Satisfaction with risk and life insurance has fallen to 65.4% in September 2018, down from 66.4% in 2017 and 69.5% in 2015, according to new research from Roy Morgan, a market research company.
At these levels, risk and life insurance continues to have the lowest satisfaction of all major household and personal insurance types including general and health insurance.
These are the latest findings from Roy Morgan’s Single Source Survey (Australia) which is based on in-depth personal interviews conducted face-to-face with over 50,000 Australians per annum in their homes, including over 10,000 with risk and life insurance.
Insuranceline tops satisfaction ratings
In the year to September 2018, Insuranceline with a satisfaction rating of 81.6% was the best performer, well ahead of second placed Suncorp Insurance (78.7%) and Real Insurance (74.7%).
AMP the market leader in terms of the number of policies, had 64.3% customer satisfaction and was below the market average (65.4%), showing a drop of 1.6% points over the year. The second largest player is MLC and it scored marginally below average with 64.9%, having declined by 1.9% points over the last 12 months.
Although overall satisfaction with risk and life insurance declined over the year, some companies showed improvement. The biggest gains were from Suncorp Insurance (up 8.6% points), Asteron (up 6.5% points), Zurich (up 6.2% points) and Insuranceline (up 4.0% points). The major brands showing declines in satisfaction were Westpac (down 10.3% points), Alliance (down 4.4% points), AIA Australia (down 4.4% points) and TAL (down 4.3% points).
Satisfaction improves likelihood of customer retention
Customer retention is important in a market where over 1m risk and life policies over the last year were at risk of being moved because they either actually changed their provider (226,000) or at least were considering to do so by looking around (795,000). Policyholders that say that they are ‘extremely likely’ to renew their insurance with the same company have a satisfaction rating of 73.3%, well above the market average of 65.4%.
As the likelihood of renewing with the same company declines, we see that this is associated with much lower satisfaction levels. Among policy holders who are unlikely to renew with the same company only around a quarter (25.6%) are satisfied with their current insurer, compared to 66.9% satisfaction among those who are at lease fairly likely to renew.
In addition to the million existing policies that are potentially subject to changing provider in a year, there are also those that are entering the market for the first time. In the 12 months to September 2018, this amounted to 228,000 new risk and life policies, which when combined with existing policyholders that are potential changers, makes for a total available market of over 1.2m in a 12-month period.
Norman Morris, Industry Communications Director, Roy Morgan said, “These results show that although 86% of risk and life insurance policies are renewed automatically without shopping around, there is a risk associated with having below average satisfaction as this has the potential to discourage renewal and new clients.
“The channel used to purchase risk and life insurance is important because it may impact satisfaction and retention. The most frequent method used to purchase this type of insurance is still directly from an insurance company with 36%, which has been falling over the last three years from 42% in 2015. The most common way people purchase directly from their insurance company is by telephone.
“Purchasing this type of insurance online is relatively small with 9.3%, having only shown gradual growth from 6.7% over recent years. The biggest increase in the purchasing channel used over the last three years has been from employer as part of superannuation, which has increased from 16.3% to 26.5%. The other major channel is the use of insurance brokers and financial planners which now account for around 17% of the market, down from 21.8% three years ago.
“The use of these third parties to purchase risk and life insurance has the potential to take the customer relationship away from insurance companies and as a result they are likely to have less control over satisfaction and retention levels.
“The considerable adverse publicity given to life insurance by the Finance Royal Commission is likely to have been a contributing factor in continuing the decline in satisfaction.”