Younger Insurance Customers Want Speed and Seamless Underwriting. Can This Industry Deliver?
The insurance industry is in the midst of a transition: Juggling the influx of new and younger customers, including a mix of millennials and gen Zs who bring with them decidedly new standards for speed and quality of service.
To capture these new customers, insurers will have to adapt their business processes to be as responsive and proactive as possible in order to stay relevant.
And this demand has only accelerated, especially as the largest cohort of millennials reach their peak homebuying (and subsequent homeowners insurance policy) age. Even in commercial lines, consumer expectations continue to demand transformation, as our era of instant gratification has primed policyholders across the board to ask for things to be faster, easier and better.
While all consumers might be adapting to more digitally-enabled interactions, either by force or choice, it is the millennials’ preference for digital transactions that has been a boon to a new generation of digital-first tech startups eager to service this new customer set.
This modernization dynamic is forcing legacy insurers to completely overhaul their systems to facilitate service at the new standard of convenience and might be setting the stage for a shift in brand dominance as new entrants like Honey, Openly, Lemonade, Hippo and Canopius battle to become household names.
Increasing Emphasis on Digital Interactions and Expediency of Resolution
Historically, insurance companies found success by building personal relationships with their clients. The industry was built on the trust between a client and their agent who could help them both navigate the tough times and be there to celebrate the key milestones of life such as an upgraded home or investment in a new swimming pool.
Technology is fundamentally changing the established relationship between the company and client.
New guidelines for how prospective clients even approach and interact with those insurance companies are being drafted, and they are decidedly less personal than ever before.
This shift is by no means exclusive to insurance, but digital enablement is forcing a rapid evolution nevertheless.
Millennials who have become accustomed to purchasing products and services online quickly via mobile applications expect frictionless transactions. If instant gratification is possible, consumers will gravitate to those carriers that provide the option, with millennials likely leading the way.
Companies that don’t embrace this shift in technology may find themselves victims of adverse selection, a near-future state where their tech-savvy competition has segmented the market and identified and bound the policies with the best risk, leaving behind only the highest-risk, lowest-margin properties for the slowest movers.
The insurance carriers that embrace the digital tools required to remain relevant for both current and future generations of clients may continue to see their business increase as they outpace the competition. While it may sound daunting, embracing change like the switch to digital-first and straight-through processing has several benefits, including increased market penetration and, most critically, higher customer satisfaction levels.
Increasing Attention Towards ESG Goals
ESG stands for environmental, social and governance, and the concept refers to the three key factors for measuring the sustainability and ethical impact of a business.
These factors are becoming an increasingly important influence of consumer selection criteria, and the insurance industry is not exempt from this trend. Socially aware and responsible consumers will apply some weight to ESG goals when selecting a new insurance carrier, so this is not a trend that can be ignored.
ESG strategy and compliance is just one additional factor that will affect brand perception among customers in the future, and younger customers are increasingly looking for insurers with established ESG goals.
So again, the compound effect and risk to companies that don’t embrace the values behind environmental, social and governance-related practices will be loss of market share and policy and brand erosion.
Investment in technology can eliminate the need for in-person inspections and reduce the number of vehicles on the road while also reducing the carbon footprint that insurance carriers leave behind.
Desktop adjusters can triage their support to the most pressing issues, no longer forced to physically inspect each insured property for changes at renewal time or for damage after an event. Investment in desktop inspections can save time, money and resources for the carrier and the client while reducing the impact on society.
Price Is Not a Primary Selling Point for Younger Generations
Quality and speed of service remain important decision criteria for all consumers and can sometimes override the importance of price. In general, consumers are willing to spend money on products that have a higher perceived value, even if they cost more than alternative undifferentiated insurance products.
With this in mind, insurers are incentivized to focus on unique ways to provide value, like ease of use, quality of service and even education.
The influx of new and younger customers also means an opportunity to educate them on even the most basic insurance terms and practices. The first time insurance customer may not know what type of policy they want or even need, but now without the personal connection to an agent making a confident decision from a sea of digital options can be almost impossible.
So, it will be the carriers that lean into this challenge and develop the most intuitive tools to objectively educate buyers on their options and recommend the best policies that will win an outsized share of the millennial and gen Z customer base.
In fact, the goal of the ‘seamless underwriting experience’ represents the opportunity space for all insurers to attract more business through better, almost omniscient digital interactions.
For instance, by prefilling property attribute data into their online quotes, insurance carriers can virtually eliminate the need to subject customers to the painful interrogation of a traditional request for a homeowner’s insurance quote. An improvement to the overall home ownership experience which ultimately increases quote conversion rates, new client satisfaction, and most importantly achieves brand loyalty.
Let’s face it: This is just the beginning of the consumer journey for these first-time customers, and it’s highly possible that the insurance brands that can build trust at this critical juncture today might just earn themselves a lifetime of committed business and loyalty in the future.
The insurance industry is actively transitioning to meet the demands of a new cohort of younger and more tech-savvy clients. Each generation has a unique perspective and requisite set of needs compared to their predecessors, and with each generational evolution, insurers will continue to adapt their approach to courting and winning these new customers accordingly.
The good news is that insurance companies today have multiple pathways to increase the relevancy of their offerings such as understanding and promoting their sustainability and providing better online digital experiences. &