers want easy, fast, convenient
websites and mobile apps, and few insurers have
been able to design digital tools that meet these
expectations.
Mobile usage is coming on strong, however,
even outpacing online usage in some Asian
markets, such as Singapore, Hong Kong and
Australia. And despite the low loyalty scores for
digital on average, mobile offers huge potential
to delight, especially for claims. Among some
loyalty-leading companies, for example, customers
give the highest loyalty scores for their mobile
experience. USAA, whose banking arm invented
remote check deposit in 2009, has been in the
forefront of mobile innovation, in large part because it serves members of the military who are
deployed to bases around the world.
Figure 12: The share of digitally active customers has risen, and China and the UK lead with about 77%
Share of digitally active P&C and life customers, 2016*
100%
UK
80
China
Australia
South
Indonesia
Korea
Germany
60
France
Spain
Poland
40
Brazil
US
Canada
Italy
Mexico
Malaysia
Singapore
Hong Kong
Japan
20
0
0
10
15
20
25
30
35
Percentage point increase in share of digitally active customers,* 2016 vs. 2014
*Respondents who used digital channels for their most recent research to find insurance-related information and for their most important interaction with their insurance providers
Notes: 2014 data for Switzerland is unavailable; Switzerland had a 53% share of digitally active customers in 2016
Sources: Bain/Research Now NPS surveys, 201314 and 2016; Bain/SSI NPS surveys, 201314
Figure 13: Customers increasingly use digital channels in combination with other channels
Share of digital-only P&C customers, 2014 and 2016
20%
UK
15
Japan
Germany
Italy
Australia
10
US
Singapore
Poland
France
Canada
China
South Korea
Brazil
Spain
Indonesia
Malaysia
Hong Kong
Mexico
0
0
20
40
60
Share of P&C customers using digital and other channels, 2014 and 2016
2014
Page 18
2016
80%
Figure 14: Almost one-third to two-thirds of customers use digital channels when purchasing a P&C product
Share of customers using digital channels to purchase a P&C product in past 12 months
100%
80
66
59
60
58
53
52
51
47
46
45
42
40
42
41
40
39
38
30
30
29
20
Indonesia
China
UK
Australia
Brazil
Germany
South
Korea
US
Singapore
Italy
Malaysia
France
Spain
Japan
Mexico
Poland
Canada
Hong
Kong
Note: Includes digital-only and hybrid-channel customers

Figure 15: The use of digital channels for purchasing has increased signicantly, complementing, not replacing,
physical channels in most countries
Change in number of channels used per customer for P&C product purchase, 2016 vs. 2014
200%
150
100
50
50
Mexico
France
China
Spain
Japan
Brazil
Indonesia
Canada
South Korea
Malaysia
US
Poland
Australia
Germany
UK
Singapore
Channel categories
Digital (email, browser through computer

or mobile device, mobile app)
Phone (customer service

center, personal adviser)
Page 19
In-person (agent,
broker, bank)
Italy
Hong
Kong
Figure 16: P&C customers interacting only through digital channels give relatively lower loyalty scores in
most countries
Net Promoter Scores of P&C customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)
15
10
10
10
10
6
5
1
0
0
5
5
10
Australia
France
China
Digital-only customers
In-person or phone-only customers
US
Multi-channel customers
Figure 17:
Life insurance customers interacting only through digital channels give relatively lower
loyalty scores in most countries

