ITIC UK 2023 | Meeting customers’ needs by understanding their behaviour
Andy Cook of AXA Health, David Parry of Finaccord and Jonathan Frankham of World Nomads discussed what customers really want and need from travel insurance providers
The ITIJ team have been reporting live from ITIC UK 2023 in Bath this week (20 April 2023) sharing the discussions that took place at the conference. Read all reports
First to speak was David Parry, Head of Finaccord. He started by asking if travel insurance can ever be anything other than a grudge purchase? Parry concluded that not if it is a service that adds value, is easy to buy, helps customers when travelling, pays claims without the customer doing anything, and covers more than just financial loss.
Parry said that these services already exist – though parametric cover, and apps to give support.
He explained that about a fifth of claims can be handled by parametric insurance. UK policies have the most cover, and medical cover is key. This is important given the low level of private medical insurance held in the UK, and ABI figures show that medical expenses made up 54 per cent of claims paid pre-Covid-19 pandemic.
Policies for pre-existing medical conditions were most common in the UK, Parry continued. Across 10 countries, 46 per cent had a ‘non-standard policy’ (eg for domestic travel only, backpackers, business travel, winter sports, etc), and five per cent of respondents had a policy specifically designed for people with pre-existing medical conditions. This was highest, at 13 per cent, in the UK.
Are UK customers ready for digital solutions?
Parry said their survey (13,000 customers were surveyed across 10 countries in 2022, including France, Germany, Italy, Spain, the UK, Australia and Brazil) asked about the interface used by consumers to take out travel insurance. The UK was leading for online purchases – 79 per cent of stand-alone travel insurance was bought that way. The USA was next on 78 per cent, Italy and Spain were last with 51 per cent.
Among customers buying online, 19 per cent did so using a mobile phone in the UK. This is a sharp rise from previous years. Parry added that China is the country that buys most on mobile (62 per cent).
Parry raised the question of whether some distribution channels are more suitable for parametric sales. Package holidays suit parametric cover for weather insurance the best; whereas airlines sell just seven per cent of stand-alone policies in the UK; and travel agents and tour operators sell only six per cent of policies in the UK.
Aggregators are more significant in the UK than elsewhere. Aggregators and brokers sold 15 per cent of policies in the UK (12 per cent through aggregators alone).
Parry concluded with this advice: offer parametric cover where appropriate; provide travel-related advice on an app; and maintain high levels of cover for other risks, especially medical ones.
Cameron asked the rest of the panel if parametrics are the way forward. Cook said that if it’s something the customer wants and needs, then absolutely. Frankham agreed that there are definitely opportunities.
Jonathan Frankham, General Manager, World Nomads UK and Europe, started his session by talking about the impact of aggregators. He said that new consumer purchasing patterns mean that it is now easier to compare policies; consumers are more likely to switch providers if they find a better deal; and it is easier for consumers to access insurance policies, particularly for those who were previously underinsured. However, they may prioritise price over other factors, such as coverage and benefits, which can lead to consumers purchasing policies that may not fully meet their needs.
Purchasing habits of consumers in a post-Covid world
New travel trends have emerged out of the pandemic, Frankham said. Confidence remains high despite Covid-19, airport chaos and the cost of living crisis. He added that 79 per cent of people in the UK intend to travel over the next year (77 per cent in the EU).
Frankham said shoulder seasons are the next big travel trends. He said tech is attracting Gen Z travellers, and that many consumers blend business with leisure travel. He added that responsible travel is important to their travellers – one in eight adults make it a travel priority.
Frankham said Covid-19 has shifted online consumer behaviour and customer expectations; trust signals across customer touch points being crucial for new insurance customers; consumers wanting privacy and data protection; and thatthere is a trend towards consumers reading more about policy coverage before purchasing. However, price remains an important factor for many consumers.
Consumer duty regulation
‘Consumer duty’ means delivering good outcomes for retail customers. Frankham said the obligations are to act in good faith; avoid foreseeable harm; and enable and support consumers in pursuing their financial objectives. He said: “Where we act in the best interests of the consumer, we support and enable them to make decisions on products and services that meet their needs.”
Frankham concluded by advising: “Listen to your customers and evolve with them but stay true to your core values.”
Cameron asked the panel: “How do you get feedback from something that’s a grudge purchase, that may never be used?” Cook said that it is a question that they wrestle with a lot; they try to demonstrate peace of mind to the consumer, and reinforce the value that insurance has apart from just at the point of claim.
Frankham said the reality is that they are present when people need them. Outside of that, they try to understand the customer and to educate people that insurance is an investment.
Finally, Andy Cook, Head of Colleague and Customer Success, AXA Health, started his session by saying that, in a digital world, humans are the difference. He said that digital maturity is here and the more we go into a digital world, the more important people are.
Post-pandemic challenges mean there have been more claims year on year. He added that we are also in a world of escalating customer needs. Customers want instant gratification: they want a problem fixed quickly. Customer duty has given them power. Everything needs to be centred on the customer and, he said, customer duty can be seen as a problem or an opportunity.
Customer happiness is everyone’s problem, Cook added, and enhanced outcomes need the uniqueness of humans. He said customer duty is a cultural opportunity for firms; cross functional collaboration beats any tech platform; augmentation of agent capabilities drives success; and that human empathy, emotion and care is irreplaceable. He affirmed that businesses have to think across the whole organisation and be collaborative with no single point of ownership.
Cook declared that ‘bad bots break bonds’. Huge promises have been made about tech, but people are still the most important; if the technology is poorly integrated and delivered, it results in damaging the customer experience.