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Spotlight on dual pricing: Price matters but customers deserve more


The price walking ban represents a turning point for the insurance industry. Vincent Belloc discusses the opportunity for insurers to build customer loyalty and competitive advantage through a relentless focus on customer experience.

Vincent Belloc
Vincent Belloc, vice-president, PayPal UK

The ban on price walking has made waves across the insurance industry, marking a fundamental change in the way insurers orchestrate their customer interactions. But the consequences are not clear-cut. PayPal’s recent survey with Insurance Post revealed the uncertainty around how this change will play out for insurers over the short and long term.

Leading insurers recognise that true business transformation requires a commitment to digital – updating legacy technology and processes, and positioning customers at the core of operations. The price-walking ban is an opportunity for these insurers.

Firms that have taken steps to focus on the customer experience through digital transformation are in prime position to capitalise on the shift to new differentiators: trust, seamless and positive customer experiences, from sign-up to payout. Now is the time to level up the customer-insurer relationship away from price, with the goal to enhance payment agility, reduce complexity of processes, and provide a frictionless personalised experience that improves customer retention and drives greater conversions.

The consumer benefits from better insights

Individuals are now used to a more dynamic relationship with service providers, beyond price alone, and data and technology are key to that evolution. The richer the data set a service provider has on their customers, the greater their ability to develop compelling products and experiences.

The Post/PayPal research shows that insurers are aware of the challenges and opportunities, but there is as yet no single defined response. The market is fluid and competition will become more multi-dimensional around pleasing the consumer.

‘Price’ will migrate quickly to ‘value’, as consumers get used to the new experience of buying insurance, therefore insurers should consider wider fields of competition. Service will become more important as a way of attracting and retaining policyholders. The insurance market is unusually crowded, forcing insurers to work hard for effective differentiation.

Customers, on average, use 2.4 different devices when deciding on insurance. As they swap from one to another, the risk of them losing their place and having to start again is a potential opportunity for defection. Insurers should build omni-channel experiences into existing transformations, so customers can find consistency across the entire journey, online and offline, and across any device.

A critical, but often overlooked, variable is payment. This can be a key point of friction in the journey, so it’s important to offer a choice of payments that customers know and trust. Recurring payment availability also makes it easy for renewals.

Already, platforms are redefining the relationship between insurer and consumer and setting new expectations of what ‘insurance’ can mean. Claims settled in seconds will become the norm, such as the renowned example involving the Lemonade policyholder who lost a leather jacket in New York.

Looking more broadly, people will get used to new ways of interacting with their insurers. For example, drivers may be offered dynamic cover that fits their specific needs at any one time. As the driver keys in their destination, why not have their insurer suggest different routes, with different risk factors and a subsequent choice of cover for that single journey?

We’re looking forward to the ways in which this enhanced customer service will be delivered. At its core, insurance is a simple product – admittedly with a lot of complexity and regulation involved. As the service proposition evolves, that complexity will increase. But it will need to remain out of the consumer’s sight, making new demands of insurers to create a seamless and intuitive experience at every point of contact.

An experience with true differentiation being built on all-round service provision and that means companies will need to ensure cohesion in their front- and back-office systems. The insurance value chain will always be as strong as its weakest link, and as those links increase, their interaction will become critical.

The ‘moment of truth’ link in that value chain is, of course, when a claim is made. Policyholders must feel they have been understood and believed, and that their insurer has their best interests at heart. Speed, clarity and completeness are essential.

Companies will look to improve how they settle payments such as with instant payout rather than a cheque that can take weeks to arrive, turning this critical moment into a positive affirmation of consumer choice.

As companies improve their service, and consumers accept (and then demand) higher levels of individualised experience, competition will grow. Price will always be a factor, but the winners will be those insurers who recognise they are now in a race to the top that’s inspired by better experiences – rather than one to the bottom.

Insurers benefit from greater commitment

Brand loyalty represents an enormous opportunity for insurers to create a new level of engagement.

To do this, they must have a clear answer to questions such as: “What will make a consumer actively choose us over our competitors?”

As studies have shown, by inspiring true loyalty, insurers not only lose fewer customers, they also gain more licence to innovate and the more their customers believe a higher price is worth paying.

Insurers’ digital journeys need to continue and accelerate, including essential service components such as payments, which can be a real differentiator and revenue generator.

The key remains ‘frictionless’. Insurers will look for ways to integrate and simplify their own payments ecosystem, and improve operating efficiencies. For consumers, anything that enhances their experience of claims and pay-outs will strengthen their loyalty to their brand.

There is an expectation that ‘brand’ will become a source of real commercial advantage. But companies will need to ensure depth and consistency of experience, at every touchpoint for the consumer.

The market benefits from a better reputation

There should be no such thing as a commodity market – there is value to be created in everything. Insurance has in some ways been allowed to slide towards the ‘commodity’ status, and the price walking ban is a great opportunity for a turnaround. Just as the consumer will benefit, so will the market itself.

The opposite of a commodity market is one in which true value is realised – on both sides of the relationship. As insurers invest in their service proposition, consumers will understand more about the pricing they see, and move from a ‘cost’ perception to one of ‘worth’.

Although the impacts remain uncertain, it is clear that the overall aim and outcome for the market is one of trust. Consumers will be able to trust their insurers and the basis on which they are being approached. Customer reviews will be made on more shared criteria and with a better understanding of what goes behind them. The ban marks a huge turning point for the market, something for those insurers who have already shifted focus onto the customer through digital transformation to be excited about. 

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