Could the latest generation of mobile apps and websites hold the keys to solving the decades-old challenge of customer apathy toward life insurance and annuities?
According to the J.D. Power 2023 U.S. Individual Life Insurance Study and the J.D. Power 2023 U.S. Individual Annuity Study, customer satisfaction is climbing as more customers make use of digital tools and start using life insurance and annuities for financial planning in addition to final planning (e.g., death benefits, burial insurance).
“Sales of life insurance enjoyed a brief surge in popularity during the height of the pandemic, while sales of annuities have more recently soared,” said Breanne Armstrong, director of insurance intelligence at J.D. Power. “But outside of that, customer satisfaction and engagement have generally declined the longer customers hold onto these products. Now, however, with more customers than ever engaging with life insurance and annuity providers more frequently via digital channels, we’re starting to see a real evolution. Customers who interact with the digital offerings of their providers are more engaged, have higher levels of satisfaction and are more likely to incorporate their life insurance and annuity products into their overall financial plans.”
Following are some key findings of the 2023 studies:
- Increased digital interaction drives life insurance satisfaction and engagement: The number of customers buying life insurance policies via insurer websites has doubled during the past five years, now accounting for 13% of all life insurance purchases, up from just 6% in 2019. All told, 62% of life insurance customers now interact with their insurer via digital channels. Overall satisfaction is 823 (on a 1,000-point scale) when customers use digital channels, which is 79 points higher than when customers do not interact via digital.
- Life insurance increasingly being treated as financial planning tool: The proportion of life insurance customers purchasing their policies for both financial and final planning reasons has increased to 39% in 2023 from 30% in 2022. Overall customer satisfaction with life insurance policies is significantly higher when they are purchased for both reasons, as opposed to final planning or financial planning alone.
- Annuity customer experience moves to digital: Customer satisfaction with annuity products is 800 this year, a significant 11-point increase from 2022, also driven in large part by increased digital engagement. Overall satisfaction levels are highest when annuities are purchased via provider websites. Customer satisfaction with the application and orientation process—which is a critical part of the annuity onboarding process—is highest when customers purchase via provider websites.
- Consistent digital touchpoints build annuity customer engagement: Nearly three-fourths (72%) of annuity customers are now defined as digital customers who regularly interact with their provider via website, email, chat, text or mobile app. Overall satisfaction among digital customers is 35 points higher (819) than among those who have no digital interaction (784) and 93 points higher than among those who have no interaction at all with their provider (726).
- Role of local agents and financial advisors enhanced by digital interactions: Even for products purchased through agents or advisors, adding in this digital interaction only increases customer satisfaction. When life insurance customers who purchased through an agent or advisor interact only non-digitally, satisfaction is 795. It increases to 821 when digital interactions are added. This trend also is found among annuity customers who purchased their annuity through an agent or advisor, with satisfaction 25 points higher (809) than among those who didn’t have this type of interaction (784).
State Farm ranks highest among individual life insurance providers for a fourth consecutive year, with a score of 843. Nationwide (840) ranks second and MassMutual (809) ranks third.
F&G (formerly Fidelity & Guaranty Life) ranks highest among individual annuity providers with a score of 843. MassMutual (827) ranks second and Nationwide (826) third.
The U.S. Individual Life Insurance Study measures the experiences of customers of the largest individual life insurance companies in the United States. The study measures overall customer satisfaction based on performance in five factors (in alphabetical order): communication; interaction; price; product offerings; and statements. The 2023 study is based on responses from 5,588 individual life insurance customers and was fielded from May through July 2023.
The U.S. Individual Annuity Study measures the experiences of customers of the largest annuity companies in the United States. Overall customer satisfaction is based on performance in five factors (in alphabetical order): communication; interaction; price; product offerings; and statements. The study is based on responses from 3,579 individual annuity customers and was fielded from May through July 2023.
For more information about the U.S. Individual Life Insurance Study, visit https://www.jdpower.com/business/healthcare/us-individual-life-insurance-study.
For more information about the U.S. Individual Annuity Study, visit https://www.jdpower.com/business/insurance/us-annuity-study.