leveraging consumer insight in insurance - bcg – … boston consulting group february 2010...

Leveraging Consumer Insight in Insurance

Heiko Franken, Christopher Freese, Ian Frost, Jean-Christophe Gard, Kosuke Kato, Astrid Stange, and Ulrich Stephan

February 2010

The Boston Consulting Group February 2010

T he financial crisis has tarnished the image of financial services as a whole, but it has burnished the image of institutions that are perceived to be safe or even staid. In this respect, the insurance industry, while far from immune to the effects of the crisis, is in a relatively strong position. The hallmarks of insurance—security and stability—are top of mind for many consumers.

But translating these priorities into new demand and higher rates of retention requires a deep understand-ing of consumer behavior. To this end, The Boston Consulting Group recently conducted a study of consumer perceptions about the insurance industry and its major brands. The study, done in mid-2009, focused on four major markets—France, Germany, Japan, and the United States—and was based on a survey of more than 1,000 people in each market, along with in-depth workshops and interviews.

Understanding consumers—their attitudes toward insurance and how the crisis has changed their view of the industry—is the first step in tapping the full potential of consumer insight. The second step is to segment consumers on the basis of their perceptions about insurance, rather than just according to income, wealth, or life stage (such as student, young worker, or senior). This segmentation should then be enriched with insights into purchasing and channel preferences, as well as the keys to loyalty. Some behaviors vary by consumer segment, while others are nearly universal.

These measures should enable insurers to pursue a range of actions that will spur growth and enhance retention. A company that has developed a refined understanding of consumers can, over time, adapt its marketing campaigns, sales techniques, and product offerings to suit specific groups. It might even roll out new brands that appeal to a particular niche. Insurers can also take immediate steps to leverage consum-er insight. In our study, consumers endorsed several measures that would have a positive impact on their attitude toward an insurance company. Among other things, companies should demystify their products and make the most of rare “moments of truth.”

The Insurance Paradox

Our study of consumer attitudes found both reassuring and worrisome signals. The vast majority of consumers—between 72 and 88 percent, depending on the country—are content with their insurer. Few are anxious or angry about their specific provider. Paradoxically, however, most consumers have either a neutral or a negative view of the industry (and its products). The degree to which consumers look askance at the industry varies among the four countries.

Japanese consumers have the most positive attitude toward insurance, but only with respect to specific ◊ products and the generic benefits they provide, such as peace of mind. Their opinion of the industry itself is neutral.

U.S. consumers associate life insurance and retirement products with safety, security, and protection. ◊ Many, however, are anxious, confused, and wary about life insurance and retirement planning. They find product descriptions—in print and even when provided by a salesperson—to be loaded with cryptic terms and almost impossible to understand. Still, these consumers see insurance as something they must have—a necessary evil.

Most German consumers have a negative view of the insurance industry and are dismayed by its ◊ complexity and lack of transparency. They also describe insurance products as intangible and hard to appreciate. In general, however, they are satisfied with their own insurer.

Leveraging Consumer Insight in Insurance


Leveraging Consumer Insight in Insurance 2

French consumers know that insurance coverage is essential, but many regard the products with some ◊ disdain. They see them as expensive, opaque, and hard to compare because of all the fine print.

The insurance paradox is the result of two factors. First and foremost, people dislike buying insurance. The fact that insurance is both mandatory—if not in actual fact, then for the sake of financial security—as well as intangible colors their view of the industry. At the same time, however, their experiences with insurers—when renewing coverage, for example, or making a claim—tend to go well. Processes run smoothly, and the insurer steps in helpfully when the consumer has suffered a loss. Second, people are often unwilling to admit that they made a bad decision. They would rather give their insurer a passing grade than say they made the wrong choice. The actual level of discontent may well be higher than the numbers indicate.

