Horses for courses – the joy of diversity

We’re not all the same – isn’t that great?  Imagine how boring – not to mention crowded – it would be if we all wanted to buy the same things from the same places.  Personally, I’m an online shopper, and have been for years – not only for the usual online stuff like books, music and increasingly travel, but especially for the more mundane stuff like dogfood, detergent and yes, even dairy products!

My online shopper at Woolworths takes my list each week – sent online, at whatever time of the day or night I choose, from the comfort of my home or office – wheels a trolley around the store, packs it up and couriers it to my door – for the equivalent of about 5 minutes worth of my time or less.  A bargain if ever there was one – but that’s not, in the end why I do it.  Would I pay more?  Yes indeed, because the convenience of shopping in that way by far exceeds any added value that I would get from the instore experience!

My quest for convenience – some might say to the detriment of the detail – extends well beyond the simple supermarket trolley.  I can’t recall when last I stepped inside my bank branch – indeed, I don’t really have a particular branch that I think of as ‘mine’ – and marvel at people like my parents who will drive into the city to change a travel booking rather than lifting the phone (and they’re not even all that old!).

So when it comes to insurance, where do I sit?  Some of you will recall one of my earlier articles recounting a less than satisfactory experience with an insurance adviser – one of the cancer-toting, fear-mongering variety.  So I am pleased to say that I have recently had a much more positive encounter with an adviser more focused on my business and my business needs, who most importantly didn’t start off with the assumption that everyone needs insurance!  What a breath of fresh air – and one that certainly gained him my business as a result. 

It did get me thinking though – if I’m a online shopper, a telephone buyer, a convenience seeker – at what point do I cross over the line to need to deal with a real person, one who can advise as well as sell, one who takes up much more of my time than it takes to sort out my car insurance by phone, or some life cover by signing and returning the form that the AA (and others) keep sending me?

I recently had the opportunity to analyse the channel preferences of insured people – the life and disability insurance types (not fire and general) – and the results were surprising, if only in the diversity of opinion that they showed.  Of the more than 600 insured people we surveyed, only just over half reported that they have an insurance adviser, broker or agent whom they would go to if they wanted to review, renew or upgrade their policies (or buy new ones)!   

The data (in the chart above) suggests that advisers in the insurance market are better at starting / maintaining relationships with people who are in their working years, particularly if they’re self-employed, and living in higher than average income households.

Does that mean that others don’t need or want insurance – certainly not!  They may simply not need (or want) an ongoing adviser relationship, or like me and my grocery shopping, prefer to buy what they need from a more convenient place, in a more convenient way.  Perhaps that’s the reason I get all those life insurance offers in my post – some people must prefer to buy their insurance in that way! 

Typical of the fickle consumer, it seems that people also justify their differing preferences with the same reasoning – for some using an adviser is convenient, for others less so;  some believe advisers can’t be trusted, while others believe this is the only way to get unbiased trusted advice;  some believe an adviser will get them the best deal (ie. the cheapest price), while others believe that it must be more expensive to have a ‘middleman’ involved.  And so it goes…. horses for courses!

The good news is that advisers are operating in the higher value end of the market – for whatever reason, those who have an adviser spend more, and are willing to spend more (up to two thirds more on average) to get the insurance that they feel they need.  Or conversely, those willing to spend more on insurance are more likely to feel the need for an ongoing adviser relationship.

And even within the adviser channel, there’s room for more than one view, with around 55% of insured people saying they prefer a neutral adviser, while the rest either prefer a company linked one, or simply don’t care.

So the next time you’re thinking about your customers, and your prospects, think about how good it is that people are different - and how much better it is that the higher income ones with the bigger insurance budgets are the ones that appreciate what you have to offer.  

But spare a thought for the lower income, less employed person, who wants and needs insurance nevertheless, and is happy with a quicker and (for them) easier way to buy it.

Debra Hall

Debra Hall is Executive Director of Synovate Ltd, and has been researching consumer views on investment and insurance products for over 12 years.  The views expressed in this column are her personal opinions, based on personal experience and data from surveys owned by Synovate, or used with permission of the clients involved.