Based on a raft of recent studies by Majesco, Accenture, Bain and others, today’s P&C insurance customers look and act a lot like travel, ride-sharing and retail customers. Perhaps most of all they look like technology customers, and this presents some urgent challenges and opportunities for the industry.
“Your customers no longer compare you just to your direct competition. You are being compared to the best service they have ever received — from any company or any person.” - Shep Hyken, What Customers Want and Expect
New attitudes, new possibilities
According Majesco, consumer preferences may be even further ahead of incumbents’ ability to deliver on them than we thought:
55–70% of insurance customers want a quote and 45–62% want to buy via messenger app.50–70% want on-demand insurance.63–74% would like services to prevent or minimize accidents or claims.Growing percentages of all generations are completing their purchases of new insurance policies online. Almost 50% of Millennials have done so.
Majesco and Accenture also found that, across generations, there are high percentages of people who are willing to share their personal data in exchange for better and more personalized pricing. Proving once again that when it comes to our personal data, we’ll all sell out for a price.
Nearly 60% of consumers are open to sharing location data and lifestyle information in exchange for lower pricing.64% of consumers are interested in receiving adjusted car insurance premiums based on safe driving.52% in exchange for life insurance premiums tied to a healthy lifestyle.
Mind the (generation) gap…
Another consistent theme in the studies is the substantial disparity between “the old and new worlds of insurance.” In the old world are the Baby Boomers, who are fully indoctrinated in the traditional ways of the industry, and in the new you have Millennials, Gen Z and Gen X, with their dauntingly high expectations driven by today’s best consumer experiences.
Ian Jeffrey, in Millennials Demand a Modern Experience, put it most directly:
Millennials shop differently than the industry sells.
They expect service levels that the industry doesn’t provide.
They want to transact easily, wherever and whenever they want.
Those expectations come with an upside though. An exciting openness to new products, services and business models, and the more profitable relationships that come with them.
Gen Z and Millennials express the strongest interest in value-added service offerings from insurers, and they are more open to viewing insurers as partners in their overall well-being.
They show stronger interest in the Lemonade social good model of distributing post-claims money to charitable causes, and they are most likely to consider other social or peer-to-peer business models.They like new ways of pricing and buying.
Nearly 50% of Millennials (followed closely by Gen Z) would consider eight different insurance pricing models based on new data sources regarding their unique behaviors or characteristics.
“While customers understand that buying insurance isn’t as simple as ordering pizza, they expect the same relative level of ease and personalization from both transactions.” - Tom Hammond, How to Win the Retention Game
So how are we doing so far?
Bain & Company’s fourth Customer Behavior and Loyalty in Insurance Report underscores the vulnerability of incumbents. Their extensive research shows that consumers, especially digitally active millennials, are very open to switching to another provider, including one from outside the industry such as a retailer, automaker or tech company.
The report further found that 80% of insurance customers ages 25 to 40 rated their insurer low on the items that mattered most to them.
“Small wonder then,” the report concludes, “that an increasing number of consumers shop for policies at aggregator sites, or that insurtechs and other newcomers to the industry are gaining traction in the marketplace.”
It wasn’t all bad news for incumbents though. Bain reminds us that many insurance upstarts are underperforming compared with incumbents and failing to attract sufficient customer interest, suggesting there’s still time for incumbents to head them off.
“Insurers should not expect the next generation of insurance customers to adapt to insurance models and products of the past. The roles are now reversed. Insurers must adapt to them.” - Denise Garth, Majesco
Two out of three ain’t enough
Successfully navigating the future of insurance, while keeping existing customers and attracting new generations at the same time is a tall order. Majesco recommends a three-pronged approach:
Modernize the Existing Business — Replace legacy systems in a private or public cloud to keep and grow today’s business.
Optimize the Business Today — Create new digital capabilities to protect and grow today’s customer base.
Create a New Business for Tomorrow — Build new business models for a new generation of customers and products.
The first two are table stakes in today’s world, though incumbents are struggling to master them. The third is where the game will ultimately be decided.
Finding the Business Model that Fits the Customer of the Future, by Denise Garth, Majesco
Insurance Products and Services that Fit Future Customers, by Denise Garth, Majesco
Millennials Demand Modern Experience, by Ian Jeffrey, Insurance Thought Leadership
Customers Are Read for an Insurance Makeover, by Majesco
How to Win the Retention Game, by Tom Hammond, Insurance Thought Leadership
2019 Global Financial Services Consumer Study, by Accenture
Customer Behavior and Loyalty in Insurance Report, by Bain & Company
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