The insurance industry is going through tremendous change driven primarily by a new breed of consumer: the millennials. The millennials have never known a world without computers, the internet, mobile phones and other mobile devices. Their daily lives are all about being digital. They share their experiences on Facebook; read Yelp reviews before making purchases; and Tweet about the service they receive from retailers, banks, restaurants, and yes, insurers.
The term millennials has been used to describe young people (most of them born after 1980) who hold a strong influence over older generations and are paving the way for their elders to be just as digitally savvy. As a result, consumers of all ages are adopting the use of digital channels to research and review the best possible insurance options to meet their needs. According to McKinsey & Company, the insurance industry spends approximately $6 billion in marketing to attract new customers and retain existing ones. But what good is marketing if you attract a consumer — a millennial in this case — and don’t offer that consumer the fast, easy, digital experience he or she has grown accustomed to from companies such as Uber, Spotify, and eBay?
To stay competitive, insurance carriers and agents are being forced to rethink how they interact with their digitally savvy consumers and redefine customer centricity. According to a 2013 LIMRA study, 86 percent of consumers would prefer to conduct their life insurance research online, and if given the option, 23 percent would prefer to buy online as well. Globally, one in five searches for financial services is from mobile phones, and in Europe, among 78 insurers, digital sales are projected to account for 18 percent of new business in 2016, up from 11 percent in 2011.
Addressing the digital challenge is a matter of survival: insurance companies that act too late or stumble through the transition will lose customers and remain saddled with a relatively high cost base. Customer expectations and demands are growing. Consumers now require more interactive and dynamic experiences and want to feel empowered to see what they want when they want it, on the device of their choice. Today’s consumers don’t want to complete a paper application; they expect a mobile-friendly environment for comparing rates and completing an application online. In the case of health insurance, digital consumers want to see and navigate through their explanation of benefits (EOB) dynamically and to further communicate within the context of their claim — requiring insurers to be able to engage immediately via online chat or text. And millennials, being digital natives, are deeply connected socially. One bad review on Yelp or Twitter can send the masses fleeing from an insurance company in seconds. Put simply, modern consumers expect their insurer to truly know, understand and empower them.
Steps to attracting millennials while retaining their predecessors
While the concept appears straightforward and simple, catering to digital natives isn’t where the insurance industry has traditionally excelled. Today’s new landscape requires a holistic view of the customer and the deployment of innovative technology, yet insurance companies have been plagued by legacy systems for years and are less inclined to adopt new technologies as quickly as their counterparts in other industries. The thought of being forced to go digital as quickly as possible to capture this new consumer can create a series of daunting questions, such as “What strategy do we employ first?” “What is the fastest but most cost-effective path to capturing our new constituents?” and “How can we make a big impact without ‘eating the elephant all at once?’” Many life and health insurers are struggling with legacy technology and outmoded organizational structures and are playing catch-up, so it is important to see this transition as a well-planned journey that requires flexibility and agility.
Shifting to a digital world to capture the hearts and minds of the digital natives calls for taking a holistic approach to customer centricity, technology, and processes. When planning to go digital, insurers should: