For life insurance companies looking to revolutionize customer relationships, personalization is everything.
Traditionally, agents working on commission were responsible for customer relationships, but this is changing. Carriers report declining rates in applications from younger customers. Millennials, albeit at a slower rate, do things like buy houses, have children, build assets – essentially age into the need for life insurance – but still reject it.
Why? As dozens of buzzword heavy articles can tell you: their expectations are different. They want personalized and digital services. They won’t respond to aging agents and a drawn out, confusing onboarding process the way previous generations did.
With tracked browsing data, personalized ads, and “relatable” brand voices saturating numerous industries, insurers must compete with other carriers as well as any company vying for a slice of the family budget. Customers now expect to feel heard and catered to – but not by going to an office and listening to someone their father’s age tell them what’s best.
Carriers must engage with customers on a human level through digital channels, and recognize the personal circumstances which bring them to invest in life insurance.
Insurers can optimize their digital spending by recognizing highly targeted social media campaigns as essential to an effective marketing strategy. Social media is now an integral part of 81 percent of Americans’ lives, and insurers who specifically target individuals with tailored campaigns can drive more conversions by ensuring their efforts are properly timed and placed.
Young insurance companies like Fabric demonstrate how effective messaging resonates with modern new parents. Their social media content emphasizes “parenting made easy, starting with life insurance,” conveying an low-effort, high-reward investment for parents looking to secure their family’s financial future. These personal and emotional connections to a life insurance purchase are key to attracting a new generations of digital natives who are constantly bombarded with online offers and limitless opportunities to spend their money.
Given millennials’ distrust of large financial companies, insurers should diversify their branding to appeal to different demographics and create tailored life insurance subsidiaries to appeal to different markets’ needs and values.
As younger generations delay the traditional milestones of marriage, home ownership, and starting families, agents’ messaging becomes less relevant. The average age of a U.S. life insurance agent is 59 years old, and their focus on selling high-value policies among their peers means traditional carriers risk completely disconnecting from the needs of young generations if they don’t make significant changes.
A recent study by Budget Insurance shows the majority of surveyed adults in committed relationships understand the purpose of life insurance, but 41 percent don’t have it. Consumers have endless opportunities to spend their money, and a 2015 study estimated the average attention span has dropped from 12 to eight seconds since 2000. In a world of instant gratification, prioritising a long-term investment, like life insurance, over setting money aside for a short-term goal can be difficult. This is particularly true for those with lower incomes, who often perceive life insurance as far more expensive than it is. While efforts to transform the purchasing process are happening, marketing life insurance as a significant priority is also key.
Building beautiful, functional websites and applications loses its value if the messaging fails to resonate with customers outside traditional demographics. It’s important to have a presence on a variety of channels and enable customers to fully engage via their preferred method. A report published by McKinsey indicated over 80 percent of shoppers encounter a digital channel at least once when making a purchase. Especially on social media, replying to customer inquiries by advising them to call a phone number seems out of touch and could cost you an opportunity.
Ensuring your team answers questions directly, via private message, and refers people to appropriate resources in reference to their enquiry better retains interest. Insurers must train their staff to communicate information and monitor customer engagement across channels so every interaction between customer and insurance company is seamless, no matter who is behind the response. These digital communications, along with data collection and analysis, allow insurers to build rich customer profiles which include needs and preferences – and prevent the repeated ask for basic customer information.
For life and health insurers, the growing popularity of wearables is a source of invaluable datasets. Programs like AIA and John Hancock Vitality both succeed at rewarding customers for sharing their wellness data and living lifestyles. Wearable data is also usable long-term to explore patterns of behavior, health, and death, to accurately model risk. Research from Accenture indicated 77 percent of consumers would share this data with insurers in exchange for lower premiums, quick claims settlements, or coverage recommendations. Surprisingly, this personalization doesn’t just resonate with young customers, as Accenture reports senior citizens adopting wearable devices five times faster than the general population. Especially for customers with pre-existing conditions who believe themselves uninsurable, the opportunity to earn discounts for staying healthy opens up a significant pool of policyholders.
That said, particularly with skeptical Millennial and Gen Z customers, carriers must build trust and good faith to obtain this personal data. Customers must first overcome fears of anti-selection in openly sharing, as well as their broader concerns around privacy and security.
Insurtech golden-child Lemonade shared how they assess risk by utilizing nontraditional data, like digital interactions through their platform. While correlation to claims is quickly identifiable with renters insurance, effectively analyzing this digital behavioral data in conjunction with health information may translate to other insurance sectors in time. This is especially true as patterns of browsing behavior and communication channel preferences become clear.
The potential for incredibly specific risk pools means data science capabilities within actuarial teams will only grow. It means pricing process transformation is essential for the majority of insurers. Properly analyzing customer data means products and policy documents become increasingly tailored to niche groups of people. Offering meaningful, relevant rewards and continually nurturing customer relationships, carriers can greatly reduce lapse rates and ensure premiums remain an essential spend in their customers’ budgets.
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