The new battleground for the General Insurance market is evolving quickly. It is no longer enough to outperform competitors with low rates; insurers must re-imagine their propositions and develop their ecosystems to enable sustainable and purposeful growth. We believe that growth will come through differentiation, with insurers adapting their propositions, distribution methods and brand messaging to remain relevant and meaningful to their customers.

We’ve seen five main expanders in the market:

1. Price is no longer the key differentiator it once was

While price is important, especially in the current climate of prices rises, Insurers will need to find a way to convince consumers of the ‘value’ of their product. The FCA General Insurance Pricing Practices regulation for Home and Motor insurances introduced in January 2022 removes the dual pricing which often meant new business customers were getting a better price than existing customers. Customers renewing their home or motor policy will now be charged the same price as a new customer. With greater parity on pricing for new and existing customer, insurers need to think beyond discounted prices and differentiate themselves by developing new service propositions that help retain existing customer and attract new ones.

How you can respond:

• Understand the mindsets and behaviours of your customers to identify opportunity areas to better serve their needs
• Place humans at the centre of service proposition development to help your organisation re-imagine how it can grow
• Focus on creating tangible value and solving genuine problems for customers
• Deliver superior value by offering new service propositions that customers trust

2. Intentional Consumerism is a key driver of change

The recent UN Climate Change Conference 2021 (COP26) has created strong pressure from investors and insurers to consider ESG (Environment, Social, & Governance) in their risk management and underwriting. At the same time, consumers are increasingly making purchase choices based on ethical and sustainability considerations. Customers are looking for insurers who reflect their values and engage in more sustainably driven initiatives. In a recent EY survey, 60% of respondents say they are likely to switch to brands that are more environmentally friendly and 43% said they would be interested in products that offer discounts or rewards for lower emissions. ¹ In addition, customers are increasingly driven by ‘intentional consumerism’, where their purchase decisions are based on the values they hold, such as diversity & inclusion and sustainability. ² This is particular the case with Gen Z. The EY Future Consumer Index has recently shown that 43% of global consumers want to buy from businesses that benefit society, even at a higher cost. ³

How you can respond:

• Build trust through a strong brand purpose for customers and employees
• Communicate a clear message about diversity, inclusion and sustainability to allow you to stand out from your competitors
• Develop new ESG propositions, for example, around Smarter Homes and Energy Efficient Homes
• Consider the use of data to measure and broadcast the green credentials of your supply chain

3. Ecosystems are creating connected experiences

The market has seen a rapid expansion of ecosystems and partnerships in recent years. Indeed, more than 75% of global insurance executives view digital ecosystems and other partnerships as essential to creating competitive advantage, according to 2019 research ⁴ from Swiss Re. That number is likely to be even higher today. Ecosystem leaders are deepening customer relationships by offering richer connected experiences, new products and services, and more compelling value propositions. We estimate that as much as 75% of the value ⁵ in established ecosystems is in the customer relationship. Existing ecosystems in insurance and other sectors are already demonstrating the potential for exponential growth resulting in a 90% increase of products-per-customer, or share-of-wallet for successful ecosystem players. Through these ecosystems, insurers are creating more value for their customers than they could individually. Insurers that innovate with ecosystems will be able to increase their revenue and share of wallet with more flexible products.

How you can respond:

• Identify opportunities for new partnerships and collaborations to create connected experiences for your customers. Consider your role and USP within that ecosystem and where to best add value
• Reduce friction across the value chain and offer on-demand access to a wider range of related solutions and services through a single trusted entry point
• Ensure the user experience is consistent across all products and services so customers are comfortable using the ecosystem to satisfy their multiple needs

4. Vulnerability, financial security and long-term wellbeing

The impact of the pandemic has been felt psychologically, emotionally and economically by many customers. The pandemic has also led to more financial vulnerability in customers. In addition, the cost of living rises for households across the UK can disproportionately impact those on lower incomes and at higher risk of vulnerability. The new FCA vulnerability guidance is asking financial services to go further to help vulnerable customers. Entering one vulnerable situation can trigger a cascade effect so early identification of vulnerabilities is key. Insurers will need to respond to changing consumer needs by developing simple and transparent solutions that strengthen their financial well-being and instil trust and confidence.

How you can respond:

• Embed empathy throughout your organisation to improve your customer centricity, Duty of Care and early identification of vulnerable customers
• Build trust with customers by creating a strong brand and reputation, supported by authentic dialogue and actions
• Offer customers connected products and services that help them to protect the things they love and value most

5. Digital transformation and self-service capabilities.

The COVID-19 pandemic has presented a new era of challenges and opportunities. EY research reveals that customers are now more open to interact and buy in new ways, for example, subscriptions models and micro and extended payments, rather than traditional yearly premiums. ⁶ Insurers will need to innovate their product sets and optimise their digital distribution channels to meet the increased demand for self-service capabilities. Digital first insurers will need to build trust with customers by creating a strong brand and reputation, supported by authentic dialogue and actions.

How you can respond:

• Develop new propositions around cyber, payment methods and moments that matter based on robust consumer insights
• Accelerate your digital transformation
• Provide a consistent customer and contact experience, especially for traffic from call centres to digital channels

How can EY teams help?

EY Seren is a specialist design and innovation consultancy. Together with our EY colleagues, we solve the genuine problems that matter for customers, employees, and society at large. Our work is rooted in helping businesses make better choices and solve their most pressing problems. EY wide-ranging team of professionals work collaboratively to focus on transformations including digital claims technologies and systems, data and analytics, operational transformation and execution, customer experience, future visioning and new proposition development, ESG, workforce advisory, actuarial and risk consulting.

For further information, please contact , Insurance Sector Lead.

Additional contributor: Tobias Misera

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.