UK customers’ view of insurance industry shifts with claims: Guidewire

The latest edition of Guidewire’s annual insurance customer attitudes study reveals a shifting view among UK customers toward the insurance industry, particularly when it comes to making claims.

Titled ‘The Insurance Engagement Gap and its Impact on Perception and Innovation’, the report focuses on how factors such as the cost-of-living crisis, technology, and diversity and inclusion influence customer sentiments toward insurers.

According to the research, customer opinions about the insurance industry tend to be relatively entrenched. While 33% of UK policyholders maintain a negative view of the industry, unchanged over the past year, 19% hold a pre-existing positive opinion. Notably, 12% report a more positive outlook due to insurers’ supportive actions. There is a significant correlation between claimants and positive perceptions of insurers.

Among respondents who filed a claim in the last twelve months, 40% express a heightened positivity toward insurers’ supportive measures, compared to a mere 8% among non-claimants. Despite the pervasive use of technology, traditional communication channels remain preferred, especially during claims, with 66% opting for phone contact and 50% preferring email.

Key findings also highlight emerging trends and concerns within the industry. While interest in usage-based insurance (UBI) grows, only 10% of respondents currently possess such policies. Similarly, the concept of embedded insurance hasn’t fully integrated into customer preferences, with 39% open to buying insurance from non-traditional sources.

Regarding artificial intelligence (AI), there is a view that it should support rather than replace human decision-making. Nearly half of respondents express discomfort with AI determining insurance prices autonomously. Privacy concerns also mount as insurers embrace digital tools, with 6% more respondents questioning the necessity of collecting policyholder data compared to the previous year.

However, there’s a nuanced outlook, particularly among younger demographics, with 47% of 18 to 24-year-olds understanding the rationale behind data collection but preferring otherwise. In spite of concerns, 28% of customers are willing to share data if it enhances services and lowers prices for low-risk individuals.

Michael Cook, Insurance Partner and Guidewire Lead at PwC UK, noted: “It is clear that the insurance industry still faces a number of challenges, with many of these being called out in the Guidewire Consumer Survey. These are especially acute in some of the personal insurance lines, such as motor, which means the trading and performance in this sector are particularly challenging.”

“While technology can, and does, clearly play a role in resolving these challenges, it is the opportunities that advancing technology presents that will deliver greater benefits to insurers, the industry, and most importantly their customers.”

In response to the query, “Should the insurance industry be more optimistic about how it is viewed as a place to work, especially amongst younger age groups?” 47% of individuals aged 18 to 24 and 41% of those aged 25 to 34 perceive the insurance industry as innovative and dynamic, relative to banking, technology, retail, and engineering sectors.

In parallel, perceptions of diversity within the insurance field are favourable, with 48% of respondents viewing it as a diverse environment conducive to collaboration with individuals from varied backgrounds. This sentiment is even more pronounced among individuals aged 18 to 24, with over six in ten (63%) holding this view, trailing only behind the retail sector (70%) in terms of perceived diversity.

Regarding insurance purchasing decisions, nearly half of households (49%), individuals act as the sole decision-makers for insurance purchases. When examining gender differences, 54% of men take on this role compared to 46% of women. Only 5% of respondents rely on the guidance of insurance brokers, but this figure rises to 13% among claimants. The reputation of the insurance provider (39%) emerges as the most significant factor influencing policy selection.

Will McAllister, SVP and Managing Director, EMEA, Guidewire, commented: “Even though 2024 was a challenging year for customers and the insurance industry alike, our findings showcase just how essential personalised customer and insurer interactions are. Insurers have a key role in their customers’ lives, but at the moment this truth is only made clear to policyholders at the point at which they make a claim. This cannot remain the case. If insurers want to create more customer loyalty, and thus improve their expense ratio, they need to find ways to add value to their customers’ lives so that the claims and renewal processes are not the only meaningful engagements a customer has with their insurer.”

“It is also interesting that in an age where consumers freely share data with many other vendors and service providers, they still appear to be averse to sharing their data with insurers. The responses suggest that insurers still have a way to go in communicating and demonstrating the value the industry can deliver to improved pricing, better claims handling, and even loss prevention through enhanced use of data and technology,” McAllister further added.

“Given the potential for data and technology to transform how insurance is purchased and provided in the years ahead, this feels like a key area where the industry should focus its attention.”