An article in the January edition of The Insurance & Investment Journal discusses likely evolution of the insurance industry in Canada over the next two decades.
While obviously no on can foretell how it will look by then – especially given the ever-increasing pace of change – the roles of ‘consumption habits’ and technology are expected to be front and centre.
Information for underwriting purposes ever more increasingly will be provided on-line.
While the human element will not disappear, as a representative will still be required to complete the purchase, aging demographics will have repercussions. While some will resist basic life coverage, feeling fine in their prime years, those who do make it to their 80s and beyond will face ‘longevity risk’, issues relating to critical illness and disability coverage.
Segmentation of needs will become more significant; so will communication skills in identifying and addressing these differences.
As a reflection of the way things are, studies are showing that younger consumers’ decisions about insurance are influenced very much by the internet and social media. Friends “will always be seen as more credible than an advisor or expert quoted on a site” for the indefinite future. However, the complexity of insurance products means that consulting an advisor will continue to be desirable.
Eliminating industry jargon, part of product complexity, would help. Consumers are most concerned with results, with being convinced insurance products serve their purposes. Moreover, the modern younger consumer wants speed and efficiency in any interaction. The insurance industry needs to keep pace with emphasis on simplifying.
Due to customer segmentation, some groups will be left to initiate queries themselves.
The aging sales force is also an issue. Many advisors are more concerned with servicing existing clients than chasing new, next generational ones. Technological advancements which speed processes along are helping the younger prospects.
It’s conceivable that, in the next twenty years, paper applications could actually disappear.
Ultimately, consumers will determine how much they want to deal with an advisor to complete the insurance sale or not.
According to a 2015 study of consumers’ sources for pursuing retail insurance:
- Baby boomers, Gen X, and Gen Y are more likely to look to a financial professional than either the internet or friends/parents/co-workers; boomers are most likely
- Gen Y is a little more likely to use the internet than the other two groups; all three groups are more likely to use the internet than friends/parents/ co-workers
- Gen Y is also more likely to depend on friends/parents/co-workers than the other two groups; boomers are least likely to value these sources
- In short, with age, the likelihood of depending on human expertise increases, at least insofar as the existing mix of generations