Card Protection Metrics: Consumer Approaches to Card Protection Insurance in Germany

Abstract

Finaccord' s report titled Card Protection Metrics: Consumer Approaches to Card Protection Insurance in Germany offers detailed and unique insights into the behaviour of German cardholders in the context of card protection insurance. Based on a primary survey of over 1,000 consumers in Germany carried out in July and August 2008, the research provides valuable data describing the extent to which consumers with debit and / or credit cards take out card protection insurance and clarifying the proportion of uninsured cardholders who value the benefits of the insurance but have simply not got round to acquiring cover. In addition to calculating the percentage of German cardholders possessing card protection insurance, the investigation also analyses the types of policy that they hold (i.e. insurance that they are paying for separately or free cover), the range of benefits that they believe that they derive from their insurance, which distribution channel and interface they use to take out paid-for card protection insurance and whether they buy cover within a week or a month of acquiring a given payment card or at a later stage. Finally, the report measures the degree to which insured cardholders in Germany are satisfied with their insurance, whether they find it expensive and if they are likely to discontinue it the next time that it comes up for renewal. Key features of this report include: - robust analyses showing the percentage of cardholders that acquire card protection insurance in Germany, the potential for this proportion to grow further and how cross-selling rates differ between debit cards and credit cards; - unique data describing the proportion of cardholders who understand that the insurance that they possess provides them with particular benefits and services; - accurate statistics illustrating the extent to which sales of card protection insurance in Germany are made through remote interfaces (i.e. Internet, telephone and post) in addition to through face-to-face contact; - reliable information displaying how quickly cardholders are inclined to purchase card protection insurance once they have acquired a payment card; - valuable insights into the reasons given by German cardholders for not acquiring insurance (for example, because they have not had time, because it is too expensive, because they did not see the benefit).

Table of Contents

0.0 EXECUTIVE SUMMARY

• Few consumers pay separately for card protection insurance in Germany
• Younger cardholders are more likely to pay for insurance
• Low take-up of insurance means many potential customers - if they can be convinced of the value
• Most insured cardholders perceive that their card protection insurance cover is limited to core services
• Face-to-face and Internet distribution account for the majority of card protection insurance sales
• ... but remote interfaces are much worse at selling insurance at the same time as the card itself
• Sales of insurance by debit and credit card issuers are in line with their share of cards in issue
• There is a need to promote insurance when making card sales online, and to show value for money

1.0 INTRODUCTION

• Research rationale
• Consumer research illustrates the differences between Europe' s five most populous markets...
• Finaccord.
• European consumer research
• Card protection insurance
• European market, partnership and bancassurance research

2.0 SURVEY ANALYSIS

• Introduction
• Percentage of respondents possessing any kind of payment card
• Over 80% of consumers hold a payment card in Germany
• Percentage of cardholders in possession of card protection insurance
• Few cardholders pay separately for card protection cover in Germany
• Attitudes towards card protection insurance of cardholders without cover
• Potential for growth is limited by scepticism about the value of card protection insurance
• Risks covered by card protection insurance
• Anti-fraud protection is the benefit most commonly provided by card protection insurance
• Distribution interfaces used for paid-for card protection insurance
• Distribution of card protection insurance is evenly split between face-to-face and remote interfaces
• Point in time chosen to acquire paid-for card protection insurance
• Only a half of card protection insurance policies are sold at the same time as the card
• because card distribution often occurs remotely rather than face-to-face
• Distribution channels used for paid-for card protection insurance
• There is no apparent difference in take-up of insurance by type of card held
• Attitudes towards insurance of cardholders with paid-for cover
• Customers who pay for separate card protection insurance may be few, but they are satisfied
• Younger customers are more likely to view card protection insurance as expensive

3.0 APPENDIX

• Research sample
• The research embraces a total of 1,005 respondents in Germany
• Research structure

GRAPHICS / TABLES

• Percentage of respondents in Germany possessing any kind of payment card, 2008
• Percentage of respondents in Germany possessing any kind of payment card, 2008 (data)
• Percentage of cardholders in Germany in possession of card protection insurance, 2008
• % of cardholders in Germany in possession of card protection insurance segmented by gender, age group and annual household income, 2008 (data)
• Attitudes towards card protection insurance of cardholders in Germany without cover, 2008
• Risk coverage among insured cardholders in Germany, 2008
• Risk coverage among insured cardholders in Germany, 2008 (data)
• Distribution interfaces used to acquire paid-for card protection insurance in Germany, 2008
• Point in time chosen by cardholders in Germany to acquire paid-for card protection insurance, 2008
• Frequency with which card protection insurance is sold at the same time as the card itself, face-to-face and remote interfaces, Germany, 2008
• Distribution channels used to acquire paid-for card protection insurance in Germany, 2008
• Attitudes towards card protection insurance of cardholders in Germany with paid-for cover, 2008
• Cardholders who find paid-for card protection insurance to be important but expensive by age, in Germany, 2008
• Sample breakdown in Germany by age group, household income band and geographic location