Although customers generally expect to save an average of 16 percent on policies from digital insurers, one-third of research respondents expected premiums would rise on average by 13%, perhaps anticipating that more data would negatively alter their risk profile.
According to the research by DXC Technology and technology analyst firm Telsyte, of the non-financial factors influencing choice and loyalty, personalisation ranked highest — twice as high as having an assigned personal agent.
“Despite data being a key component of digital insurance, the industry’s current reputation could hinder the growth of digital insurance as most respondents expressed reservations in providing data to insurers,” said Dr Michael Neary, director and general manager of Insurance, DXC Technology Australia & New Zealand.
The research also revealed that one-third of respondents identified digital claims processing as a technology factor that would improve their loyalty, and 40 percent felt their insurer needed to use technology to improve claims handling. Further, two-in-five or 40 percent are comfortable using chat bots to make claims or apply for insurance.
A significant proportion (47 percent) of Australians would be comfortable downloading and using an app from an insurer.
And expectations for usability are high, with almost half (49 percent) of those surveyed expecting that using the app would be as easy as using Facebook or Instagram.
The research also revealed that comfort levels with insurers having access to other personal information was significantly lower - and lowest when the data was related to lifestyle, from sources such as social media, smart home data and shopping records.
However, the research shows nearly half (48 percent) of consumers would provide additional personal and lifestyle information in exchange for lower premiums.
Prue Willsford, chief executive officer, ANZIIF, said, “I was struck by the findings from the DXC survey that demonstrated the disconnect between customer perceptions of the insurance industry and their own experience”.
The majority of people felt that successful claim rates were 60 percent or less, not the 95 percent we know it to be. Given the findings that 67 percent of respondents would not recommend a role in the insurance industry, there is clearly a need to step back from the challenges upon us and shift this perception by acknowledging the achievements and accomplishments we do every day.”
DXC’s Neary also said: “Australian insurers are facing a perfect storm of profitability pressure, customer demand for digital services, increasing regulatory oversight, industry consolidation, reputational rebuild, and the potential of competition from data- and digital-savvy companies”.
“Addressing these competing priorities requires a clear road map for digital transformation and an ecosystem of supporting platforms and partners. With most people willing to engage digitally with their insurer, and around a third who prefer it over human interaction, we are confident that the time for digital insurance is now.”