There is a new goal for Insurers: the better understanding of the expectations of Gen Y customers. Although they always worked to offer the best experience to their clients, the Customer Experience Index (CEI) showed that the Gen Y is less satisfied when compared to the other ones.
This means that something is wrong with the approach Insurers take in fulfilling customers’ needs, as they prefer to interact with Insurers more frequently than other segments, especially via new channels such as social media (with 37.1% saying they use digital channels at least once a month, and 30.7% saying they use traditional channels).
These are the findings revealed by the 2016 World Insurance Report, carried out on more than 15.000 respondents in 30 countries. The report showed the leak into the Gen Y expectations caused by the services that traditional Insurers provide and so the need of better understanding the motivations, habits, preferences, and behaviours of this new segment.
For example, what emerged is that customers are more willing to adopt driverless cars than Insurers expected, thus highlighting the fact that they must revise their outlook and consider new long-term business models when developing their future strategies.
The 2016 World Insurance Report also offers an insight related to the progress of new competitors making inroads by addressing Gen Y customer demands. This is not a surprise given the increasing number of technology-based firms that see opportunities in offering insurance policies, counting on the Insurers’ reliance on aging technology and at the same time noticing how much the sector is ready for innovation.
The threat especially comes from those companies that provide technologies such as channel integration, customer data analysis and digital interaction and that are able to catch the attention of tech-savvy customers used to adopt advanced technology in their daily lives. In this scenario, nearly one-quarter of Gen Y customers (23.4%) say they are very likely to purchase an insurance policy from a technology company compared to 14% of non-Gen Y customers who are not.
This fact provides evidence that Insurers need to stay updated on technology innovations and work on better understanding their customer’s needs.
Another matter refers to the increasing adoption of connected technologies by customers through the Internet of Things (IoT). Which type of these are most changing the current insurance business models? Connected ecosystems, embedded technology and machine intelligence are influencing consumers’ lives and therefore the insurance industry too. We are talking about devices that are able to operate without the need of human involvement or that can be embedded into the human body to monitor their habits or, again, that enable objects to make decisions and perform tasks on behalf of humans. As a result of this phenomenon, how quickly consumers will adopt the connected technologies will affect the speed at which insurers will make investments and develop their short, medium and long-term strategies to respond. Another outcome of these trends is the change of the risk variables that Insurers are facing so that risk is decreasing while risk transparency and risk sharing are both rising. On one hand, these technologies enable customers to avoid risks by reducing their exposure to them over time; on the other hand, Insurers have to prepare for a potential reduction of long term insurances, for a change in insurance products, customer portfolios design, and for more risk mitigation models (instead of the traditional risk transfer from policyholders to Insurers).
Gen Y and IoT forces are unstoppable and Insurers have to get prepared. The key is to become a fully data-driven business in order to adapt to a new customer-driven market and improve in data management and analysis.