Consumer Behaviour and Loyalty in Insurance

Consumers now view insurance differently than they did even five years ago. They want more than loss coverage - they want help reducing and preventing the risks tied to their homes, cars, health, and finances. Extreme weather, rising healthcare costs, an ageing population, and rapid technological change have all sharpened this expectation. Insurers who still frame the relationship as "we pay you back after something goes wrong" are increasingly out of step with what their customers actually want.

The research bears this out. Bain & Company's Customer Behavior and Loyalty in Insurance: Global Edition 2023 survey drew on 28,765 consumers across 14 countries, fielded with Dynata. It found that 80% want insurers to embed environmental, social, and governance (ESG) initiatives into their proposition, and 59% want life insurers to reward them for healthy living. Neither figure describes a niche preference. Both describe most of the market telling insurers, directly, that the value exchange has changed.

The shift in customer expectations

Customers now expect the same joined-up, personalised experience across every touchpoint that they get from their banking app or their supermarket loyalty scheme. Insurers that still route every meaningful interaction through an annual renewal letter are competing on a much narrower footing than those using data and digital channels to understand what a customer actually needs, and when.

This does not mean price stops mattering. It means price is no longer the only lever. Bain's research and the wider industry evidence point to the same conclusion: customers reward insurers who demonstrably help them avoid a loss, not just settle one. A motor insurer that flags risky driving patterns before an accident, or a health insurer that nudges a member towards a preventive check-up, is building the kind of relationship that a comparison-site discount cannot easily dislodge.

What ESG and healthy-living rewards look like in practice

The Bain statistics only matter if insurers can point to something concrete built around them. A handful of UK and Irish insurers already have.

Vitality built its entire commercial model - "Shared Value Insurance" - around rewarding healthy behaviour. Its Active Rewards programme, running in the UK since 2016, reduces a member's monthly Apple Watch payment the more active they are. An independent RAND Europe study of over 400,000 members across the UK, US, and South Africa found participants increased their tracked physical activity by an average of 34%, with UK members seeing a 40% jump in active days per month on their first Apple Watch benefit. In April 2025 Vitality extended the model with "Pick and Play," a separate weekly rewards mechanic that lets members choose their own reward once they hit a points threshold - evidence the healthy-living reward model is still being actively developed, not a one-off campaign from a decade ago.

YuLife, a UK group life insurer, takes a similar principle into the workplace benefits market. Members earn YuCoin for everyday wellness activity - walking, cycling, meditation - and redeem it against well-known brands including Amazon, ASOS, and Avios, with Virgin Experience Days as a rewards partner. The pitch to employers is that a life insurance benefit most staff never think about becomes something they engage with weekly.

In Ireland, Laya Healthcare applies the same logic without the wearable-tech angle: adult members get a one-to-one health check with a qualified Healthcoach, a personalised fitness and wellbeing plan, and ongoing discounts across health, fitness, and everyday consumer brands. The mechanism is different from Vitality's or YuLife's, but the underlying bet is the same - reward the behaviour you want to see, continuously, rather than only at renewal.

The rise of ecosystems and partnerships

None of the examples above are single-insurer efforts built entirely in-house. They are ecosystems: an insurer partnering with retailers, wellness platforms, healthcare providers, or technology firms to widen what the policy actually does for the customer.

This trend is accelerating on the underwriting side too, not just on the rewards side. In October 2025, AXA Partners announced a strategic partnership with bolttech to deliver embedded insurance and assistance products - motor, home, travel, and lifestyle protection - across the EU, UK, and Switzerland, distributed through business partners rather than sold directly. And in Ireland, AXA's move to underwrite Laya Healthcare's policies - reported in May 2026 - shows the same ecosystem logic playing out at group level, with a composite insurer and a health insurance brand consolidating around shared distribution and underwriting capability.

For the customer, none of this underwriting detail is visible. What they experience is a policy that comes bundled with services they would otherwise have paid for separately, delivered through partners whose brands they already trust. This bundled proposition is meaningfully different from a standalone annual policy, and it is one of the clearest ways insurers are answering the ESG and prevention demand Bain's research identified.

Traditional cover vs the loyalty/ecosystem model

Dimension	Traditional insurance model	Loyalty/ecosystem model
Customer relationship	One meaningful touchpoint a year, at renewal	Continuous engagement via apps, wearables, and partner offers
Core value proposition	Reimburse losses after they happen	Help prevent risk before it happens, reward doing so
Main pricing lever	Price at renewal, often penalising loyal customers	Price plus recognition, tiered benefits, and added-value rewards
Use of customer data	Underwriting and claims only	Underwriting, personalisation, and ongoing engagement
Partner network	Minimal or none	Retail, wellness, healthcare, and mobility partners
Retention driver	Switching cost and inertia	Genuine engagement, habit, and demonstrated value
Example in this market	A standard motor or home renewal notice	Vitality Active Rewards, YuLife's YuCoin, Laya Healthcare's partner discounts

The power of trust and transparency

Building trust is essential in insurance, and it starts before any rewards programme is even considered. Customers stay loyal to insurers that are transparent, communicate clearly, and price fairly - not just to those with the most attractive perks. Understandable policy terms, a simplified claims process, and proactive support remain the baseline retention factors, and no amount of gamified rewards will compensate for a confusing policy document or a slow claim.

