New Research Shows Customer Switching Costs Insurance Sector £5.04 Billion

Emotion and fair treatment influence insurance consumers more than increased encouragement to switch providers

Boston, UNITED STATES


Nottingham, United Kingdom, June 24, 2020 (GLOBE NEWSWIRE) -- CallMiner, the leading platform provider of award-winning speech and customer engagement analytics, released today the 2020 CallMiner Churn Index for the insurance sector. It reveals that UK Insurance companies are driving customers away when they would rather stay loyal. And it’s costing them £5.04 billioni  per annum.

CallMiner surveyedii 2,000 UK adults that contacted a provider over the past 12 months to understand what makes them stay loyal or switch. The results, including comparisons with results from 2018, can be found in the full Churn Index report. Three additional reports have been produced for banking, utilities and, insurance organisations. The top findings for the insurance sector are:

  1. Churn rate has remained stable – moving the sector from 2nd place in 2018 to 5th place in 2020: Despite increased encouragement to switch, insurance is the only sector that didn’t experience a significant increase in churn according to survey respondents (24.4% in 2018 vs. 24.2% in 2020).
  2. Insurance is heading for a rise in switching: Despite the small decline in switching last year, the insurance sector is the third highest sector for ‘planned’ churn – up 19% from 2018 to 22.5%.
  3. ‘Unplanned’ customer switching costs insurers £312 Million: More insurance customers change providers than plan to. This ‘unplanned’ churn represents 781,000iii customers and a cost to insurance providers of £312 millioniv.
  4. Emotions & fair treatment play an increasingly larger role: Although price is still the leading driver of churn, it declined in importance by 15% since 2018. Emotional factors, such as feeling fairly treated and being rewarded for loyalty, increased in importance to be the top three of four reasons to switch providers.
  5. Customers report insurance sector as worst for fair treatment & recognising vulnerability: Compared to other sectors, insurance came highest for customers feeling unfairly treated, not being rewarded for contract renewal and discounts offered to new customers not being automatically applied to existing accounts. Insurance companies were also reported worse than their counterparts at recognising vulnerable customers, with less than half (49.2%) of customers saying they were good at it.

 “There has definitely been some improvement in the last two years within the industry, but it’s time for many insurance providers to review their strategy if they want to reduce the significant cost of churn,” said Frank Sherlock, VP of International at CallMiner “The new default approach needs to include investment in a combination of super-agents (who are empathetic problem solvers) and automated channels that create loyal, satisfied customers. This will reduce unplanned churn, improve customer loyalty and increase the bottom-line.”

You can download the Insurance sector report here and the full 2020 CallMiner Churn Index report, including comparison results from 2018, here.

About CallMiner

CallMiner is recognised as a leader in the speech analytics software industry, transforming your customer interactions with conversational insight to drive positive experiences and profound business change. Uniting with our customers and partners, our platform surfaces intelligence captured across your multiple communication channels and compels action that leads to improvement within and beyond the contact centre for customer experience, employee performance, compliance, security, fraud and interaction automation.


i UK adult population is 52.079 million. 24.2% of 52.079 million = 12.6 million people. Based on the results of the survey, 12.6 million insurance customers switched in the last 12 months. A conservative cost of acquiring a customer is £400 per person when incentives, advertising and administration costs are taken into account. So, 12.6 million x £400 = £5.04 billion

ii The research was carried out for CallMiner by 3Gem Research & Insights. 2,000 UK adults responded to an online survey in March 2020

iii The difference between insurance customers who switched and planning to switch is 1.5% - so 52.079 million x 1.5% = 781,000 million insurance customers

iv The difference between insurance customers who switched and planning to switch is 1.5% - so 52.079 million x 1.5% x £400 (conservative cost of acquiring a customer) = £312 million

 

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