Want a Sneak Peek at the IBV Customer Retention Study?

The new insurance study – to be published in June – is coming along nicely. So it’s time for a sneak peek or three over the coming few weeks.

Today I’ll start slow by talking about some background etc. We surveyed a bit more than 12k insurance customers in our usual 24 countries, i.e. 500 per country. Also as usual, the respondents had bought insurance in the past two years. What we were trying to find out this time: what are the factors that determine whether or not they switch insurers? Price? Quality? Brand/reputation? Availability of channels?

Anybody who read my PoVs over the past few year won’t be surprised to hear the I didn’t expect price to be decisive, but rather a hygiene factor. Without getting into detail today: the data didn’t disappoint – price is important, but in most cases not the clincher.

One of the difficulties we anticipated in doing a study like this cross-country is that the modalities of cancellation or renewal are different everywhere. Some countries have opt-in, some opt-out, and duration is different, too. To correct for that, one of the things we wanted to know was, what the modality was. 36% had opt-in (renewal), 54% opt-out (cancellation). 10% didn’t even know – a first hint that the modality might be a lower loyalty factor than we expected. And sure enough, here the plot:

For type 1 (life insurance) and type 3 (property) there was no difference at all in the loyalty index [1] The other three types, auto (2), casualty (4) and other 5) show small differences – for auto, they are statistically significant (p<0.01), for the others they are not.

The loyalty index measures intent (since we are asking about current insurer). If we look at past switching, i.e. in the last two years, opt-out had a larger effect – between 2 and 10 percentage points. Still not as big as we expected, though. What do you think?

[1] The loyalty index is a construct we built out of six questions, both attitudinal and behavioral.