How Millennials Are Driving a Digital Disruption in Commercial Insurance
The massive generational shift of millennials now being the largest U.S. generation means that commercial carriers must change how they go to market. As more millennials become business owners, they are bringing the same expectations to commercial insurance that they used to disrupt and transform the consumer market.
Millennial business owners will increasingly demand — and expect — a better customer experience driven by digital efficiencies and the personal touch.
Commercial carriers striving to meet these expectations are wise, because the opportunity is too compelling. A recent LexisNexis survey interviewed commercial insurance professionals in the roles of underwriting, product management and actuarial science to understand the impact of millennial entrepreneurs, uncovering some key takeaways:
- 84 percent of commercial professionals recognize millennial entrepreneurs as a robust market trend;
- 60 percent consider millennial entrepreneurs to be an opportunity for their commercial insurance business;
- 81 percent are currently making or planning to make changes to how they do business as a result of millennial entrepreneurs; and
- 21 percent consider millennial entrepreneurs to be a threat to their commercial insurance business.
Thus, the first lesson for commercial carriers may be that expectations have evolved dramatically.
One change in business processes seen as necessary by the majority of the respondents would be to appeal to their sense of streamlined user experiences. Yet the commercial insurance process is still conducted the same way as before, often laden with multiple rounds of information-gathering between the agent and the customer, data input from the agent and validation of the information by the underwriter.
This old model will not necessarily work with millennial business owners.
Today’s millennial entrepreneurs are more likely to conduct business transactions while skimming headlines on a tablet, while also drinking a coffee they ordered on the coffee chain’s mobile app, which they accessed using their smart watch.
They can already buy personal insurance and receive a quote within minutes using a smart phone. And we’re seeing the impact of customer experience in personal lines impact customer expectations in commercial lines. In fact, a PwC study found that 70 percent of business owners who purchased personal insurance online would like to purchase commercial insurance online in the future.
Real-time, immediate gratification is also essential for this generation. LexisNexis found that 90 percent of commercial insurance professionals said faster turnaround time is the most important factor in providing a positive customer experience.
The evolving competitive landscape is also pressuring commercial insurance carriers to provide more robust digital tools. The millennial generational shift has brought into the commercial market more non-traditional players who are far more adept at catering to millennial sensibilities.
Insurtech and other new competitors are going to market with digital-first solutions specific to millennial customer demands. Many aim to streamline the quote and application process, while others provide a direct distribution channel between carrier and business owner. Between 2008 and 2017, more than 900 of these new entrants had flooded the insurance market, with 138 being commercial-specific providers.
Invest in Automation
So how can commercial carriers keep up with evolving millennial customer demands and increasing competition? Investing in automation and data prefill capabilities are essential in enabling carriers to meet new customer expectations while also defending against other market pressures.
Consider, for example, technologies that leverage the power of automation to generate faster, more accurate customer data to streamline the insurance buying process, from application through underwriting. Millennials are much more open with their information and share it willingly. And in this hyperconnected world, they expect you to already know a lot about them before they even begin the process.
With a minimal amount of application information from the customers — such as business name and address — carriers can tap into business insights they need drawn from multiple data sources. Within seconds, the technology commercial data prefill solution can return relevant applicant data, such as vehicle, property driver, workers’ compensation and firmographic information. This approach significantly reduces the data input required for commercial applications while increasing the speed of quotes.
It also creates a more personalized experience for millennials. Carriers’ agents can thus spend more time engaging with millennials by confirming their data rather than collecting it and can further spend that time being more consultative to the customer.
Automation and digitization are the new norms in many of our daily interactions, and commercial insurance transactions are subject to the same expectations. Carriers’ intent on engaging with millennials is embracing the opportunity to streamline the insurance buying process with digital tools. For now, they can enjoy early-adopter status.
However, as adoption increases, digital tools — and the competitive advantage they offer — will become table stakes. Carriers that do not actively adapt to these shifts in the market will struggle to keep up with their more savvy competitors. &
Liz Rozier, Vertical Market Manager for Commercial Insurance at LexisNexis Risk Solutions, also contributed to this article.