The industry’s image is not helped by widespread misperceptions about the arithmetic of insurance. We asked consumers to estimate the percentage of motor-vehicle insurance premiums that is spent on claims—in other words, the amount of money that flows back to policyholders. On average, consumers in the four countries believe that about 40 percent of premiums go toward paying claims, while 20 percent are spent on customer acquisition and administrative expenses, 20 percent are used for marketing, and 20 percent are pure profit.

The gap between perception and reality is staggering. In Germany, the combined ratio (the percentage of gross earned premiums paid out in claims and expenses) in motor-vehicle insurance amounted to about 102 percent in 2008. This was close to the ten-year average. The percentages are similar in other markets.

The Impact of the Crisis on Consumer Perceptions

Insurance products have connotations that carry greater weight since the crisis. In three of the four countries surveyed, consumers perceive insurance companies to be safer and more secure than banks.

In the United States, the crisis has changed consumer attitudes in ways that dovetail with the core ◊ values of insurance. People have become preoccupied with financial security. “I lost a lot of savings due to the downturn,” one consumer said. “This has had a strong impact on my financial planning.” Consumers have come to view insurers as safer than banks, but this sentiment may not translate into higher demand. (See the sidebar “Dealing with Adversity in the U.S. Market.”)

In Germany, most insurance companies are seen as safer than banks. This perception has not changed ◊ much—consumers had a fairly positive view of the industry before the crisis as well.

In France, too, people consider insurance companies to be safer than banks. But unlike consumers in ◊ other countries, the French have come to trust both insurance companies and banks more since the crisis, a sentiment that held even during the dark period from November 2008 to March 2009.

Japan has bucked the trend. Despite the crisis, consumers consider many banks to be safer than ◊ insurance companies. This could be a lingering effect of Japan’s “lost decade” of the 1990s, when insurance companies had trouble coping with deflation and low interest rates.

Consumer behavior, in general, is imbued with a new awareness of the value of thrift. In a recent BCG survey of consumer sentiment—which took in views from around the world—70 to 80 percent of respon-dents said they had intensified their bargain hunting across a range of goods and services. Most plan to continue searching for deals, even after the crisis subsides.

To the extent that consumers are “trading down” in insurance, we expect this behavior to focus mainly on motor-vehicle insurance, which has become commoditized. In other categories, especially life insurance, consumers are interested in shopping around, but they are not inclined to make a decision based only on price. (See Exhibit 1.) They place a higher priority on long-term security than on short-term savings, and give significant weight to a company’s reputation when making a purchase decision.



4.0

3.8

3.7

3.4

3.2

3.1

4.9

4.3

4.3

4.3

Compare financial products

Buy annuities in order to be secure in retirement

Switch to life insurance that has lower premiums

Switch to life or annuity products that are less risky

Spend more on life insurance in order to feel more secure

Accept high prices in exchange for relying on established companies

Seek life products that can be used as collateral

Seek low-price offerings from unknown companies

Borrow against the cash value of life insurance

Cancel and cash out life insurance

Definitelyno

Definitelyyes

Impact of the crisis on U.S. consumers1

As a result of the crisis, I already do or plan to:

Neutral 4.0

1 2 3 4 5 6 7

U.S. consumers are more

interested in shopping around

for life and annuity products

But price is not always the

deciding factor

Sources: BCG survey of 1,066 insurance consumers in the United States; qualitative interviews, June 2009.1The survey of U.S. consumers covered only life and annuity products.

Exhibit 1. U.S. Consumers Are Shopping Around—but Not at the Expense of Safety and Security

The steep decline in new sales of life insurance in 2009 suggests that these products, which are considered indispensable, have major obstacles to overcome. Stated simply, U.S. consumers recognize the need for life insurance and retirement planning, but they hate the process of selecting products and generally do not trust the people or the companies selling them.

All too often, these consumers associate buying insurance with confusion, anxiety, and fear. They find insurance-speak incomprehensible and are seldom confident of their ability to make the right choice. As a result, they put off insurance purchas-es. Even more troubling for U.S. insurers is the rapid deterioration of consumers’ confidence in—and opinion of—financial institutions in general.

