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Staying competitive in a mature market: the challenge for life and pension insurers

"Customer satisfaction is not what the customers tell you; it is what they tell others about you."


Thomas Leonhardt Nielsen, PA expert

The market for life and pensions (L&P) insurance in Scandinavia is maturing, bringing about changes in the behaviour and requirements of customers. Driving demand for products that are less complex and more transparent, customers are also increasingly dissatisfied with inadequate service levels. As well as losing market share, the L&P companies that cannot compete are at risk of falling prey to mergers and acquisitions activity within the industry.

To compete, Scandinavian L&P insurance companies must move away from competing solely on price. They should focus instead on finding new ways of meeting customer needs and adapting their services to improve customer experience.

Building your business around what customers value most

Research over the last 20 years, supported by scoring systems like the Net Promoter Score (NPS), show a strong correlation between customer satisfaction, loyalty and profit. Customer satisfaction is not what the customers tell you; it is what they tell others about you. Moreover, other studies have found that, historically, L&P insurers score low on loyalty. For example, a study by EPSI Denmark concluded that many Danish insurance companies do not have a strong relationship with their B2B customers due to indifferent satisfaction and loyalty scores. 

You can challenge these preconceived notions by ensuring that your entire business system is designed to deliver on the promises you make to your customers. These promises should be grounded in a clear understanding of what customers value at each stage of the customer journey. PFA, for example, transformed its core business system to enable it to provide better products faster. The company also launched a mobile app which allows customers to check on the performance of their pension and understand what would happen if they made changes to their personal pension arrangements.

Finding new ways to differentiate your products and services

Competition for L&P customers has intensified, especially in the corporate pensions market where companies are undercutting each other and jeopardising profitability by doing so. Rather than pursuing cost-leadership, you should find a different way of creating loyalty and capturing market share. Occupational pension companies are looking for ways to retain current members and attract new ones. For example, PBU (the Danish pension fund for teachers) focuses on retaining members by offering a simple product and dealing with its members in a proactive and targeted manner while maintaining low costs.

Exploring new channels for engaging with customers

Changing customer behaviour and rapid technology development is accelerating the need for providing services through new channels. Social media, in particular, extends the opportunities for interacting with customers and understanding their needs, and also serves as a way for them to reach you. However, the Social Media Factbook 2011/12 – produced by SocialSemantic among others – shows that insurance is one of the slowest industries in Denmark to adopt social media for business purposes. Companies in other industries do much better in this area. The jewellery company PANDORA, for example, has a Facebook entry that was recognised by L2, the digital think-tank, for driving an exceptional increase in engagement. The challenge and opportunity for L&P companies therefore lies in bringing low-interest products into positive high-involvement contexts.


PA has worked with PFA as outlined in headlines in the video above. To find out more about thriving in the life and pensions market, please contact us now.

Contact the financial services team

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