Insurers should carry out a “willingness to pay” analysis to design life cover that better tailored to clients’ needs, according to Swiss Re.
In a report looking at how insurers should become more consumer focused, published last week, Swiss Re argued insurers should concentrate on factors affecting consumers’ “willingness to pay” for protection, such as the different types and features available, and the likeliness of consumers in different demographics to buy certain types of cover.
The report says: “More research is needed to understand consumer willingness to pay for insurance and its various features and attributes. This will enable insurers to make products more appealing to consumers, and avoid unnecessary product features that ultimately raise the price of insurance above the price consumers are willing to pay.”
Swiss Re argues greater knowledge of consumer needs, such as the willingness-to-pay analysis, would help insurers and sales agents to tailor and build products that clients want to pay for, and overcome the idea they are being “sold to”.
Swiss Re senior economist Milka Kirova says: “A very large proportion of consumers can be described as ‘non-shoppers’ when it comes to insurance.
“If insurers understand the reasons for this, they will be better positioned to design products that people want and make insurance more accessible for all. In turn, increased uptake of insurance improves individual and societal welfare.”
Highclere Financial senior partner Alan Lakey says: “We need to use every tool at our disposal to make sure we are having the right conversations and in that context, this kind of willingness to pay analysis could be useful for helping understand what the client requirements are.”