Insurers can no longer rely on historic consumer behaviour patterns, Ernst & Young Senior Manager Bozenna Hinton has warned.

“Insurers must listen to the voice of the customers, because the key message is that things are changing,” she told an Actuaries Institute forum in Melbourne last week.

“We are seeing changes in the regulatory environment, technology and the economic outlook, and all of this is impacting on the customer relationship.”

Last year Ernst & Young surveyed 24,000 customers in seven regions around the world about their attitudes to general and life insurance.

Ms Hinton says customers were asked about five insurance “myths”: consumer confidence in the industry is low; life cover is sold, not bought; personal interaction is essential; it is hard to cross-sell; and insurers can influence persistence.

The research found 30% of customers have a favourable view of insurers, with the same figure registered in Australia.

“The survey shows there is definite room for improvement,” she said. “Consumers think the insurance industry is lagging behind other industries.

“They are happy with the products, but they see everything else with the insurance industry is wrong.”

Ms Hinton says consumers have a better perception of life compared to general insurance.

“The more negative perception of general insurers is not surprising in light of last year’s events,” she said.

“The main problem is product complexity. They don’t connect with the product and they want to cut through that complexity.

“They want simpler products that are easier to understand.”

Despite trying to sell more products to the same customer, Ernst & Young found insurers put little effort into trying to win back consumers after they lose them.

“We found 12% of customers plans to change their insurer in the next five years,” Ms Hinton said. “And 63% of those who switched said their insurer made little effort to keep them.”

She says there is a huge opportunity for insurers to do something about retention.

“Insurers should be looking at how their products are sold and if they are being churned,” she said. “Start focusing on what policies a customer has and make sure you understand what is driving them to buy those products.”

Ms Hinton says having identified the customers an insurer wants to keep, it then should be proactive about retaining them.

“If a customer lapses, make sure you respond and take an active role to retain them.”