The digital customer is here: Are insurers ready?

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Every generational cohort has a demographic profile that reflects shared experiences, attitudes and behaviors. Think of the Greatest Generation or Baby Boomers and instant images and perceptions come to mind. As those markers evolved, businesses and service organizations had to recognize them and adjust their operating models accordingly to meet the new generational expectations.

This cycle is continuing with the latest generational cohorts – millennials and Gen Z - coming of age and once again there’s a scramble to match business operations to new and emerging cultural and social expectations. For insurers, meeting these new expectations is about nothing less than the future of the insurance industry.

Unlike their parents and grandparents, millennials are the first generation of digital natives. That means that they’re comfortable with technology and actively use technology to essentially manage their lives.

For example, a typical millennial vacation involves buying tickets through Expedia, using Uber to get to the airport, staying at a place reserved through Airbnb, listening to Spotify along the way, and logging photos on Instagram. And since millennials will form the majority of the insurance buyers going forward – along with their expectations that differ significantly from previous generations – it behooves the insurance industry to pay attention to the fact that millennials will demand an experience similar to the one they enjoy with their other beloved products.

More specifically, insurers hoping to meet these new consumer expectations need to focus in three overlapping areas: user experience, personalization and product offerings. Here are some brief “requirements” for insurers designing products and services for this cohort:

User Experience

  • Should be comparable to other products they use constantly - Spotify, Uber, Airbnb, etc.
  • Online/mobile experience is preferred over human touch.
  • 24x7 availability.
  • Intuitive dashboards displaying easy-to-understand metrics, coverages, comparisons, gaps, etc.
  • Less hard on "selling" but more on just providing information and letting them decide.
  • They need to feel they are making the decision with all the facts and not being forced into it.


  • Ask relevant questions and only for minimal additional data than can’t be collected elsewhere.
  • Use publicly available data to personalize offerings and pricings per individual.
  • Collect data from various sources to form a holistic view of the customer to provide best-fit recommendations.
  • Pre-fill as much data as possible.
  • Find the line between relevant recommendations and across as "spooky" - fine line!
  • Millennials will allow access to their data if trust is earned – only takes one misstep however.
  • Follow the customer on their life journey and provide necessary recommendations and changes to holistic coverages as needed.

Product Offerings

  • Simplify product offerings and provide more transparency.
  • Prior generations often resorted to “safer” option of buying-in when in doubt or confused; millennials tend to go in the opposite direction.
  • Provide more flexibility – offer a la carte, bundling, subscription-model, on-demand, etc.
  • Leverage new opportunities - cyber, preventions/alerts, personalized pricing, etc.
  • Make the product “preventive” instead of just “covering cost after damage.”
  • Provide value while they have it instead of just covering in disaster.
  • User should buy it because they “want to” and not because they “have to.”
  • Use data from IoT sensors to provide personalized and proactive and timely alerts: water leak detector to alert before flooding; car brake monitors to alert before accident; health monitors to alert before health incident, etc.

Given these “requirements,” how are insurers tracking against these new and very different consumer expectations? The short answer is that much work needs to be done.

A large portion of the work required has happened in the burgeoning Insuretech ecosystem. The majority of Insuretechs are focusing on making the front-end acquisition smoother - both for the end consumer (typically personal or small/medium size businesses) and for the carriers.

Many are also focusing on a more intuitive user experience for quoting combined with price comparators and matching between carriers. However, very few of them seem interested in back-end product offerings but instead prefer just serving as an acquisition agent, likely because the barrier for entry is too high due to regulatory and state-specific constraints.

On the carrier side, the larger companies have for some time been setting up "Innovation Groups" internally to focus first on their own products and processes, and lately on working with Insuretech startups to fast track new functionality and services.

To date this seems more like out of the necessities of new consumer expectations rather than a genuine interest in modernizing – evolutionary rather than revolutionary. That said, there’s widespread recognition that the “middle man will be digitized,” and it’s therefore incumbent on insurers to focus on quick responses, prototypes, pilots, working with partners, etc. Core product offerings remain largely the same, with some incremental updates for better user experiences or lowering the costs of doing business.

The best of those updates falls into the broad categories of preventing losses before they occur, experimenting with subscription and just-in-time coverages as needed, using data for micro-underwriting and insurance for one, and generally simplifying and streamlining the insurance acquisition process. The focus of much of the above is to fundamentally challenge the way consumers view insurance – from a “have to buy it” attitude to a “want to but it” attitude – a tall order indeed.

The challenges are many and are familiar to all insurers. Things like fighting existing internal inertia and comfort zone thinking; assuming that real disruption will never impact the industry; chafing at the complexity and costs of innovation and true transformation; lack of long-term strategies and focus on short-term operational goals; and the very real problem of resources and priorities.

This may be why many insurers are only now slowly coming around to accepting the changing consumer landscape but, in many cases, don't see it yet as the existential threat it could be. And even when the senior executives are committed to changing, it often gets lost at the middle management layer when the day-to-day operational issues are the priority.

Combine that with the fact that most Insuretechs, as innovative as they may seem, are still playing it safe by working on the front end and the outer edges of the insurance ecosystem, although that may yet change. The title of this article asks the question of whether or not insurers are ready for the demographic tsunami headed their way. The answer in 2019 is no, they are not ready, at least not yet.

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