These challenges are part of a perfect storm affecting the conversion process. At the front end, advisors are reluctant to reach out to clients, most of whom have seen their investment returns plummet. And even when they do, the conversation is clouded by mistrust and confusion. Making matters worse, the selling message is often poorly aligned with the issues that are most important to consumers today. Ultimately, the sale is harder to

make because many consumers have less money to spend. Some have lost income. Others, rattled by the downturn, have become more preoccupied with saving.

On a positive note, the crisis has improved attitudes toward certain insurance products, which could help bolster demand. U.S. consumers continue to view life insurance and retirement planning as helpful and protective. They are more in tune with the core values of these products, which provide them and their families with a safety net during difficult times. “Because of the crisis,” one consumer said, “I am much more aware of what I need to do in terms of financial security.”

The insurance paradox is at its most extreme in the United States, with both positive and negative attitudes in stark relief. Consumers want protection more than ever, and they see insurance as helpful and necessary. Many, however, are not buying. Companies that find ways to tap into this potential demand—not just through better marketing but through redesigned products, processes, and other changes to the operating model—will win a disproportionately high share of the market and accelerate their recovery from the downturn.

Dealing with Adversity in the U.S. Market



Attitudes Toward Specific Companies

In France, Germany, and Japan, we asked consumers to describe the qualities of the perfect insurer. The results in France and Germany were similar: consumers associate the perfect insurer with serenity, harmony, confidence, trust, and strong relationships. In Japan, they associate the perfect insurer with peace of mind and full coverage for the entire family.

To understand how insurance companies might be able to differentiate themselves, we asked consumers in all four countries to rank the main brands across a range of qualities, such as approachability, fairness and honesty, and trustworthiness. We looked closely at the results for three qualities: expert knowledge, value for money, and sympathy. Participants in our interviews and workshops frequently cited the first two qualities as critical.

In Germany, only a handful of companies managed to stand out, mainly because of their expert ◊ knowledge and value for money. The middle ground was crowded. There were about 20 large compa-nies that consumers think of as similar or nondescript. These companies have an unmistakable need, as well as a clear opportunity, to set themselves apart by repositioning their brands.

The differentiation among brands was a little stronger in France. Most of the top-rated brands were ◊ mutuals, which suggests that French consumers have a good understanding of the mutual concept. Our workshops revealed five characteristics that underpin the image of mutual insurers: their longevity, their practice of returning profits to customers (who are the shareholders), their narrow focus on consumer segments or regions, their local presence, and their reputation for honesty and trustworthi-ness. These factors create a powerful brand advantage over publicly listed insurers. (See the sidebar “Learning from Mutuals.”)

In Japan, brands were more sharply defined by expert knowledge and value for money. There was one ◊ cluster of expensive experts—mainly traditional Japanese companies—that have outstanding knowl-edge but lack value for money. Companies in a second cluster have outstanding value for money and also rank high in sympathy. Finally, there was a catchall cluster that included brands lacking in any defining characteristics.

Insurance companies fell into five groups in the United States. First were all-around champions, which ◊ provide both expert knowledge and value for money. Next were price leaders, which provide good value for money. These were followed by experts, usually associated with specific products. The fourth group comprised middle-of-the-pack companies that blend together in consumers’ minds. Finally,

Mutual insurance companies have a better image than other insurance companies, particularly in France. They are seen as partners, not just provid-ers, and are considered more trustworthy than publicly listed insurance companies and banks. Consumers also see mutuals as more sympathetic than other insurance companies. In France, the institutions receiving the three highest marks for sympathy were all mutuals.

Outside of France, however, mutuals are less well understood. In Japan, for example, only one-third of our survey participants knew about mutuals, and less than 25 percent said they were knowledgeable enough to explain the concept. There was a similar lack of familiarity in Germany. Mutual insurance

companies in these two countries have a tremen-dous opportunity to increase their market share by promoting the inherent strengths of the model.

