The insurance industry needs to embrace innovation rather than resisting change in order to attract new clients and keep up with changing consumer expectations, industry executives said on Monday.
At the KPMG LLP insurance issues conference in Toronto, a panel of executives said that if the industry wants to do a better job of capturing business from younger generations, it must update and modernize industry practices in ways that resonate with these markets.
As the economic clout of Gen X and Gen Y expands, this is becoming increasingly important, said Sean Gilday, vice president of alternative distribution with Reinsurance Group of America, Inc.
“There’s a lot of potential out there,” he said. “These are big markets that have insurance needs, yet the solutions aren’t there yet.”
After having catered heavily to the boomer generation for many years, insurers need to turn their attention to these younger generations, said Louis Régimbal, partner, advisory, and Quebec insurance lead at KPMG. However, the strategies that the industry has used to attract boomer clients won’t necessarily be effective in attracting clients from Gen X and Gen Y.
“They are very different,” said Régimbal. “The way in which they approach solving problems and financial planning is very different, the way in which they want to interact with companies is very different from what we’ve seen in the past.”
Insurance companies need to consider ways of modernizing all aspects of their businesses, from product manufacturing to distribution, said Stéphane Morency, senior vice president, development and member client solutions at Desjardins General Insurance. From a manufacturing perspective, he said the focus should be on making products more straightforward, and easier for clients to understand.
“It’s going to be about simplifying the product,” Morency said. “I don’t think that if you are to use a smartphone to get a quote you want to [answer] 50 questions. You have to reinvent the product…to make it easier.”
Allowing customers to use their mobile devices as part of the researching and purchasing process is key, according to Gilday. He pointed to statistics from Google showing that instances of people searching for information on life insurance on their tablets and mobile devices are growing by between 34% and 38%. In comparison, searches from desktop computers are flat.
“In the mobile market for life insurance, people are researching it, but there’s really no vehicle for them to buy once they’re interested,” Gilday said.
Part of the problem, he said, is the lengthy life insurance application process, which can be difficult to complete on a mobile device. He suggested that the industry may need to explore new approaches to the application and underwriting processes to enable more innovation on the distribution front.
“You have to be testing quite often, and just learn quickly,” Gilday said. “The faster we can get testing different distribution ideas, learn from those, and move on, the better.”
Duncan Avis, KPMG digital lead, said the industry needs to expand the variety of channels available, and allow clients to choose the channel that best suits their needs and preferences.
“The winners, I think, will be the folks who are brave enough to move away from some of the historical distribution channels,” he said.