Best Insurance

Among the most significant current opportunities for
insurers is optimizing the customer experience and
improving how they interact with customers. The
widespread revolution of e-commerce and mobile
technology over the past two decades has led consumers
to expect convenience, simplicity, transparency, and
disintermediation. Combined with rapidly changing
demographics, economic and regulatory uncertainty,
and the constant struggle to competitively differentiate
themselves, changing customer expectations are causing
insurers to ask the following, basic questions about how their
business models should evolve over the next decade:

For the most part, carriers are not
meeting changing consumer and
policyholder expectations, and
in turn are missing out on a vital
competitive differentiator.
When asking themselves these questions, insurers should
be cognizant of the rapidly changing market in which
they operate. The diagram on the next page highlights
the mismatch between traditional offerings and current
demographics, as well as the gap between coverage
needs and consumer demand (which is especially
true among younger consumers). Of particular note is
how non-traditional customer segments representing
different ages, cultures, family structures, and socioeconomic
backgrounds are emerging as significant
growth opportunities.

Compounding these developments are technological
advances that have transformed consumer preferences
about how they interact with insurance carriers. This is
creating new distribution and communication channels that
are changing how insurers conduct business and manage
relationships. While older generations tend to be less at
ease with these shifts, younger consumers are generally
comfortable utilizing digital platforms to become more
informed shoppers and buyers. Moreover, though this
lucrative segment likely will remain relatively small,
there is an increasing number of self-directed consumers
who have a strong desire to play an active role in their own
financial planning.

At the same time, the declining number of traditional
insurance agents is reducing insurers’ ability to have
sustained customer interactions. Traditionally, agents would
help clients become more financially literate by explaining
financial products and services, as well as individual
financial and coverage needs over time. Despite the rise in
self-directed customers, this lack of personal interaction
is hurting insurers’ overall ability to market and sell more
complex products, particularly via online channels.