Net Promoter Scores of life insurance customers who interacted in the past 12 months, 2016 (indexed to average Net Promoter Score in each country)
30
22
20
17
16
13
12
10
8
6
3
0
4
8
10
14
20
Australia
France
China
Digital-only customers
In-person or phone-only customers
Page 20
US
Multi-channel customers
Figure 18:
For research, customers still use online more than mobile in most markets
Share of customers using browser on desktop or laptop for P&C insurance research
50%
Australia
Online exceeds mobile
UK
40
Mobile exceeds online
Germany
US
30
Poland
Italy
Switzerland
Japan
20
France
Spain
China
Mexico
Singapore
Canada Brazil
Indonesia
Malaysia
Hong Kong
South
Korea
10
0
0
10
20
30
40
50%
Share of customers using browser or app on smartphone or tablet for P&C insurance research
Figure 19: Online interactions are less frequent for customized advice, although mobile has become relevant in many markets
Share of P&C customers using browser on desktop or laptop for customized advice
50%
Online exceeds mobile
40
Mobile exceeds online
30
South
Korea
20
Australia
Germany
Poland
France
Italy
10
China
UK
Indonesia
US
Spain
Hong Kong
Mexico
Brazil
Malaysia
Singapore
SwitzerJapan
land Canada
0
0
10
20
30
40
Share of P&C customers using browser or app on smartphone or tablet for customized advice
Page 21
50%
Figure 20: In-person interactions still provide a better P&C experience in some countries, but Asian markets show
that mobile can delight
Channel experience score for P&C, relative to leading channel, 2016 (indexed to zero)
Americas
US
Brazil
Asia-Pacific
Singapore
Hong
Kong
Australia
China
Malaysia
Europe
South Indonesia
Korea
Germany France
UK
Italy
Spain
10
15
20
Mobile
Online (including email)
In-person
Phone
Note: Channel-experience score is calculated by subtracting likelihood to annoy percentage from likelihood to delight percentage
Figure 21: For the P&C sector in the US, in-person interactions generally create a strong experience, but
customers appreciate mobile for claims
Channel experience score for P&C in the US, relative to leading channel, 2016 (indexed to zero)
P&C market
average
Learn about
provider
or product
Seek customized
advice
Purchase product
Seek services
10
15
20
Mobile
Online (including email)
In-person
Phone
Note: Channel experience score is calculated by subtracting "likelihood to annoy" percentage from "likelihood to delight" percentage
Page 22
Submit claims
Figure 22:
The mobile channel offers a major opportunity to delight P&C customers
Share of P&C customers in US, 2016

0%
Decreasing likelihood to annoy
Reliable
Delightful
Mobile
Mobile
Online
Online
Phone
Mobile
Online
Inperson
Phone
Phone
In-person
Bubble size
shows frequency
of interactions
8
Annoying
Variable
10
0
35
40
45%
Increasing likelihood to delight

Net Promoter Score leader (USAA)
Top 5 digital insurers*
Market average
*Based on share of digitally active customers

Notes: Survey participants were asked, "To what extent did the interaction increase or decrease your likelihood to recommend your main P&C provider"; responses were scored on
a scale from 5 to 5; interactions that were given scores of 4 were considered likely to delight, and interactions given scores of 1 were considered likely to annoy
Page 23
3.
Mastering the customerswitching game in P&C
In both auto and home, most new customers have

switched from another carrier, rather than being
rst-time buyers. The UK, with its strong presence
of aggregators, has by far the highest share of
switchers among the people who bought a policy
in the past year. Customer churn is most problematic
for carriers in countries where an older demographic, combined with high insurance penetration, limits the number of rst-time buyers.
Insurers typically compete aggressively to acquire
new customers or to retain current customers.
Very few manage to excel in both activities, and
some underperform in both.
Before customers switch auto or home policies,
they tend to engage in comparison shopping,
which heightens competition and crimps protability. Aggregator platforms have emerged in
all markets, and they have become the main
channel for comparison-shopping research in a
few markets, such as Japan, Germany and the UK.
Acquisition hinges on generating and converting
leads, and many companies have ample room to
improve in one or both of those activities to win
their fair share of shoppers.
Companies that lead in acquisition attract more
price-sensitive customers than companies that excel
in retention. These customers naturally are more
difcult to retain, having high defection rates
up to 2.6 times that of other customersas they
hunt for the next price deal.
Earning greater loyalty puts the brakes on defection,
but as companies still need to acquire new customers, its essential for insurers to pursue three
streams simultaneously: to attract and convert more
customers who value peace of mind, to drive
down the cost of acquisition and to give new customers good reasons to stay.
Figure 23: The majority of new customers have switched from another insurer
Auto
Home
Customers who purchased an auto policy from new provider in past

12 months
Customers who purchased a home policy from new provider in past

12 months
100%
100%
90
80
80
70
60
60
50
40
40
30
20
20
10
0
Switchers
US
Canada
Germany
France
Australia
UK
China
Indonesia
Mexico
Switzerland
Malaysia
Canada
South Korea
Spain
Brazil
Singapore
Australia
France
Germany
US
Japan
Poland
UK
Italy
First-time buyers
Figure 24: P&C carriers tend to perform better on either customer acquisition or retention, but not both
Auto insurance in the US
Auto insurance in the UK
Customer-loss index
Better
Customer-loss index
Better
0
Better on both
Better on both
0.5
Average
Average
0.5
1.0
1.5
1.0
1.5
Worse on both
Worse 2.0
0
Worse
Worse on both
Worse 2.0
0.5
1.0
1.5
Average
2.0
Better
Customer acquisition index
0
Worse
0.5
1.0
Average
Customer acquisition index
Page 26
1.5
2.0
Better
Figure 25:
Most P&C customers comparison shop before buying coverage
Share of customers who comparison shopped before purchasing auto insurance in past year
100%
80
60
40
20
0
UK
Italy
Brazil
Poland
Spain
US
Australia
Mexico
Germany
Canada
Japan
France
Switzerland
Malaysia
South
Korea
Singapore
Indonesia
China
Figure 26:
Aggregators have the strongest role for P&C comparison shopping in Japan, Germany
and the UK
Comparison-shopping research for auto insurance in past 12 months
Aggregator shopping
exceeds traditional
shopping
Traditional shopping exceeds aggregator shopping
100%
80
60
40
20
0
Japan Germany
UK
Poland
Switzerland
Spain
Brazil
Mexico
Aggregator shopping
Page 27
Italy
France
South
Korea
Traditional shopping
Australia Canada
US
Malaysia
Figure 27: Many carriers have room to improve their lead generation and conversion, each of which contributes
to winning a fair share of shoppers
Auto insurance in Germany
High
Auto insurance in Australia