Nonmutuals cannot mimic all the advantages of mutuals, but they can recreate the kind of transpar-ency that consumers value. We asked consumers In Germany and France if they would appreciate having annual updates about how their premiums are used. Such reporting is common practice among mutuals, which typically spell out their claims, costs, and profits. In both countries, around 65 percent of respondents thought this was an excellent or a good idea. Only 2 percent thought it was not a good idea at all.

Learning from Mutuals



there was a group of companies defined mainly by negative perceptions; most were hit hard by the crisis.

Across all markets, there is room for insurers to make their brands more distinct. Consumers’ perception of insurance companies is blurred by the large number of brands that lack definition. Most brands fall into broad categories—for example, nonmutuals and middle-of-the pack insurers—which are too general to make a lasting (or accurate) impression on a company’s target customers.

Developing a More Refined Consumer Segmentation

To determine how they can best acquire, serve, and retain customers, most insurers segment the consum-er base according to wealth or income. But such a value-based segmentation assumes that consumer preferences—for certain products or channels, for example—are inextricably linked to money. In fact, these preferences are more closely correlated with underlying attitudes and motivations.

To arrive at a more accurate, actionable segmentation—one that can steer the development of marketing campaigns and product portfolios—we developed a process for categorizing consumers according to their attitudes and motivations. The criteria for this behavioral segmentation were uncovered during our mind-discovery workshops. (For more on our approach, see the sidebar “BCG’s Study Methodology.”) We then used a quantitative survey to ensure that these criteria would result in segments that are internally homogeneous—with consumers in each group sharing key characteristics—and externally heterogeneous. Such segments would be distinct enough to provide cues for altering, say, a marketing message or product offering.

Our method allows consumers to be segmented along a small number of dimensions. (See Exhibit 2.) Two dimensions, in particular, proved useful when categorizing consumers in all four countries.

Active Versus Passive. ◊ This dimension describes a consumer’s behavior when dealing with insurance issues. Does he or she have the motivation and capabilities needed to be actively involved in the process of assessing and buying insurance products?

Peace of Mind Versus Necessary Evil. ◊ This dimension captures consumer attitudes toward the industry as well as toward specific brands or products. It also reflects consumers’ relationships with insurers and their perception of the benefits of insurance.

These two dimensions go a long way toward describing how people approach the insurance sector. In fact, they are so comprehensive that by themselves they were enough to segment consumers in France and Japan. (The dimension capable versus not capable, which we used in Japan, is very similar to active versus passive, while caretaking partner versus untrustworthy cheater is a more extreme version of peace of mind versus necessary evil.)

In Germany, we added a third dimension—relationship-seeking versus independent—to capture other important variables in behavior. (The capable/sovereign versus lost and confused dimension, used in

BCG’s Customer Minds and Branding in Insurance study was conducted in the summer of 2009. The research combined several mind-discovery work-shops and an online survey with more than 1,000 respondents in each country. Mind discovery is a proprietary method for conducting consumer and expert workshops. It facilitates market and opinion research, the segmentation of target groups, and

the development of market strategy. BCG uses this method primarily to understand issues relating to brand management and strategy. The study also drew on BCG’s Consumer Sentiment Barometer, which provided additional insights into the impact of the crisis on consumer attitudes.

BCG’s Study Methodology

T B C G F


Germany, is analogous to active versus passive; involved versus indiff erent describes people who derive peace of mind from insurance and are therefore involved in the process of buying it, versus those who see insurance as a necessary evil and are therefore indiff erent.)

To segment consumers in the United States, we added a fourth dimension—feeling well-insured versus not well-insured. The former category includes people who take comfort in knowing that their personal insurance coverage is suffi cient; they sleep well at night. The latter group includes people who know they need better coverage and feel anxious as a result, but they will not address the problem without being pushed. (In the United States, our segmentation focused on life and annuity products. In the other countries, it covered both life and nonlife products.)

