Insurance customers in the digital age are firmly in the driving seat, according to Suncorp’s latest Insurance Insights paper.

The growth of the internet and access to vast amounts of information has resulted in a more educated customer, says the report’s author, CEO Commercial Insurance Anthony Day.

Titled The Changing Face of the Insurance Customer, the paper sets out to identify the characteristics of modern insurance consumers, what they want, and how insurers should respond.

“The growth of the internet and access to vast amounts of information has resulted in a more educated insurance customer,” Mr Day says.

“Consequently, they expect their insurance to be tailored to their needs, demand better service and better experience, expect solutions rapidly and make many more demands.”

This year’s Vero SME Insurance Index revealed three specific customer segments:

• Grudge buyers, the largest category, who tend to be younger, have micro-businesses and are price-driven;
• Thoughtful buyers who do their own research (primarily online), are quite wary and more likely to be female;
• Outsourcers who are older, use brokers and are happy to pay for good advice.

But Mr Day’s report warns that in the fast-moving digital age, it’s really not so clear-cut.

It says customers rarely rely on one channel for information. They may search the internet, phone a call centre, start filling out an online application and, ultimately, talk to an intermediary.

So what must insurers do? Mr Day suggests two clear strategies are emerging.

The first is to put the customer “front of mind” in everything from underwriting to claims experience.

Traditionally, insurers have seen themselves as product manufacturers, but they must “redefine customer relationships”.

Insurance is built on trust, Mr Day says, and trust – even in the digital age – is still derived from the personal touch.

“It is here where insurers and intermediaries can join together as one to counter digital ‘attacks’.”

The second strategy is to develop multiple distribution channels and brands.

“Insurers that are inflexible in meeting the changing needs and variety of customers will simply cease to grow,” the paper says.

Channels must be integrated. For example, a fledgling business may begin by obtaining cover online, but as it grows it may require more complex solutions and shift from the insurer’s online brand to its intermediary-aligned brand.

“The customer of today – and even more so in the near future – expects an insurer to provide what they want (product, service) when they want (24/7) and how they want (various distribution channels),” the report says.

The digital-age customer also presents a challenge to intermediaries. Previous research has shown young business-owners – and the growing number of female owners – are less likely to use brokers.

“A key question for intermediaries is how to convey their value proposition and remain relevant,” the paper says.

Mr Day says insurers can no longer be “one-trick ponies”, relying on just one or two distribution channels. They must evolve and adapt or be left behind.

“The commercial insurance customer is not only king or queen, but also complex in their needs,” he says. “They are much better informed about insurance than their predecessors and more demanding.

“No longer can commercial insurers and other industry players such as intermediaries believe they can ‘build it and they will come’.”

The paper can be downloaded here.