Millennials And The Change That They Bring Towards The Insurance Industry
Practically every industry in the world has witnessed transformative disruptions in the past decade, owing to an explosion of technological advancements that are fundamentally changing the way people and businesses work and interact. Every industry and every business must adapt — or perish. Insurance, one of the oldest and most universal industries in the world, is no exception. This is because the traditional models of selling insurance, and the very structure of insurance products, are no longer appealing to the single largest force driving many of these disruptions — millennials. The fate of insurance companies hinges on adapting and evolving to satisfy millennials’ requirements.
In most countries, insurance has been primarily push-driven. It has traditionally been sold via the agent model, where individuals or families brought insurance products from a sales agent representing an insurance firm. However, the Information Age and the Digital Age have democratized and proliferated access to information, consumer products, financial services — virtually everything — that could earlier be bought or accessed only through physical and offline channels. Millennials have increased financial literacy, and are purchasing insurance on their own via online channels.
But it’s not just about distribution channels — their purchasing preferences and habits, their financial goals, and their professional journeys are very different from the previous generation, all of which impacts how they perceive (and buy) insurance. This means that legacy insurance products in their traditional form and structure are largely untenable in a millennial market.
What kind of products are attractive to millennials?
For the previous generation, owning a home and a car were the foremost financial priorities. Millennials, however, don’t want to necessarily be homeowners and have moved away from this trend to drive a large sharing economy based on renting accommodation or using ridesharing apps to get around. Many millennials are also now choosing to push back the age that they get married, and therefore start their families later, which could affect how they buy life insurance products.
But one thing is clear: millennials want personalization. They’re generally comfortable with sharing their data with companies to access products and services that are customizable, behavior-based and highly relevant, and built to suit their requirements. Insurers will, therefore, have to repackage or restructure their offerings, and innovate new ones, to remain competitive in the millennial market — a one-size-fits-all approach will no longer work. What’s also essential is to structure products in a way that makes them easily comprehensible and accessible, without the need for excessive paperwork and time commitment, because insurance products generally contain several clauses and terms that can be very difficult for the consumer to decipher on their own.
Where are millennials most likely to buy insurance?
No surprises here: offline channels are becoming increasingly unpopular amongst millennials in various industries, but this is particularly true for insurance. Millennials don’t want to buy insurance from local agents — they want to buy it online. One of the many reasons for this is the information asymmetry that exists in the agent model and the comparative transparency that customers have access to when they opt for insurance online. They can take their time to browse the products and offerings of various insurance providers, through comparison websites and other means, to determine which of them fits their requirements and financial goals the best. This saves them the hassle of carrying out a similar research exercise in the offline marketplace and interacting with insurance sales agents or brokers.
Leveraging the digital marketplace is not just about placing insurance products online — it’s also about building a brand for the company and product. It’s important to have a credible website, positive reviews, and high online visibility through search engines as well as social media, all of which is likely to influence millennials’ decision-making behavior.
The rise of Insurtech
For any insurance provider to remain relevant for millennials, technology must be pre-programmed into products and sales strategies — this is evidenced in the invasion of the multi-trillion dollar insurance industry by the burgeoning insurance-tech landscape. Industry leaders claim that India is on the cusp of an InsurTech revolution.
The InsurTech ecosystem is the primary birthplace of innovation in insurance. This space isn’t looking at restructuring legacy products — it’s looking at changing the face of insurance as we know it, by innovating new products to plug glaring insurance gaps, streamline operational processes, enhance customer experience, drive digitization, and leverage technology and data to solve critical problems in the insurance landscape.
Some InsurTech companies are offering on-demand, bite-sized, micro-insurance products that are highly targeted, or work only with new technology. Others are deploying drones to verify and ascertain claims for agriculture insurance. A popular realm of innovation is leveraging AI to build chatbots for customer experience enhancement. Above all, there is a push towards bringing together seemingly disconnected businesses and products to seamlessly integrate them into an ecosystem of interconnected services. One example of this is offering non-insurance solutions that complement an insurance product, such as medical devices or health monitoring through wearable technology, to build an ecosystem of services in the realm of health.
The sum it all up, insurance companies, whether established or emerging, cannot afford to ignore the millennials — it is this customer base that’s driving these disruptions. to adapt, providers must digitize their operations, products, and processes; leverage technology to build products that are attractive to them, and use data-driven insights to provide personalized customized services. The mantra for millennial consumers is convenience, simplicity, adaptability, and value.