In each country, the behavioral segmentation yielded distinct groups. In France, for example, these included optimizers, who represent about 8 percent of the population, and relationship seekers, who represent about 10 percent. Optimizers see insurance as a necessary evil but are still engaged. They compare prices and are very interested in direct channels. Relationship seekers have a positive attitude toward insurance—they value the peace of mind it provides—but they are a more captive audience. They will not compare prices, nor will they consider using any channel other than the company’s sales agent, as personal relationships are extremely important to them. Similar segments exist in other countries.

Needless to say, insurers must have separate marketing strategies for segments that are substantially diff erent from one another. This kind of alignment is already creating value for insurers. Some have successfully adapted their marketing strategies to suit specifi c segments, sometimes varying prices or even developing diff erent brands. These companies tend to have better premium growth than companies that make less of an eff ort to target specifi c segments.

The true test of this approach—and a measure of its potential value to insurers—came when we started to assess the bearing of each segment on customer acquisition and retention strategies, as well as on brand and channel management.

Germany France

Japan United States

High versus low importance of relationship

Capable/sovereign versus lost and confused

Relationship seeking versus independent

Active versus passive

Peace of mind versus necessary evil

Capable versus not capable

Caretaking partner versus untrustworthy cheater

Active versus not seeking information

Feeling well-insured versus not well-insured

Peace of mind versus necessary evil

Involved versus indifferent

Primary dimensions for segmenting insurance consumers

Source: Quantitative research in Germany (n=1,004), France (n=1,004), Japan (n=1,001), and the United States (n=1,066), May through July 2009.Note: In the United States, our segmentation was based on research into consumer attitudes toward life and annuity products. In the other countries, our segmentation covered both life and nonlife products.

Exhibit 2. Consumers Can Be Segmented on the Basis of Their Attitudes and Behaviors



Understanding the Keys to Customer Acquisition and Retention

In addition to examining consumer attitudes toward the insurance sector, our study looked at how people negotiate the purchasing process—an experience that turns out to be more improvisational than scientif-ic—along with the channels they prefer and the factors that influence loyalty. Some of our insights are applicable to all segments, but most vary according to the characteristics of each group.

The Purchasing Process Consumers say that their decision-making process when buying insurance is rational and disciplined. They genuinely want to compare products and prices, draw on objective sources to make an informed choice, and arrive at a product that delivers the best value.

The reality, however, is far from the ideal. For many consumers, the process tends to be spontaneous rather than planned. Demand is sparked by conversations with friends and family, or it arises only when someone close to them needs insurance. Searches are narrow, and the decision is easily swayed by a small number of information sources. In Germany and France, recommendations from friends and family are the most important influence. In Japan, consumers tend to get their information from advertising—on both TV and the Internet—and from insurance agents. Among U.S. consumers, insurance agents are the most important source of information.

Neutral sources, such as price comparison Web sites and specialized media, are a second-order priority for most consumers. The lone exception is the segment of active consumers, who are both interested in and capable of understanding the complexities of different products.

ChannelsDistribution structures vary widely among the four countries, but the structures themselves change slowly. Direct channels do not yet play a major role in any of the four markets, except for motor-vehicle insurance and some noncomplex risk life products. But each country has some consumer segments—typically comprising active consumers—that use the Internet to research and buy insurance. Even passive consum-ers are starting make a foray into the market using the Internet. For most companies, therefore, an easy-to-use online site is essential.

Customer RetentionAcross all segments, lower prices are the main reason for switching insurance providers. (See Exhibit 3.) It takes time, however, before a customer will start to think about switching, let alone comparing offerings.

