Insurance companies spend a lot of their time thinking about demographics, particularly life insurers, but this is often purely from a risk point of view, but now more than ever firms need to think about the changing faces of their customers, otherwise they could find themselves behind the curve.
Millennials and Gen-Z consumers are making up an ever-increasing percentage of the market place however their purchasing power comes with strings attached.
It’s no longer about offering rewards, promotions and incentives to hook in consumers. The new market demands more. They expect their suppliers to be customer focused, to speak with them using the channels they like and to respond to the issues that matter to them.
So how can insurance companies change from a process/risk focus to a customer focus? And why would they want to?
In a recent Deloitte survey of insurance companies, the researchers looked at the aspects of the offer that are most important to customers. The customer focused items such as being able to talk to friendly staff, products tailored to the customers needs and speedily resolving issues appeared a long way ahead of more functional items such as price, rewards or promotions.
So this means that the traditional methods of selling insurance based on pricing and giveaways have ceased to be as important.
But something more profound is happening as the UK population ages.
Whereas the baby boomer demographic is now moving out of the need for insurance products, a new wave of millennial/Gen-Z consumers is moving into the peak buying time of their lives and they are demanding more.
Not only do they expect more from their suppliers, but they also expect to be communicated with in a different way and using different channels.
Brand means less in the new world and insurers are finding it harder to attract and retain customers.
Brand neutrality on issues isn’t a viable strategy any more. Gen-Z expects the brands it supports to take a stand on social justice issues such as black lives matter and global warming to such an extent that they fully expect companies to live up to their commitments.
In a recent study, Morning Consult found that 67% of Gen-z consumers said that a brand's reaction to issues like this would permanently change their likelihood of buying from them in the future.
And size is no longer an insulator from this approach as Gen Z and Millennials are now less likely to trust institutions and big brands like they used to.
So brands need to stand for something and that something can’t just be that they are big and trustworthy as they could get found out.
The biggest societal change over the last 20 years has been the advent of the mobile native.
Gen-Z lives digitally, expecting to be able to access services 24/7 and to do so from the comfort of their iPhone.
It’s no longer acceptable for companies to deal in paper and firms that don’t have a fully joined up digital strategy are going to struggle.
But consider this; in 2008 MySpace was the go-to platform for digital natives and just over a decade later it is a footnote in the history of the internet.
So whilst firms need to be happy to communicate using social media, it is a mistake to pin everything on an instagram account.
Instead the firm of today has to be aware of developing trends in communication and be ready to jump onto the next TikTok as soon as it appears.
The Western world is facing something of a demographic crisis with ageing populations meaning that there are fewer consumers and fewer workers.
Despite this, Gen-z still demands a personalised service, so how can firms square the circle?
The answer has to be automated and integrated back office systems.
Automation of manual processes that follow a predictable pattern is a must. Alongside this, Machine Learning (ML) should be used to deal with non-standard situations so that humans are left to manage those tricky cases that fall way outside the norm.
Artificial Intelligence (AI) can be used to provide human-like interactions for consumers through chatbots and support lines that are able to answer the vast majority of calls.
Humans will need to be seen in the employment context as a valuable resource that should only be deployed when other systems fail.
Following on with the theme of employment, insurance firms will need to understand that employees are now much more mobile and will vote with their feet if they feel taken advantage of.
It’s important to remember that today, potential recruits are acting like consumers by researching brands to find out if they are living up to the hype and to make sure they have similar values to the worker.
This means that companies who want the best staff will need to treat this demographic like another customer channel, marketing to it and speaking their language to ensure that they are able to recruit suitable people.
Putting a customer focus onto recruitment will reduce the eventual cost and the churn that less responsive firms experience.
Culture change is never quick and it certainly isn’t easy and it is probably fair to say that the insurance sector has never been a first adopter.
But if firms are to survive and thrive in a world dominated by millennials and Gen-z consumers and workers, then a culture change is needed nonetheless.
New entrants into the marketplace are building entire organisations that exist purely to service this slice of the market and this is something that more traditional firms need to be aware of.
By transforming your firm into a customer-focused, responsive organisation, you can make sure you are best placed to service the needs of a new set of consumers.