High
Winning more
than market share
Winning fair
share of
comparison
shoppers
Lead
generation
relative to
market
share
Low
Winning more
than market share
Winning fair
share of
comparison
shoppers
Lead
generation
relative to
market
share
Winning less
than market share
Winning less
than market share
Low
Low
High
Low
Conversion of leads
High
Conversion of leads
Carrier
Notes: Traditional shoppers only, not aggregators; fair share is defined as market share
Figure 28: P&C acquisition leaders attract more price-sensitive customers than retention leaders
Australia
Germany
US
Customers who purchased an auto policy from a new provider in past 12 months, by key purchasing criteria
Other
Prior relationship
100%
100%
Reputation
Service/claims
Service/claims
80
80
Service/claims
Product
Product
60
60
Advice/ease
of purchase
60
Advice/ease
of purchase
40
40
20
100%
Reputation
Reputation
80
Other
Prior relationship
Prior relationship
Price
20
40
20
Price
0
Acquisition leaders
Retention leaders
Product
Advice/ease
of purchase
Price
0
Acquisition leaders
Page 28
Retention leaders
Acquisition leaders
Retention leaders
Figure 29:
Price-sensitive P&C customers tend to churn more; their defection rate is up to 2.6 times
that of other customers

Defection rate of price-sensitive auto customers relative to other auto customers (past 12 months)
Lower or similar
defection rate
Higher defection rate

3x
2.6
2.6
2.5
2.4
2.2
2.2
2.0
1.8
1.8
1.6
1.5
1.5
1.4
1.2
1.0
0.9
0.8
0.8
0
US
Brazil
France
Italy
Australia
Poland
UK
South
Korea
Germany
Canada
Indonesia
Mexico
Switzerland
Japan
Spain
Malaysia
Singapore
China
Figure 30:
P&C insurers with higher loyalty scores have lower defection rates
Customer-loss index for US auto insurance

Worse
R2=0.51
2.0
Average
1.5
1.0
0.5
Better
0
0
20
40
Net Promoter Scores for P&C insurers in US, 2016
US insurance company
Page 29
60
80
4.
Capturing greater
share of wallet
Improvements in cross-selling can generate huge

value in both P&C and life. Customers owning
more insurance products stay longer, as evidenced
by a much lower churn rate at any stage of the
relationship for people who have multiple contracts
relative to those with just one. And nding protable growth through existing customers typically
is easier and less expensive than acquiring new
customers, and yields a higher return on investment.
There is a massive gap between cross-selling
leaders and laggards among P&C, life and multiline insurers in each country. Leaders sell up to
twice as many products as laggards. The gap
between multiline insurers is widest in Hong Kong,
the US and France, and narrowest in Australia,
Mexico and Switzerland.
Opportunities abound to expand share of wallet.
Many life insurance customers express a need for
more coverage and more products, particularly
in China, Indonesia, Malaysia and South Korea.
Moreover, in most countries, the majority of customers
are likely to buy from their primary insurers. Many
carriers have earned the right to an additional
salebut they have to ask.
Insurers have opportunities to engage with customers through live and digital channels. Many
customers expect insurers to be proactive about
contacting them with advice about such things as
planning for savings and investments.
Leaders in cross-selling often have higher loyalty
scores, longer customer tenures and favorable
customer demographics. Prociency in cross-selling
thus offers a route to growth: directly, by selling
more products per customer, and indirectly, as
customers with more products stay longer.
Figure 31: Cross-selling products reduces customer churn and generates signicant value for carriers
Customer churn, by number of contracts held and as a share of total number of P&C and life insurance customers
20%
0
01
12
23
34
45
56
67
78
89
910
10+
Length of relationship (years)

