There are many variables that influence consumers' decision in purchasing health policies. In a recent study of China's consumer behavior in travel, health and home insurance, we focused on understanding consumers' purchasing preferences, including buying channels, purchasing processes, and types of products and services. The results of the study will enable us to gain a better understanding of consumers' needs, highlight pain points during the buying process and reveal opportunities for insurers to provide an attractive, innovative product to consumers.
From the results, 84.5% of respondents do research on health insurance, the highest compared to other products such as travel and home insurance. It is an indication that Chinese consumers have a rather high awareness of health insurance and this is a positive start for companies marketing such products. Where then should insurance companies put their marketing efforts – online or offline? Data shows that 41% of the respondents will buy health insurance online while 59% of the purchase decisions and actual purchases were completed offline, mainly through insurance intermediaries such as agents and brokers.
With the growing popularity of online shopping and active social media connectivity in China has led to a strong digital retail culture, especially among those between 26-36 years old. However, insurance products are relatively unique and complex. Today, face-to-face explanations between professional agents and consumers seem to be more effective in driving purchase and preferred by consumers. Our result shows that younger consumers (26-36 years old) are more enthusiastic about researching and buying the insurance product online such as social media. This is a good indication that marketing online (especially on social media) remains the key to promote health insurance products.
Moving into the near future, insurance company should also pay attention in improving their online buying process and products need to be adjusted for such channels. These are also two simple - yet key - conclusions. While price is a concern for consumers, it is not the most important factor. Simple terms and conditions are what respondents are looking for. Based on our survey, respondents are still willing to trade price for more important benefits from a health policy.
How important are simple terms and conditions? Among the respondents who bought health insurance products in the past 12 months, results showed that it took an average of three weeks for a decision to be made. Among the three types of insurance products in the study, this is the longest it took. The data showed during the buying process, the drop-out rate varies at different stages of the purchase. , The highest takes place at the information gathering and policy comparison stage (48%). We know this is from complexity terms and conditions. So, it is definitely worthwhile to think about how we can capture this 48% at this particular stage of the buying journey. With better use of data analytics, machine learning and predictive modelling, we can improve our ability to predict specific variables that impact this drop-out rate. And find an appropriate solution for it.
Through discreet choice modelling method, we can find out not only what type of value-added services consumers prefer, but also how much more are they willing to pay. Policies with the most number of common disease coverages, low premium and high sum assured remain a top preference. That said, we also found that respondents are willing to pay up to 20% more on basis premium if the policies provide family crisis assistance, quality doctors and access to overseas drugs. Understanding policy holders' needs will enable insurers to provide products with the right support.
It is not easy for insurance companies to win over the hearts of consumers in this competitive market. Nevertheless, from our survey, we can see that there are many types of consumers with varying needs that influence their buying and decision-making journey. With the use of technology, analytics and behavioural methods, plus our years of expertise, Swiss Re can help our partners make the right choices and be smarter together.
For more findings from our research on the opportunities for health insurance in China, read here.