The most popular way to buy life insurance is now through digital channels but customers still value face-to-face contact for financial advice, according to the latest survey of UK life and pensions customers conducted by Accenture (ACN).
According to the poll of 2,870 UK life and pensions customers, 38 percent of consumers purchasing life insurance in the last 12 months, bought online. This included purchases through websites run by insurers, independent financial advisors (IFAs) and banks. By comparison 33 percent bought policies in person and 22 percent completed transactions over the phone.
The survey also reveals that a significant number of customers (19 percent) used price comparison websites to buy a life policy in the last 12 months. In addition, 41 percent of all customer interactions with life insurance providers and 38 percent of interactions with pension providers over the last 12 months were digital, including time spent researching, buying and servicing products.
However, in-person meetings were the preferred way to conduct long-term financial planning. Almost one-third of customers (30 percent) do their planning in this way, and 43 percent would like to do so.
"Customers value the convenience and immediacy of digital channels and they like to do their research and make comparisons online," said Peter Kirk, managing director for Accenture Distribution and Marketing Services in United Kingdom and Ireland. "But when it comes to making big financial decisions, they still value face-to-face advice and prefer to deal in person with a human being. The priority for insurers is to enable seamless interactions across different contact points, whether human or digital, and also guide consumers to the relevant channels for advice."
IFAs still dominate, but life and pension providers have an opportunity to fill the "advice gap" in a digital world
According to the survey, the most popular channel through which to buy life and pension products was IFAs, which accounted for more than a third (35 percent) of all policy sales in the past twelve months and 23 percent of these were bought in person. The survey also indicates that IFAs are the channel where most consumers (72 percent) would turn to for information and advice on retirement planning, followed by life and pension providers (65 percent).
The survey also suggests there is still a big gap between those who think they need advice and those who actually seek it. Forty-eight percent of customers who feel they would benefit from information and advice have never actually sought any professional advice or guidance, and 51 percent of consumers without life and pension policies claim they do not need any help with planning or managing their finances.
Peter Kirk said: "The need for financial advice appears to be benefiting IFAs. Despite all the predictions about the impact of new regulations such as the Retail Distribution Review, which means IFAs are now obliged to charge fees rather than commission for advice, IFAs are still in demand. However, over the next 12 months it will be interesting to see how life and pension providers seize the opportunity to engage digitally with customers that seem reluctant or unsure of how to seek information and advice."
Lack of consumer engagement across life and pensions market
Life and pension providers face low levels of engagement among customers as the survey found that only 44 percent of customers are satisfied, compared with 60 percent for current account banking, and only 21 percent were likely to recommend their provider compared with 40% for current account banking.
Customers rank life and pensions providers lowest among all financial companies when it comes to trust and how convenient they are to deal with. Only 31 percent felt they could manage their policy in a way that suited them, and 39 percent of customers agree strongly that products are too complicated and unnecessarily confusing.
In addition, only 38 percent of customers said their life and pensions providers offered value for money, and 37 percent indicated that their insurer provided clear and transparent communications.
Peter Kirk said: "Life and pension providers need to up their game and improve relationships with customers both by giving them the digital convenience they want but also by finding ways of meeting customers’ desire for personal contact. Companies that fail to engage better with customers risk being side-lined as financial utilities."
The research is based on online interviews with 2,870 UK life and pension customers conducted in March 2014. The questionnaire probed topics including the level of digital interaction, buying behaviour and preferences, customer attitudes towards new and alternative sources of advice and guidance, perceptions and behaviour shaping customers’ relationships with life and pensions providers; levels of customer satisfaction; and savings behaviour. This research was part Accenture’s fifth study of almost 10,000 banking, motor insurance and life insurance customers in the UK and Ireland, conducted simultaneously.