Should-insurers-expect-reduced-loyalty-from-car-insurance-clientsI have found an interesting story by Rachel Stiles titled “Young drivers’ car insurance loyalty ‘gone through the windscreen”. It is argued in this story that the car insurance premiums of young drivers have increased sharply in recent years, partly due to the internet which has seen loyalty to car insurance companies replaced by regular switching.

It is believed that the ability to compare car insurance deals online has increased competition and can help drivers save money, but has also brought an end to loyalty when it comes to car insurance providers.
This reminded me of a conference I attended on employee satisfaction and how the changing generations require greater attention to the needs of employees.

Dogs, cats and a younger generation of employees and consumers

Employees were compared to dogs and cats. The older generation are more like dogs whilst the behaviour of younger employees mirrors that of cats.

Behaviour of dogs:

  • They are more easy to please.
  • You can whistle to call them and are likely to come running over.
  • A nice bone now and then and they will be happy.
  • Less likely to wander off into the unknown.
  • Easy to cage or lock-down

Behaviour of cats:

  • Difficult to please.
  • They don’t re-act and obey a mere whistle.
  • You can’t keep a cat happy with food alone.
  • Cats are all over the place and cannot be locked within a space – they will climb over walls discovering new locations.

Why is this important for car insurance and consumer loyalty?

The younger consumer will display more “cat like” behaviour and be willing to venture into the unknown. Our parents were much more loyal not only in the working environment, but also with regards to their financial providers. They stayed with the same bank, insurer or broker for decades.

The younger generation do not stay with the same employer for many years and easily migrate between employers and financial providers. They are more aware of the vast amounts of information available to them online and more likely to compare different providers and products.

It needs to be kept in mind that this is the “information age” and there have been many online resources to compare insurance deals available. There are also much more interaction between younger consumers and a willingliness to share consumer expectations and experiences. They share complaints and discuss providers on a variety of forums. The younger consumer grew up in the online environment and is comfortable with doing online business. A simple internet search provides them with info on valid claims rejected by a specific insurer and the decisions from the Ombudsman to address unfair decisions by insurers. Financial websites provide more information on the financial sustainability of specific insurers and alerts them to warnings and other actions from the Financial Services Board.

In the UK it has become common practice for British consumers to move car insurance companies every year in search of the cheapest deal.

What could car insurance companies do to improve and protect client loyalty?

Insurers cannot rely on the fact that a young driver will remain with them for several years. The signature on a car insurance policy will not guarantee consumer loyalty and we could expect that car insurers will seek to focus on other initiatives to enhance loyalty:

  • An increased focus on the online presence.
  • Greater public interaction via social media platforms.
  • Price competitiveness.
  • Product innovativeness – a constant reminder that the provider is at the front of innovation.
  • “In your face” marketing and visibility of the provider and products.
  • Flexibility and ability to change with the times.

Reduced loyalty could benefit car insurance clients

The expected lower levels of consumer loyalty need not be regarded as bad news! The ultimate beneficiary in the efforts to address reduced loyalty will be the car insurance client. As insurers are providing innovative solutions and required to be more competitive and accessible, consumers will benefit from a greater variety and cheaper premiums available for products that meet their needs!

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