1 contract
2 contracts
3 contracts
Source: Bain analysis
Figure 32: For multiline rms, there is a large gap in cross-selling between leaders and laggards
Average number of P&C and life insurance products per household and provider, 2016 (indexed to market average)
150
Desjardins
AIA
125
AIA
USAA
MAIF
NTUC
Income
Ping
An
PZU
LVM
Samsung
MAPFRE
Allianz
Aviva
Meiji
Yasuda
Suncorp
GNP
AXA
100
75
50
France
Hong
Kong
US
Number of products,
leader relative to
laggard
1.9x
1.8
Singapore
China
1.8
1.7
Poland
Germany
Malaysia
1.7
1.7
Canada
1.7
1.7
South
Korea
Spain
1.7
1.6
UK
Italy
1.5
1.5
Maximum
Market average indexed to 100
Minimum
Page 32
Australia
Mexico
Japan
1.3
1.2
Switzerland
1.2
1.2
1.2
Figure 33:
The gap between cross-selling leaders and laggards extends to P&C as well
Average number of P&C products per household and provider, 2016 (indexed to market average)
150
125
USAA
NRMA
MAIF
AIA
NTUC
Income
LVM
MAPFRE
AIA
PZU
UnipolSai
NFU
Mutual
SchweiLa
zerische
PersonMobiliar Ping
Mitsui
nelle
An Sumitomo AXA
Samsung
Allianz
100
75
50
US
Australia
Number of products,
leader relative to
laggard
2.2x
2.1
Singapore
Hong
Kong
France
1.8
1.8
Spain
Germany
1.7
1.7
Poland
Malaysia
1.5
UK
Italy
1.5
1.4
1.4
Canada
1.4
China
Switzerland
South
Korea
1.4
1.3
1.3
Mexico
Japan
1.2
1.2
Indonesia
1.2
1.2
Maximum
Market average indexed to 100
Minimum
Figure 34:
Life insurers have a huge opportunity to upsell and cross-sell more, especially in
emerging markets
Share of life insurance customers expressing need for more products or coverage, 2016
100%
80
60
40
20
0
China
Malaysia
Indonesia
Mexico
South
Korea
Brazil
Hong
Kong
Poland
Singapore
Japan
Italy
Need more coverage and more products
Spain
France
Need more products
Note: More coverage refers to changing an existing policy, such as raising the amount insured or adding an annuity
Page 33
US
UK
Canada
Australia
Need more coverage
Germany
Switzerland
Figure 35: Most customers would likely buy a new life product from their primary insurers
Share of customers likely to buy new life insurance product from primary insurer
100%
86
80
80
79
79
78
76
72
67
67
66
63
62
60
61
61
60
56
54
41
40
38
20
0
China
Malaysia
Mexico
Brazil
Spain
Indonesia
Italy
Poland
Switzerland
Hong Kong
Singapore
Likely
Canada
US
Germany
France
UK
Australia
Japan
South
Korea
Highly likely
Figure 36: Many customers are open to getting advice from insurers on coverage and related services
Share of customers expecting insurers to provide advice, ranked by country
0
20
Planning for better savings/investments
Planning for a healthier lifestyle
Singapore
Japan
US
Hong Kong
Brazil
Canada
Indonesia
Japan
Australia
France
Having a child
Japan
Getting married
Japan
Starting a new job
South Korea
France
Buying a house
Planning to travel
Singapore
Italy
Being hospitalized
Going for a medical checkup
60
Japan
Suffering from a severe disease
Purchasing a new car
40
Japan
China
Indonesia
US
Mexico
Minimum
Maximum
Average of all countries

