The 2016 World Insurance Report is out, with some interesting revelations regarding what we're all doing with our insurances. Gen Y has come out with some surprises, including wanting to talk to their insurers more often than anyone else, and having great expectations. Driverless cars are another area of interest, with more people than once believed interested in going driverless. The Internet of Things features heavily.
Risk is changing its nature, meaning that conventional insurance models are fast becoming irrelevant. Soon, nobody will care about them anymore, and the way things have been done for so long will suddenly just disappear and in a puff, become history. While nobody can quite predict just what will come out of the woodwork, what is clear from this report is that insurers, no matter what their subject matter, will need to act quickly to keep up.
The report was created from information gathered from 150 insurance executives and thousands of customers, across 30 countries.
Key findings of the report
Insurers have improved their customers' experiences, particularly in Austria, USA, and Belgium, however Gen Y customers are not as happy as everyone else, by a significant margin.
It's more than just their use of technology - it's their levels of engagement too. Gen Y customers embrace all channels of communication, meanwhile having a less satisfying experience.
Almost a quarter of Gen Y customers (and nearly half in Latin America and developing Asia-Pacific) say they are very likely to buy insurance of a technology company.
According to the report, insurers are underestimating how fast consumers will adopt driverless cars and other technology, with affluence being the main driver involved in uptake, not age.
Gen Y - specific key findings
- Gen Y's expectations are not being met in customer experience.
- Gen Y engage 2.5 times more than any other group via many channels, particularly social media and the internet-mobile channel.
- Gen Y are more likely to buy insurance off non-traditional insurers.
- Gen Y are set to become the world's main insurance clients, despite not necessarily being the most insured consumers right now.
- Because of the variety of communication channels Gen Y uses, there are gaps in their customer experience, and that is what's causing the lag in consumer satisfaction.
- Customers who made a claim in the past year had far lower levels of satisfaction than those who hadn't, with only 43 per cent of customers who made an insurance claim on a vehicle having a positive experience, compared to 59 per cent of those who hadn't made a claim.
Outcome? Insurers need to provide an integrated experience using all channels, instead of focusing on one or two. They all must be treated equally in the eyes of Gen Y.
Technology companies providing insurance
This is happening, with several providers off to a very good start. One in particular is Amazon, the world's biggest online publisher, now an insurance purveyor. Amazon offers life insurance policies tailored to each individual, automatically updated, and accessible online via a user-friendly system.
The beauty of the tech company-cum-insurer is they understand data. They can respond quickly to trends - that's their business, after all. Their whole business model as a tech company is based on using the internet to figure out how to make money, and understanding Gen Y, which cannot be said for the insurance industry, with an overt focus on Baby Boomers that must now shift gears.
The other thing tech companies have up their sleeves is a lack of pompous old-school thinking that goes with huge finance corporations. Tech companies are new, fresh, simple, and sans the historically very poor reputation of big banks.
New technology and how it's changing insurance
The report talks technology, saying the Internet of Things is driving the changes with smart ecosystems, wearable devices, and driverless cars all taking the top spots for change.
There is a disparity between when consumers - compared to insurers - believe they will be taking up new technology, with more consumers interested in driverless cars than insurers think, and more consumers less interested in wearable technology than insurers think.
Insurers have to become more like tech companies to keep up, with solid data collecting and analysing becoming more and more important as the IoTs takes off, bringing with it a need for proper data management. This includes currently non-digital items that may soon become digital items (take the fridge that connects to the internet, for example).
Major changes in risk fundamentals
Our ability to monitor risk is changing, for example to monitor heartbeats, breathing, and driving patterns mean we can determine risk profiles more accurately and pricing can reflect this. This is risk transparency, so fewer guessing games and inflated premiums for the whole pool.
The remainder of the report details how insurers can change. This includes maximising technology, optimising channels of communications, and innovation.