Lower price at new company

Previous company did not care about my needs Former product didn’t suit my needs anymore

Bad reimbursement

Recommendation by family or friends Previous company was not easy to contact Previous company had a bad reputation

Previous company had no aer-sales service

Previous company had poor aer-sales service

Not tested

Not tested

Germany France Japan

Reason for leaving an insurer (%)

62 63 43

22

21

13

12

9

2

21

22

13

15

14

3

20

10

21

8

12

8

Source: Quantitative research in Germany (n=1,004), France (n=1,004), and Japan (n=1,001), May through July 2009.Note: Respondents were permitted to cite more than one reason. This analysis was not part of the quantitative research conducted in the United States.

Exhibit 3. Price Is the Most Common Reason for Switching



Germany France Japan

Good service

Good reputation

Good past experience with a claim

Sympathetic agent

Discount for existing clients

Lowest price

Convenience of staying

Agent convinced me

53

52

47

44

42

35

33

19

50

45

27

35

37

44

46

10

16

11

14

32

22

30

31

20

Reason for staying with an insurer (%)

Source: Quantitative research in Germany (n=1,004), France (n=1,004), and Japan (n=1,001), May through July 2009.Note: Respondents were permitted to cite more than one reason. This analysis was not part of the quantitative research conducted in the United States.

Exhibit 4. The Drivers of Loyalty Vary by Country

Consumers in passive segments are much more loyal to their insurance providers, particularly if they are relationship oriented. For them, the burden of switching—the time spent searching for information and filling out forms—outweighs the benefit of a lower price. In addition, these consumers are not inclined to research prices or other providers.

Only a few consumers said they had switched insurers because of poor service or unfulfilled needs. But rather than focusing on what makes customers leave, we were more interested in what makes them stay. How do you keep them from entertaining competing offers or actively shopping around? In France and Germany, good service and an impeccable reputation will keep customers on board. (See Exhibit 4.) In Japan, sympathetic agents and customer inertia—the convenience of staying—are the most common reasons why people stay with an insurer.

A Call to Action

Connecting with the consumer requires detective work. Segments based solely on age and income only scratch the surface of consumer insight. A marketing campaign targeting people who are, say, 30 to 40 years old and in a certain income bracket will be blunter than one geared to people who share specific traits.

To improve customer acquisition and retention, companies should begin by segmenting their existing and target customers according to their attitudes and behaviors. The basic segmentation dimensions will mirror those defined for the four markets above, but companies may be able to develop more granular segments based on other factors. Using such a refined segmentation, companies can promote certain products to specific segments, develop new guidelines for the sales force that clarify which approaches work best with certain consumers, and even roll out new brands that appeal to a particular niche. But to put consumer insight into action, a company must have an effective market-research function. Unfortu-nately, many do not. (See the sidebar “Hearing the Consumer’s Voice.”)

For many companies, the process of leveraging consumer insight will entail substantial transformation. It requires not only careful study but also clever adjustments to the business. The changes set in motion by segmentation should—over time—affect marketing campaigns, product development, and training.



But insurers can also take immediate steps to leverage consumer insight. In our study, consumers endorsed several measures that would have a positive impact on their attitude toward an insurance company.

Make the most of rare moments of truth. ◊ Insurers have few opportunities to leave a lasting, positive impression on the consumer. The claims process is the definitive moment of truth—the time when the insurer does something that has a direct and substantial impact on the customer’s well-being. An insurer can make a strong impression by being there when the customer needs support—not just over the phone but in person. In addition, insurers should try to manufacture moments of truth that are separate from claims. In France, many consumers said their insurer had called to say that their rates were being reduced. These customers felt they were being treated fairly, which helped build loyalty.

Make insurance more tangible. ◊ Many insurance products remain dormant until customers need them—that is partly why consumers describe insurance as intangible (and hard to appreciate). Insurers need to make their presence felt, and they can do so by describing some of the outstanding efforts they have made in response to claims. Some, for example, are able to mobilize substantial resources in response to natural disasters. Other companies find ways to play a visible role on a regular basis. In the United States, State Farm Insurance has partnerships with several state highways to provide safety patrols. The patrol vehicles are painted in the company’s colors and reflective signs along the highway bear the company’s name, along with the number to call to request free roadside assistance.