Page 34
80%
Page 35
Appendix: Methodology
Bain & Company partnered with Research Now, the online global market research organization, to survey consumer
panels in 19 countries: Australia, Brazil, Canada, China, France, Germany, Hong Kong, Indonesia, Italy, Japan, Malaysia,
Mexico, Poland, Singapore, South Korea, Spain, Switzerland, the UK and the US. The surveys purpose was to gauge P&C
and life insurance customers loyalty to their main insurance providers and to understand the underlying reasons for their
views. Conducted between March 2016 and June 2016, the survey polled 164,421 consumers of P&C and life insurance.
For our analysis of individual insurance providers, we included only those in the Americas, Australia and Europe
that received at least 200 valid survey responses and those in Asia, Mexico and Poland that received at least 100
responses. In many cases, sample sizes exceeded these thresholds.
Survey questions
Respondents were rst asked to list the P&C and life insurance products they purchased and to name the corresponding insurance providers. They then indicated their primary P&C and life insurance providers. Based on
their responses, participants completed either the P&C or life insurance questionnaire.
They also responded to two questions to assess their loyalty to their primary insurance providers:
On a scale of zero to 10, where zero represents not at all likely and 10 represents extremely likely, how
likely are you to recommend your primary insurance provider to a friend or colleague?
Why did you give your primary insurance provider the score you did?
Based on the scores they gave, respondents were classied as promoters (910), passives (78) or detractors (06).
The Net Promoter Score is the percentage of promoters minus the percentage of detractors.
We asked which channels respondents currently use for the following: to gather information about an insurance
provider or insurance products, to seek advice, to purchase a product, to seek service and to submit and settle a
claim. We then asked respondents how their channel usage had inuenced their likelihood to recommend their
primary insurance providers. We also asked whether they would be interested in platforms provided by insurers
that offer ancillary services related to car, home, health and life. Finally, we asked participants about their willingness to share personal data with insurance companies.
In the survey, we included different questions for P&C respondents and life insurance respondents. We asked
P&C respondents about switching behavior in auto and home insurance. For life insurance respondents, we included
questions to understand the potential for cross-selling and upselling. Finally, we asked for demographic information:
household income, age and region of residence.
The results of our data analysis are robust. Our measurements for insurance carriers Net Promoter Scores in
each country and for respondents Net Promoter Scores for each demographic category were statistically signicant.
For each carrier, these scores were statistically signicant to an 80% condence level, with a one-tailed test ranging
from 1.3% (n=4,956) to 10% (n=100).
Page 36
Shared Ambit ion, True Results

Bain & Company is the management consulting rm that the worlds business leaders come to when
they want results.
Bain advises clients on strategy, operations, technology, organization, private equity and mergers and acquisitions. We develop
practical, customized insights that clients act on and transfer skills that make change stick. Founded in 1973, Bain has 53 ofces
in 34 countries, and our deep expertise and client roster cross every industry and economic sector. Our clients have outperformed
the stock market 4 to 1.
What sets us apart

We believe a consulting rm should be more than an adviser. So we put ourselves in our clients shoes, selling outcomes, not
projects. We align our incentives with our clients by linking our fees to their results and collaborate to unlock the full potential
of their business. Our Results Delivery process builds our clients capabilities, and our True North values mean we do the right
thing for our clients, people and communitiesalways.
For more information, visit www.bain.com

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CUSTOMER BEHAVIOR AND LOYALTY

IN INSURANCE: GLOBAL EDITION 2016

Key contacts in Bains Global Financial Services practice

The imperative to earn greater loyalty . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 11

Creating delight through mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 17

Mastering the customer-switching game in P&C . . . . . . . . . . . . . . . . . . . pg. 25

Capturing greater share of wallet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pg. 31

The consumer is sovereign

Fight to get closer to the customer

Weather alert based

Alert when speed

Alert if the car

Simplified claim notification,

Fix the basics and accelerate the mobile channel

Australia Germany Canada

Raise the game in customer acquisition and retention

Decreasing likelihood to annoy

Increasing likelihood to delight

Expand your share of wallet

Most insurers, especially in the life sector, rarely

Across all of the countries analyzed, there is a

laggards for the P&C sector

Source: Bain/Research Now NPS survey, 2016

Source: Bain/Research Now NPS survey, 2016

Allianz, Prudential (UK)

Source: Bain/Research Now NPS survey, 2016

Figure 8: Being in touch contributes to loyalty

Source: Bain/Research Now NPS survey, 2016

Such as monitoring driving

Such as advice and discounts

Such as health advice and

Such as health advice/monitoring,

Source: Bain/Research Now NPS survey, 2016

Source: Bain/Research Now NPS survey, 2016

Not willing to share

Customers are increasingly embracing digital

Note: Includes digital-only and hybrid-channel customers

Digital (email, browser through computer

Phone (customer service

In-person or phone-only customers

Source: Bain/Research Now NPS survey, 2016

loyalty scores in most countries

In-person or phone-only customers

Source: Bain/Research Now NPS survey, 2016

Online exceeds mobile

Online (including email)

Online (including email)

The mobile channel offers a major opportunity to delight P&C customers

Share of P&C customers in US, 2016

Decreasing likelihood to annoy

Increasing likelihood to delight

Top 5 digital insurers*

*Based on share of digitally active customers

In both auto and home, most new customers have

Customers who purchased an auto policy from new provider in past

Customers who purchased a home policy from new provider in past

Source: Bain/Research Now NPS survey, 2016

Auto insurance in the UK

Customer acquisition index

Customer acquisition index

Source: Bain/Research Now NPS survey, 2016

Most P&C customers comparison shop before buying coverage

Source: Bain/Research Now NPS survey, 2016