Manager, business consulting
In 2020, the Covid-19 pandemic triggered a mindset shift. Customer behavior altered significantly, making spending and consumption more conservative. Since 2020, priorities have also changed: Household finances, inflation, crime, and planning for retirement represent the most prominent concerns for the average consumer. In 2023, Generation Z and millennials are more pragmatic in their spending than they were before the pandemic. Consumer spending, or the lack of it, can have a significant economic impact.
While millennials and Generation Z have become careful spenders, they still recognize the value of insurance, according to a 2022 blog post from Majesco, a 2022 blog post from Salesforce, and a 2022 study from Manulife. These groups are becoming the new target market for providers. Consumers desire both peace of mind and financial wellness, per a 2023 Majesco article, thus bringing insurance products under greater focus.
Younger customers have different priorities. They want information at their fingertips; the ability to perform their own research; quick assistance; transparency; personalization and individualization; and instant gratification, according to a blog post from SAP, a software company.
As these consumers consider their insurance options, they retain strong opinions about how their customer experience (CX) should unfold. According to a 2022 Majesco study, customers are digitally savvy, used to transacting with high-tech GAFA companies (Google, Amazon, Facebook, and Apple), and more likely to embrace newer channels and multi-channel environments. A 2023 study, also from Majesco, noted a skepticism present among Gen Z and millennial customers: “Today’s customers are increasingly disillusioned with the ‘traditional’ insurance approach, creating a loyalty fault line between customers’ expectations and insurers’ ability to deliver what they want and need. While risk and trust tend to be constants, customers increasingly have no guaranteed loyalty to old models, even from trusted brands.”
It is essential that providers find ways to resonate with these customers, who increasingly occupy a larger share of the market. Offering a robust customer experience is now key. Insurers are worried about not understanding, and therefore not meeting, customers’ expectations. As an IDC InfoBrief from 2021 notes, “To stay relevant and remain competitive in these challenging times, insurers need to meet the experience expectations of all stakeholders by using technology such as a digital experience platform that helps unify efforts towards evolving customer-centric initiatives.” By 2024, according to IDC, CX will comprise 37% of information technology (IT) spending in the insurance sector, rising at a compound annual growth rate (CAGR) of 17.5%.
At the moment, consumer faith in providers is waning: In a Forrester Research survey of more than 10,000 U.S. financial services customers, contacted between March and May 2022, no single insurer achieved greater than a “moderate” level of trust. These "levers of trust," as termed by Forrester, were accountability, competence, consistency, dependability, empathy, integrity, and transparency.
While customers currently have a wide range of options, they often believe that providers do not meet their expectations in terms of accountability, competence, consistency, dependability, empathy, integrity, and transparency.
There is no doubt that CX is the key to keep the current generation of customers hooked. However, CX has moved beyond conventional boundaries. Working in silos to improve digital experience, call center experience, agent experience, or direct sales experience ― or undertaking stand-alone initiatives, such as plug-in AI/ML, building a mobile app, or automating claims ― is not enough.
Providers need to look at CX from a holistic approach and lay down a strategic approach to keep customers engaged and help them become brand advocates.
Insurers should continue to do the same with their budget — improve speed of service, reduce cycle time, and expand their digital footprint — with a customer-centric mindset. It's not just about touchpoint CX strategies anymore. It's about building an ecosystem that supports its members. This means that various LOBs support each other, various stakeholders help each other, and even customers contribute to the ecosystem. Companies should make use of every piece of information offered by the customers to make the experience better. The Information Age has opened up numerous options for companies to retrieve data, and customers are ready to share information if that offers them a better experience. A report from Capco Insurance found that nearly three-quarters of respondents (75%) would share personal data to secure cheaper premiums. For young people (aged 18 to 24), this number rose to 87%. Most customers expect service providers to make use of their data and use it to provide customized offerings.
Insurers should therefore build a value chain that listens to customers and utilizes insights at each touchpoint. To build a reliable web network of information and insights, IT systems should be built with a customer-centric mindset.