One of the starkest trust failures in UK insurance has been the "loyalty penalty" - the practice of quietly charging existing customers more than new ones for identical cover. Aviva addressed this directly with AvivaPlus, a subscription-style motor and home product that guarantees existing customers the same price, or better, than a new customer buying the same policy would get. This example is useful precisely because it does not rely on rewards at all - it simply removes a well-documented source of customer resentment, which is often the more urgent fix before a loyalty programme is built on top.

Personalisation and customisation

Insurers should use customer data to build offerings that address individual circumstances rather than broad demographic segments. Advanced analytics and AI-driven segmentation make it possible to identify which customers are at genuine risk of churn, which are receptive to a bundled add-on, and which need a human conversation rather than another automated email. Acting on each differently, rather than treating the base as one audience, is where the retention gain actually shows up.

This is where the ESG and prevention findings connect back to personalisation directly. A customer who has told an insurer, through their behaviour or their stated preferences, that they care about sustainability or about wellness incentives is signalling exactly the kind of segment an AI-driven engagement model should be built to serve. Treating that signal as a data point rather than acting on it is a missed retention opportunity, not a neutral choice.

The role of digital transformation

Digital transformation remains a precondition for most of the above, not a separate initiative. Mobile apps, chatbots, and online claims processing are now baseline expectations rather than differentiators, and insurers still catching up here struggle to deliver the continuous engagement that a Vitality- or YuLife-style rewards model depends on. A wellness rewards programme built on top of a claims process that still requires a phone call and a fax number is unlikely to move the retention needle it is meant to move.

Telematics is a useful illustration of how far this has moved in motor insurance specifically. A device or app that tracks driving behaviour can now feed directly into both pricing and a rewards mechanic, turning a single annual underwriting decision into a rolling, data-driven relationship with the customer.

Customer engagement and retention

Insurers must focus on retention at least as much as acquisition. New customers are easier to track and generate the kind of short-term volume that looks good on a quarterly report. Retained customers are typically more profitable, though: they are less likely to churn at the next comparison-site search, and a positive claims experience compounds into further loyalty rather than sitting as a one-off transaction.

Exceptional service, active engagement between renewals, and a genuine rewards or ecosystem proposition - not a discount alone - are what convert a policyholder into a long-term customer. The insurers profiled above did not arrive at this by accident; each made a deliberate decision to treat the relationship as ongoing rather than annual.

Frequently Asked Questions

Why are insurers shifting from covering losses to preventing risk?

Customers increasingly expect their insurer to help them avoid a claim in the first place, not just pay out after one. Wearables, telematics, and health apps let insurers see risk building in real time - a driver braking harshly, a policyholder's activity dropping off - and intervene early. Prevention is also commercially rational for the insurer: a claim avoided costs nothing to settle, and it keeps the customer's no-claims record intact, which is a stronger retention lever than a discount.

What real-world examples show insurers rewarding loyalty or healthy living?

Vitality's Active Rewards programme reduces members' Apple Watch payments based on their activity levels and has been running in the UK since 2016. YuLife rewards UK employees with YuCoin, redeemable against brands like Amazon and Avios, for everyday wellness activity. Laya Healthcare in Ireland gives members ongoing discounts across health, fitness, and everyday brands rather than a single renewal-time offer. All three treat the policy as the start of a relationship, not a one-off transaction.

How big is consumer demand for ESG and loyalty rewards in insurance?

Bain & Company's Customer Behavior and Loyalty in Insurance Global Edition 2023 survey, covering 28,765 consumers across 14 countries, found 80 percent want insurers to embed environmental, social, and governance initiatives into their proposition, and 59 percent want life insurers to reward healthy living. That is most of the market signalling that price and cover alone no longer decide loyalty.

What does an insurance ecosystem or partnership model look like in practice?

Rather than selling a single policy, insurers partner with healthcare providers, wellness apps, motor dealerships, or retailers to surround the core product with services the customer uses regularly. Laya Healthcare's discount network and AXA Partners' 2025 embedded-insurance partnership with bolttech are both examples - the aim is more frequent, lower-friction touchpoints than an annual renewal notice.

How can insurers reduce the "loyalty penalty" and rebuild trust?

The loyalty penalty - charging existing customers more than new ones for the same cover - has been one of the biggest trust issues in UK and Irish insurance. Aviva addressed it directly with AvivaPlus, a product that guarantees existing customers the same or better price than a new customer would get. The broader lesson holds across the sector: clear terms, a simplified claims process, and pricing that does not punish tenure are what convert a policyholder into a loyal customer.