One of the significant headlines from McKinsey’s Global Insurance Report 2022 is that the insurance industry is struggling. Against the backdrop of persistently low-interest rates and pricing pressures, they are also stumbling to rapidly adapt to a new reality- the growing dominance of new buyer cohorts- Gen Z and Millennials.
Gen-Z & Millennials- Dominant buyer groups of Insurance
In 2019, there were approximately 73 million millennials in the US alone, depicting that they will make up for the largest section of consumers along with Genz-Z in the next few decades. These new cohorts and their growing influence are today shaping the way that brands across industries build products and engage with customers, forcing businesses to change or suffer the consequences. And every company across industries must craft strategies to attract these buyer groups to survive, and the insurance industry is no exception.
Gen-Z, raised in a digital world, and millennials have high expectations in terms of connected digital experiences and require truly digital insurance offerings that are available on multichannel and new demand-generation techniques.
With information readily available on various offerings, industry predictions, and carriers, Gen Z and millennials mostly prefer to get their options or choices validated by peers. The former cohort perceives digital as a way of life and leverages digital channels to connect with people, and share views about anything and everything – including insurance coverage. Online reviews or comments shared by peer group influencers often shape Gen Z’s decisions. But millennials, as much as they trust online reviews, also value the expert opinions of agents. Both the groups have undergone significant lifestyle changes and rank lower on brand loyalty.
Older millennials are now starting families, buying homes and cars, as they head into their peak earning years and are hence looking for the most comprehensive insurance coverage. In the case of complex buying decisions, they resort to research, peer groups and connect with agents through digital channels such as online reviews, as they still value the input of an expert advisor. But Gen-Z, on the other hand, complete digital natives, mostly always prefer to transact and engage digitally.
Though both the cohorts have varying interests, they seem to have common realms in terms of expectations, which are constantly evolving, like wanting a holistic customer experience. For example, both the groups tend to have mere transactional relationships with their current insurance carriers, and will not hesitate to jump ship the moment a better carrier comes along who understands their needs and can provide a customized alternative to traditional service offerings. Both the categories have diverged from the traditional path set by older generations, and have made significant lifestyle shifts as well that result in different risk needs that require different insurance needs. The need for insurers to transform digitally is imperative since Gen-Z is a fully digital native cohort and millennials are increasingly becoming one too, and they need to provide digital offerings to help the customer manage their lives.
Why should insurers reinvent themselves?
The insurer of the future is required to meet the needs and preferences of hyper-connected, passionate, and tech-savvy Gen- Z and millennials– and stay competitive and profitable. And to achieve that, insurance carriers need to be resilient, reinvent their business models and undergo a complete and rapid digital transformation.
Digital transaction channels
Transactions through digital channels are becoming increasingly popular, and the pace of adoption is on the rise, thanks to the pandemic as well. Today, above 50% of the insurance customers place high importance on mobile, internet, or website channels for conducting insurance transactions, as per recent reports.
Gen- Z will likely prefer a complete digital experience with access to all products and services via a digital platform of choice. Interconnectivity, personalization, and seamless omnichannel access will transition from good-to-have to must-have value-added services.
Digital Insurance offerings
Gen-Z, raised in the digital age, has never experienced a world without smart digital technology and hence, expects seamless omnichannel access and digital offerings, that can be purchased with fewer clicks, that provide an evolving coverage in accordance with their changing lifestyle. purchase with a few online clicks.
Efficient Demand generation
As we aim to cater to new cohorts with fully-digital channels and transactions, the traditional demand-generation methods will also need to be revamped. Insurance carriers will need to find better ways to engage with them as it will be critical in creating awareness about their offerings, providing customer service, and improving their marketing campaigns. They will be expected to create an ecosystem to provide an array of offerings from which customers can purchase products and services from the platform of their choice. The ecosystem creates multiple customer touchpoints, which can supply valuable data about customer preferences to help insurers hyper-personalize their offerings.
How can insurers transform in today’s digital age?
But for insurers, who have generally been called tech laggards, with mounting technical debts due to challenges like age-old legacy systems that leave no budget for innovation, and struggles with time-to-market, need to find better ways to equip themselves with digital capabilities that take up only a fraction of time and cost as compared to traditional approaches. They need to find innovative ways to cater to digitally native customers, by providing seamless omnichannel access and meeting new-generation expectations by simplifying existing products and processes to create relatable offerings available for purchase with a few online clicks. And this would mean that the underlying processes must be automated to enable a seamless buying process.
So, how can insurance businesses reimagine their business models and reinvent themselves to cater to the growing target group- millennials and Gen-Z?
With no-code development platforms, they can quickly churn out enterprise-grade applications for insurers to meet the needs and preferences of hyper-connected, passionate, and tech-savvy Gen- Z and millennials– and stay competitive and profitable.
At Axcel Beck we have partnered with leading no-code development platforms to create powerful solutions that enable insurance businesses to deliver high-touch convergent experiences that are not only human but also insightful and data-driven