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LIMRA INSIGHTS
Informativeness, Service Quality are Top Buyer Concerns IMRA research shows that L consumers select a method of buying life insurance based on service and quality of information. By Nilufer Ahmed
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oday’s consumers can choose to interact with companies in various ways: they can pick up a phone, go online or visit a brick-andmortar outlet to purchase what they need. They are already using these channels for purchasing products and services in several industries – telecommunications, retail and the banking industries immediately come to mind. What about the life insurance industry? Are consumers comfortable making purchases of life insurance through these sales channels? Given a choice, which channel will they choose and what factors do they consider when making this decision? Recent LIMRA research provides insight into these issues. Consumers make their decision of which sales channel to use based on their perceived values of the channel. What determines perceived value? The risk associated and the time and effort it will take them to use the channel. For example, being face-to-face is considered most valuable by consumers because they are confident that they are buying the right product for themselves at the best value for the price. Assuming the consumer is secure in the accuracy of the information they receive and convenience is more valued by the consumer, it is likely using a call center or the Internet may be preferred. Channel preference depends on how an individual weighs the value of risk versus time and effort. LIMRA’s study found that in all three channels, while consumers felt that both risk and time/effort were important considerations in the purchase process, they were more concerned about the risk factor.
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What factors influence consumers’ perceived risk of buying the “wrong product” for their needs? LIMRA research indicates that the two factors that consumers feel are critical for the reducing their perceptions of the risk involved are: the informativeness of a channel and the service quality (during the information-gathering phase) provided by that channel. Improving these two characteristics of each channel would go a long way to providing consumers with a more effective buying experience. What is informativeness? This refers to the quality of information that is available on carriers’ or producers’ websites, presented by producers when meeting with potential clients and described by call center representatives. The clarity and the completeness and the presentation style of the information itself are all considered by consumers. The ideal information will result in consumers understanding the features and benefits of the product, so that they are confident they can make informed decisions about their purchase, such as which type of life insurance, and how much coverage to get that is best suited to their needs. LIMRA results indicate that informativeness is particularly important for the online channel. This could be because there is no personal interaction involved when reading information online and consumers have to rely on their own understanding of the information. What is service quality? This refers to the quality of the answers, solutions and advice that consumers perceive that they may receive during the entire purchase process through the sales channels. Consumers want the assurance that the responses they receive are not “one size fits all,” but are tailored to their individual situation. They also expect the service to be accurate, dependable and prompt. Improving these two factors – informativeness and the service quality that can be obtained from each channel – will have the largest
InsuranceNewsNet Magazine » March 2013
Average Perceived Value of Channels for Buying Life Insurance (7=High Value, 1=Low Value)
5.36
Face-to-Face
5.20 Online
4.44
Call Center
effects on reducing the risk that consumers believe are inherent in buying a complex product like life insurance. Four suggestions for improving the informativeness and service quality of the sales channels are: Evaluate field force training programs for presentation, communication and advisory skills. Evaluate the life insurance information on websites for clarity, relevance and completeness. Ensure that website visitors can easily contact someone (phone or chat) directly from each page of the website. Ensure that call center representatives (for sales) have adequate training and skills to support and sell a range of life insurance products. In addition, carriers can investigate whether it is feasible to route calls to a product specialist or a producer, if needed. The goal of these measures is to ensure that sales channels can provide a more effective experience for consumers through reducing the risk consumers perceive – which in turn would increase the perceived value of channels. Nilufer Ahmed, Ph.D., senior research director, LIMRA Markets Research, is responsible for conducting research related to unique markets (e.g., women, Hispanics, African Americans and Asian Americans). Before joining LIMRA, she was an associate population officer at the United Nations. Contact her at Nilufer. Ahmed@innfeedback.com.