What does the next generation of insurance customers want?

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Key Takeaways

  • The next generation of insurance customers demand the insurance sector to be well versed with the ever-evolving digitalisation and provide personalised products.
  • Positive customer service is an important condition to attract a new customer base.
  • The new age of customers appreciates an active role in problem-solving.
  • Sustainability and environmentalism have now become mandatory core values.
  • An increased sense of security and privacy is part of the new generation because of the constant digital presence.
  • Insurance companies should endeavour to develop an extensive platform with human interaction at its crux.
  • To ensure smooth growth of the industry, companies must acknowledge the financial literacy of the next generation and design value-for-money products.

The insurance industry is advancing at a rapid speed. The next generation of insurance customers demands efficiency as a right. Being raised around technology, they expect the best results with the least input and that too, in as little time as possible.

This demand for ‘only the best’ often leads many to assume that the coming generation is simply not aware of the inherent and external setbacks faced by the insurance industry, when in fact, they’re highly informed due to the excessive resources available on the internet. They are habituated to move past the shortcomings of an industry instead of living with it, or better yet – use it to their advantage.

 

In order to thrive in the future, the insurance industry needs to understand the gradual change in customer expectations. A few of these expectations, derived from several studies and statistics from around the world, have been listed below.

 

Expectations of the next generation from their insurance:

 

1. Increased Digitalisation

 

The world has shifted online. Digital competition and being spoilt for choice have left customers with a paper-thin sense of loyalty and patience. Hassle-free interaction and a seamless digital experience with customer-facing features are the need of the hour.

As per Statista, the Digital India initiative increased the number of active internet users to 624 million as of February 2021. Based on another research conducted by Accenture, 47% of respondents said they wanted more online interactions with their insurers.

 

These digital requirements of the new generation can only be met by an insurance sector that is responsive and ready to adapt to changing needs. The introduction of virtual assistants and AI chatbots, automated data, telematics, unmanned drones for accumulation of data and blockchain data can help improve efficiency. The process of getting healthcare insurance is now 70-80% digital.  The IRDAI is confident of another 40-50% growth in the next five years, powered by digitalisation.

 

Areas of focus:

 

A few areas that can flourish under digitalisation are underwriting, core policy admin systems, risk management and claims. Besides, the integration of social media platforms to spread the word about insurance products is a good move, considering that India accounts for 518 million social media users.

 

2. Customers want to do it themselves

 

According to the 2017 World Insurance Report, nearly three-quarters (74.8%) of tech-savvy customers place importance on the ability to send claim notifications to insurers online or via mobile. What’s more? Early 70% of Gen Y customers value the ability to digitally renew or cancel policies.

 

The upcoming customer base, as DIY enthusiasts and practitioners, will evidently appreciate an active role in problem-solving over that of an observer. Instead of being provided with a tailor-made solution, nowadays, customers prefer to be equipped with sound resources that enable them to resolve the issues themselves.

 

In fact, self-service is a trump card for the insurance companies too, as it is the most cost-effective and fastest means of customer assistance. This is of great importance given that the insurance industry of India has one of the highest customer acquisition costs.

The provision of 24/7 access to services, real-time notifications and mobile apps are a few methods to promote self-service.  Another is putting out resources and intelligence for public access that cater to the customer needs. This could be achieved by easing the process of data navigation and provision of information.

 

3. Quick Customer Service

 

The rapidity of technology has led to high demand for prompt responses among new generation customers. They have little tolerance for delays. The demands of customers, which previously only involved receiving a defect-free product and getting a response to their grievances, have now elevated to new heights.

 

As per Comm100, 71% of consumers (age 16-24) believe that a quick response from a service team can drastically improve their customer experience.

 

Real-time engagement is a crucial metric to gain and preserve a satisfied customer base.

 

As Steve Jobs said, “You have got to start with the customer experience and work backwards to the technology.”

 

Measures to enhance response time:

  • Investing in an email or AI response tool
  • Setting a response time benchmark
  • Assessment of total time required to obtain demanded information
  • Determining the number of responses per hour
  • Monitoring customer satisfaction on interaction with the response tool

Problems are bound to arise, but providing a positive customer experience is what counts in the long run.

 

4. Benefits to the environment

 

There has been an increase in the number of customer calls requesting environmentally-friendly products. As per one study, more than two-thirds (67%) say they want digital experiences that encourage sustainable travel and shopping practices.

