bao-EY-Study: insurers are running behind the ESG consulting obligation in sales talks

October 26TH 2022

bao-EY-Study: insurers are running behind the ESG consulting obligation in sales talks

October 26TH 2022

bao-EY-Study: insurers are running behind the ESG consulting obligation in sales talks

The audit and consulting firm EY and the software company bao analysed the ESG conversation quality of sales talks in the insurance market via mystery shopping. The result:

  • Sustainability concerns of the IDD insufficiently implemented
  • No preference query on sustainability for almost 80 percent of intermediaries
  • Counsellors lack structure and supportive measures in the counselling interview

Since the second of August this year, the query of the customer’s sustainability preferences has been an integral part of the IDD (Insurance Distribution Directive). Intermediaries are thus legally obliged to integrate sustainability into the advisory process. A recent study by bao in cooperation with the consulting and auditing firm EY on how the insurance industry deals with the ESG advisory obligation reveals: 78 percent of intermediaries do not yet ask their customers about their sustainability preferences.

Patrick Pfalzgraf, Partner at EY EMEIA Financial Services, says: “The required content and scope of the preference query is defined in the IDD and is the door opener for the further course of the conversation in the ESG advisory process. In about four out of five cases, however, this does not even happen – the topic of sustainability tends to be avoided, apparently for various reasons. The fact that a large part of the industry does not comply with applicable law is certainly not intentional. But it shows how many hurdles the industry has not yet overcome, even two months after Day X.” Dr. Patrick Strunkmann-Meister, founder of bao, adds: “It is not just about the law. Providers are also missing the opportunity to leverage sales potential through good consultations.”

Using a mystery shopping approach, bao and EY conducted 85 telephone and online counselling interviews of approx. 50 minutes each with intermediaries from 13 insurance companies via the bao platform as part of the study and subjected the ESG counselling quality to a real endurance test. Further partial results: In almost all conversations (95%), the level of knowledge on the topic of sustainability was not queried and far more than half (65%) of the documents sent contained no information on sustainable products, let alone classifications.

“If there are no ESG-compliant investment products to distribute or the provider has not classified them accordingly, intermediaries are of course up in the air,” says Pfalzgraf. “But the overall problem goes deeper. Often, the knowledge on the intermediary side is not yet sufficient for dedicated sustainability advice. In addition, there is a lack of suitable support through structured processes in omni-channel consulting; on top of that, tools and clear guidelines are often in short supply. At some point, this also affects the motivation of the advisors.

bao and EY

bao x EY

left to right: Dr. Patrick Strunkmann-Meister (Co-founder & CEO of bao),Patrick Pfalzgraf (Partner at EY EMEIA Financial Services)

Pfalzgraf and Strunkmann-Meister see various solutions here for a better quality of conversation.  “One short-term approach is the establishment of sustainability competence centres. Customers interested in sustainability can thus be directed to specialised sales units or certified sustainability advisors in the respective organisation. In the medium term, however, there is no way around the intensive and recurring training of all intermediary staff,” says Pfalzgraf. “In addition, the embedding of the counselling protocol including preferences in the application route as well as suitable tools for conducting interviews and for a structured declaration of suitability are necessary.”

Pfalzgraf adds: “From a business perspective, the great need to catch up is somewhat incomprehensible. Sustainability pays off in optimising all dimensions of success: customer experience, credibility, product value. Especially – though not exclusively – for younger customers, sustainability is increasingly a purchasing factor. Played out well, the topic of sustainability can create an unprecedented basis of trust between customer and insurer and emotionally charge the brand strength of an insurer.”

The winners of the hearts among the 13 test persons are Bayerische and Gothaer. Even though there is still room for improvement in the consultation structure and the scope of the preference query, the intermediaries were able to score points with an active approach to sustainability, good professional competence and a high degree of customer centricity. The clear winner, however, is also the only platform: Check 24 convinces with direct, interactive and structured advice. “This is where the advantages of following a structured, digital process become apparent,” says Pfalzgraf. However, there is also room for improvement at Check 24 in terms of dedicated content-related advice. In addition, it is not possible to divide the shares among the factors E, S and G.

About EY

EY* is one of the largest German audit and consulting organisations. In tax consulting, EY is the German market leader. EY employs around 11,500 people in 20 locations and achieved a total turnover of €2.2 billion in the financial year 2019/2020. Together with the 300,000 employees of the international EY organisation, EY serves clients all over the world.

About bao

Founded in Munich in 2017, the software company bao is on a quest for the perfect sales conversation. That’s why bao helps companies to systematically and measurably improve their sales conversations. The Conversation Intelligence software identifies success factors in the sales process and supports sales teams in implementing best practices. Customers like TeamViewer or Conrad Electronics use bao to generate structured, analysable data from conversations and to continuously improve their sales teams.

Contact details

Noah von Cappeln – Press and public relations

(089) 6931 3573


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