Having a customer-centric mindset means wearing the customer's hat while you’re defining and designing the user experience.
Figure: A representation of the customer's digital experience, with customer-centricity as the pivot point. Source: Virtusa
Imagine the following scenario: A prospective customer would like to purchase a health insurance plan for his family. You can shepherd him through the process by doing — and having done — the following.
While the ecosystem engages the customer, it should also enable you — employees and brokers — to do the following:
Solving the challenge of creating an effective digital experience for customers, independent agents, and employees requires insurers an ecosystem that has the following key attributes:
In conclusion, insurers should understand that today’s customers are simultaneously demanding and understanding. As a provider, you can devise strategies for a more holistic customer experience by capitalizing on all your assets: technology, tools, and people. Insurers do not need to take a U-turn when it comes to redesigning their experience strategies. Instead, they should look at the experience holistically. Do not try to solve problems in isolation; instead, capitalize on your existing assets to better the experience. For instance, consider personalized self-service tools that can provide customers with a personalized, AI-assisted experience. A document manager can also prove helpful, and it can be integrated with mobile portal. Keep the process safe and straightforward while enabling employees and brokers to become trusted advisors to customers. Add a human touch to your digital experience, and make everything pivot around customer-centricity.
Chubb, 2022, Selling across Generations: Key Findings from the Chubb Study.
Cobisa, Ignacio. Liferay/IDC, 2021, pp. 2–22, How to Accelerate Customer Experience Transformation in Insurance.
Garth, Denise. Big Changes for Insurance: Gen Z & Millennials Make Bold Moves - Majesco. Majesco, 6 Jan. 2022, https://www.majesco.com/blog/big-changes-for-insurance-gen-z-millennials-make-bold-moves/.
Garth, Denise. “Rethinking Insurance with A Gen z/Millennial Mindset.” Rethinking Insurance with a Gen Z/Millennial Mindset, Majesco, 19 Jan. 2023, https://www.majesco.com/blog/rethinking-insurance-with-a-gen-z-millennial-mindset/.
Grant, Michelle. “Millennials vs. Gen Z: How Are They Different?” The 360 Blog: Millennials vs. Gen Z: How Are They Different?, Salesforce, 16 Sept. 2022, https://www.salesforce.com/blog/how-millennials-and-gen-z-are-different/.
Majesco, 2022, Enriching Customer Value, Digital Engagement, Financial Security and Loyalty by Rethinking Insurance, https://majesco.com/white-papers/enriching-customer-value-digital-engagement-financial-security-and-loyalty-by-rethinking-insurance/
Majesco, 2023, Your Insurance Customers: A Crystal Ball of Big Changes in a Small Window of Time, https://majesco.com/white-papers/your-insurance-customers-a-crystal-ball-of-big-changes-in-a-small-window-of-time/
Manulife, 2022, Know Your Ys and Zs: A Closer Look at the Financial and Mental Well-Being of Filipino Millennials and Generation Z in the Time of COVID-19, https://www.manulife.com.ph/about-us/blog/know-your-Ys-and-Zs_A-Manulife-study.html
Ostermeier, Isabel. “UX Vision – Gen Z as Drivers of New Expectations.” SAP Blogs, SAP, 22 Apr. 2021, https://blogs.sap.com/2021/04/22/ux-vision-millennials-consumers-as-drivers-of-new-expectations/.
“Seventy-Two Percent of Consumers Would Share Personal Data to Get Cheaper Insurance Premiums.” Capco, 22 July 2021, https://www.capco.com/en/About-Us/Newsroom-and-media/Capco-Insurance-Survey-Press-Release. Accessed 17 Mar. 2023.
“The US Financial Services Customer Trust Index Rankings,” Forrester Research, Inc., November 4, 2022.
Manager, business consulting
The author has 10+ years of professional experience as a product owner responsible for improving the user experience within the insurance domain. Some significant projects include self-service portals built by a large group insurer, based out of the United States, and a call center portal built by a U.K.-based home utility insurance service provider.
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