Most companies recognize the importance of the market research—or consumer insight—function but they struggle to unlock its value. This was one of the key findings of a recent BCG report, The Consumer’s Voice—Can Your Company Hear It? (November 2009), which benchmarked the consum-er insight capabilities of 40 companies across a range of industries. The study included a survey of more than 800 executives and nearly 200 inter-views.

While all companies see consumer insight as a major contributor to financial performance and growth, only 35 percent of the executives surveyed described their consumer-insight capabilities as best in class. Frustrations were evident among both the recipients of market research—the line managers—and those who generate the output.

When asked whether consumer insight teams ◊ “consistently answer the question, So what? about the data they provide,” only 34 percent of line managers said that they do

Fewer than half (41 percent) of insight staff ◊ thought the business leaders in their organiza-tion could pass a pop quiz on important facts about consumers

If companies are not hearing the consumer’s voice, it may be because they follow a hemmed-in approach to market research. The study identified four stages of a company’s consumer-insight

capability. At stage one, it is essentially an isolated order-taking function, walled off from critical business decisions. At the opposite end of the spectrum—stage four—it is a source of competitive advantage, with a mandate that spans the organiza-tion and findings that influence cross-firm decisions such as acquisitions, prioritization of brands and markets, and resource allocation. In our study, almost 90 percent of companies were still at stage one or two.

To capture the full potential of consumer insight, companies must focus on two factors. First, they need to improve the engagement model. This involves, among other things, getting senior managers involved and expanding the scope of the function. On average, only 20 to 35 percent of a company’s market-research budget is devoted to strategic studies, and less than 40 percent of survey participants said that market research is used at their companies for decisions on pricing, promo-tional activities, or distribution channels. Second, companies need to improve the performance of the consumer insight function by upgrading capabilities and talent and focusing the team on the right activities and deliverables.

Generating and exploiting consumer insight—knowledge that brings a company closer to the hearts and minds of its targeted consumers—is a capability that can yield immense impact. There are few business decisions that could not benefit from a deeper understanding of consumer behavior.

Hearing the Consumer’s Voice



Increase transparency. ◊ Insurers can build trust with consumers by demystifying their products. They should explain terms and conditions as clearly as possible, spelling out exactly what is and is not covered. And when premiums rise, they should say why. That can help minimize the risk of alienating customers, particularly if the company makes it clear that premiums are used largely to pay claims.

In short, insurance companies have an opportunity in both the near and the long terms to leverage a better understanding of consumers.



About the Authors

Heiko Franken is a partner and managing director in the Hamburg office of The Boston Consulting Group. You may contact him by e-mail at [email protected].

Christopher Freese is a senior partner and managing director in the firm’s New York office. You may contact him by e-mail at [email protected].

Ian Frost is a senior partner and managing director in BCG’s Chicago office. You may contact him by e-mail at [email protected].

Jean-Christophe Gard is a partner and managing director in the firm’s Paris office. You may contact him by e-mail at [email protected].

Kosuke Kato is a partner and managing director in BCG’s Tokyo office. You may contact him by e-mail at [email protected].

Astrid Stange is a partner and managing director in the firm’s Cologne office. You may contact her by e-mail at [email protected].

Ulrich Stephan is a principal in BCG’s Munich office. You may contact him by e-mail at [email protected].

The authors would like to thank Aliaa Ali, Gaby Barrios, Tim Bercio, Kilian Berz, Diana Diedler, Finn Age Hänsel, Emmanuel Huet, Liselotte Maichel, Kate Manfred, and Felix Waldeier for their support and input. They would also like to thank Dan Coyne for his help in the writing of the report and Kim Friedman and Gina Goldstein for contributions to its editing, design, and production.

The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-val-ue opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advan-tage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 68 offices in 39 countries. For more information, please visit www.bcg.com.

© The Boston Consulting Group, Inc. 2010. All rights reserved. 2/10

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