Global Consumer Insurance Survey 2012 India by ERNST & YOUNG

With the rise in affluence and increased product awareness, the middle class is fast emerging as the most lucrative segment of the Indian market for financial services companies. India has a large working population, with higher disposable income than in the past and therefore a greater propensity to buy products to meet their growing aspirations. However, due to rapidly evolving markets, customer loyalty to brands is fickle and very much dependent on price points, customer service and innovative product offerings. Only one in five Indian consumers say they are “extremely loyal” to their favorite brands.

In light of this evolution, companies need to reevaluate their long-held beliefs about the consumer in the Indian markets. Our research uncovered strong evidence that customer behaviors in India are changing and that some of these beliefs have become outdated. As a result, we believe that insurers in this market will need to think differently if they are to continue to be successful in attracting customers.

Indian life and pensions key findings

  • Consumers surveyed in India are surprisingly well aware of their needs. Seventy-four percent of respondents indicate that they conduct detailed research before buying life and pensions policies, far more than in the US (31%), the UK (37%) or China (44%). As buyers take more control of the buying process, providers will need to ensure they understand their customers better, tailor products to customers’ needs and provide details about the products in a simple, transparent manner.
  • Customers still have a strong need for personal interaction when buying life or pension products, with 94% of respondents considering it an essential part of the buying process. The trend is slightly more marked here than in China, and is much stronger than in the UK and US. Insurers will need to ensure their sales channels are equipped with the right expertise to help customers make appropriate choices to meet their needs and to close the purchase process.
  • Customers surveyed in India are willing to buy more. To maximize opportunities, insurers need to build trust and make it convenient for them to do so. In addition, customers have become accustomed to rewards for loyalty from other industries and increasingly expect the same from insurers. To increase their share of customers’ wallets, insurers must reward loyalty.
  • Persistency levels are lower in India compared to other countries. Seventeen percent of Indian consumers say they have switched providers in the last five years — considerably more than the global average from our survey of 10%. However, the survey provides evidence that if insurers can connect better with customers and respond flexibly to their needs, they will be able to increase retention and maximize customer lifetime value.

Indian non-life insurance key findings

Our research focused primarily on consumer behavior in buying personal product lines. The response to our survey shows that in the Indian non-life insurance market, consumers’ motives are surprisingly similar to those of their peers in other markets around the world.

  • Purchases of non-life insurance products in India are mainly driven by convenience and value — in other words, the right product at the right price. Convenience, however, is a complex proposition. Customers must be able to research and buy easily, a trend that has primarily been driven by the growth of online websites. But convenience also implies avoiding problems later on — with cover, service or technology. For this reason, some customers still rely on tried and tested channels such as agents, family advice or trusted brands to guide their purchasing decisions.
  • Consumers are increasingly moving online. Currently, 31% of respondents use a range of online channels for research, although only 11% indicate that they purchase online. This research/sales lag indicates that for the moment, concerns about reliability and unfamiliarity with the online setup still outweigh its benefits in terms of speed and flexibility for Indian customers. Insurers will need to develop their online offering, but as a component of an integrated channel management strategy.
  • Pricing is not the most important criterion for consumers when purchasing an insurance product. Only 33% of survey respondents indicated that price was a factor in provider selection, which is behind other factors such as brand (69%), customer service (43%), and very close to convenience (32%) and financial stability (31%). As a result, insurance providers will need to focus on creating differentiated product offerings and service propositions to build a sustainable brand.
  • Customers are willing to purchase additional products from the same insurer. Sixty-nine percent of respondents said they would purchase additional products from their current provider, with convenience and better service being the primary drivers. Providers will need to focus on leveraging existing customer information to understand customer needs and offering targeted propositions in the right way.
  • Indian customers generally prefer to stay with one insurer as it is more convenient. However, the number of customers switching providers is likely to rise in the future. Insurers will need to clearly identify target customer segments and understand their switching propensity as well as the costto- serve. This will allow them to communicate better with their more valuable customers and boost retention and profitability.

We hope you will find this research useful in shaping your customer strategies and considering how you shape your business going forward.

If you would like more information, and to review the detailed findings, please contact your usual client service partner, or go to

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