Insurers fall short of meeting millennials’ expectations – report

Younger customers are more open to buying cover from insurtechs, but new entrants aren’t doing much better, either

Insurers fall short of meeting millennials’ expectations – report

Insurance News

By Gabriel Olano

Established insurers are failing to meet the expectations of their customers, especially the young and digitally active ones, leading them to turn to new entrants such as insurtech start-ups.

This was revealed by international management consulting firm Bain & Company, which surveyed more than 174,000 retail insurance customers in 18 countries. It found that incumbent insurers are not delivering on customers’ fundamental preferences, such as quality of products and services, and ease of doing business.

“Insurance customers don’t have complicated needs,” said Darci Darnell, global head of Bain & Company’s customer strategy & marketing practice and the report’s co-author. “They want to be able to choose from a good selection of policies at reasonable prices. They want clear, transparent information, and they want smooth, hassle-free interactions. They expect their insurers to help alleviate their anxiety, not add to it. But the harsh reality is that most insurance companies still don’t consistently deliver the value their customers are seeking.”

As a result, the industry is increasingly vulnerable to digital innovators that sell directly to consumers and bypass established companies by creating more value for their customers, the report said.

Survey findings reveal that consumers – especially digitally active millennials (those born in the 1980s and 1990s) – are very open to purchasing from new entrants, including those from outside the industry, such as tech companies, automakers, and retailers. This trend is most evident in emerging markets such as Thailand, Indonesia, Mexico, and Brazil, where approximately 90% of respondents said they would be open to purchasing insurance from new entrants. Among millennials, that number jumps to over 95%.

However, the report added that new entrants aren’t necessarily ticking their customers’ boxes, either. It cited Lemonade, a US-based insurtech firm that provides low-cost insurance to homeowners and renters, as a rare example of a new entrant that has performed outstandingly in the key dimensions that matter to consumers – helping it attract and retain customers.

The survey also found that customers give insurers higher ratings if they offer an ecosystem of services that go beyond simple insurance coverage. These insurers are able to better connect with consumers on emotional and life-changing elements - qualities prized by millennials. Across markets, over 80% of customers are open to, or actively interested in, an ecosystem of services. In many countries, a majority of customers would even prefer insurers to provide these ecosystem services.

“In a time of disruption, the smartest insurers recognize they can’t do everything on their own,” said Henrik Naujoks, head of Bain & Company’s financial services practice in Europe, the Middle East and Africa, and co-author of the report. “They’re teaming up with insurtechs and other companies to modernize their operations, from distribution to claims processing. Insurers that do the hard work of understanding and delivering the elements of value that matter most to today’s and tomorrow’s customers can put themselves on a path to sustained loyalty and lasting growth.”

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!