 

Sustainability is now a core value among customers and companies who fail to show effort on the environmental front face a major blow to their reputation. Companies should look at it from a growth perspective because ‘eco-awakening’ comes with an opportunity to build trust in insurers willing to make sustainability a part of their ethics.

 

5. Personalisation

 

Earlier, personalisation was a facility limited to those who could afford it, but now, it’s a requirement of the overall customer base.

According to Accenture, insurers that offer personalised services see an 81% customer retention rate. Another study by Salesforce states that 70% of customers believe that helpful sales interactions are fundamental to keeping their business.

Customers tend to gravitate towards companies that are watchful of their needs. Companies are leveraged with the responsibility of delivering custom-made products.

 

Salesforce’s Tom King suggested, “Insurers specifically will be measured by how well they know their customers. Experiences need to be tailored to the individual, and for this to happen the business needs to have better visibility into the customer.”

 

Companies can satisfy this need by attaining detailed information about market demand as well as the consumer demographics and using that to render personalised experiences. Customisation will help the insurance industry to achieve agility, which is a prerequisite for the new generation of insurance clientele.

 

6. Security and privacy

 

Ensuring security and privacy for customers has become a status quo for the insurance industry, as data insurance is mandated by IRDAI. This can be trailed back to several high-profile customer data breaches in the history of digitisation and security. Enabling security and privacy for customers can help insurance companies cut through the competition. As per Salesforce, 90% of people are more likely to trust a company if they have a firm privacy policy.

 

7. Balance between human interaction and customer efficiency

 

In a world gone digital, companies often fail to factor in the redundancy of human interaction. Despite a clear demand for technology and mobilised infrastructure, at the end of the day, customers still want to be treated as just that – customers.

“In the insurance industry, when you buy a policy, you are a ‘policyholder.’ When you make a claim, you are a ‘claimant.’ You are never a ‘customer.’ The language we use reflects a mindset, and this mindset needs to shift to be more customer-centred,” says Seth Rachlin.

 

The past few years have taught us that no amount of technology or infrastructure can replace the connections formed through ‘man-to-man’ interactions.

 

In a study conducted by Accenture, 58% of consumers said they trusted a human advisor in a branch to help them make an insurance claim.

 

In order to thrive in the industry, an insurance company must be sensitive to such needs of the customer.

 

8. Increased well-being and health awareness

 

The urgency among the masses to have health security has risen dramatically with time. People portray a deeper concern for their physical well-being, warranted by the fact that India has seen the highest increase in downloads of fitness apps, which rose by 156% during the lockdown.

 

A study conducted by Redseer estimates that India is home to 90 million Health Conscious individuals.

To cater to this, the IRDAI is ensuring that the products offered by the insurance sector carry more benefits than terms and conditions. In 2020, products such as Arogya Sanjeevani (health), policies for covid-19 (Corona Rakshak and Corona Kavach) and Saral Jeevan Bima (term plan) were introduced to standardise insurance products.

 

Moreover, IRDAI makes regular interventions to warrant a transparent and customer-friendly market wherein the products and services are innovative.

 

9. Value for money is paramount

 

The new generation of customers is financially savvy. A vast majority seems to have an in-depth understanding of consumption, tax and savings functions. They are price sensitive and expect outstanding products at the most reasonable rate possible. The focus has gradually shifted from discretionary spending to fundamental expenses.

 

The millennials and Gen Z don’t view insurance simply as a source of protection but also as a prerequisite for entrepreneurship, world travel, preventive healthcare, parallel career, etc. They seek exuberant individualisation in the policy terms and supplementary services along with the base product.

 

As observed by Majesco, nearly half of Gen Z & Millennials and 40% of Gen X & Boomers felt that insurance has become more important due to the pandemic.

 

10. Early financial planning and lifestyle needs

 

The lifestyle choices of customers have changed over the years. Individuals are now looking forward to practising early retirement and focusing more on their standard of living.

 

Similarly, the demand for long-term insurance plans has also fallen. People are more inclined toward a customer-centric experience that involves digital touchpoints, self-service apps and automated payment reminders. Another pressing requirement is transparency and a straightforward process.

 

Conclusion

 

In summation, the new age of customers is caught between a dual battle of feeling powerful and privileged due to the vast array of resources at their disposal, and the constant fear of being overloaded with information to figure out what best fits their needs. This imbalance promises vast space for the insurance industry to offer simplified solutions.

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