More often than not, when we ask insurers, "What does the future of insurance hold?" - the initial response is a quizzical look or despondent eyes, and a response of "How could I possibly know?" Although there are a myriad of reports, analyst insights, and other 'guess-estimates', it's challenging enough to plan for the upcoming year or two, let alone predict what will occur in the next 10 or 20. So then, all guessing aside, if Life carriers are truly looking to understand "what the future holds", where do they even start? Well… if you're looking to address innovation then look no further than Instacart.
During the pandemic, the demand for quick and contactless deliveries steadily rose, and there is little reason to think this service model will change. The accelerated shifts in consumer behavior have now become the best way to determine where the future is going, and how insurers can benefit from these innovative new offerings.
As the pace of transformation continues to accelerate across all areas of enterprise, customers' perspectives on the essentials of insurance are also changing - as often as the daily specials on Instacart. Insurers are finding that the shifts are not merely due to standard reasons such as fluctuations in demographics, daily life, or even the introduction of new technologies, but also generational variations. Not only are Gen-X, but now Gen-Z and Millennials are also starting to put more focus and thought into their best options to insure their futures from the unpredictable. Understanding how insurance is able to detect and repair, but also prevent and protect from life's uncertainties, has driven more of this sizable market to order ala carte products to support their more non-traditional lifecycles.
Not too long ago, a lot of insight was given into the "Amazon Effect" and how it has upended customer journeys, rendering many obsolete. Fast forward to today, where many erroneously believe that brick and mortar shopping was all but dead, when in fact, according to Gen Z insights, it's the personalized offerings from brands like Instacart that has helped them shift into the swift adoption of omnichannel platforms. Having the convenience of not only instant service, tailored to each individual consumers need, helped the online retailer generate $1.8 billion revenue in 2021 (the company's estimated valuation in 2021 was $39Bn and is predicted to increase steadily as it adds more partners to its sizeable network.)
If history (and Whitney Houston) taught us anything, it seems that the 'children are our future' and now that those children are growing up, and now comprise the most dominant demographic, their expectations are key drivers into what the future holds for insurers. Many hold to the ideal that a Gen Z has the expectation of insurance being as elementary as ordering groceries, fast selections, seamless and simple transfer of relevant data, and even simpler and more secure payment options. Instant, on-time delivery and digital policy docs are the end result, and should they need to make changes or file a claim, with the touch of a button, all the essential services are at their fingertips -anywhere and anytime they need it.
Now that this more racially diverse era of digital pioneers is leading the transformation across industries, in the desire to be constantly connected, it's no wonder that the internet has become the go-to source for investing and financial education for the young generations. 45% of Gen Z use YouTube, and 30% turn to TikTok, while Millennials prefer internet searches (47%), but also lean on YouTube (40%). Therefore insurers, particularly those with products that are not always required by law (as with P&C lines), could benefit from the insights and data provided by companies like Instacart, who now provide "shoppable recipes" on TikTok, ensuring that not only is brand loyalty being gained and retained, but that alliances with partners are being leveraged, and the investment in their technology is paying off substantially.
According to MIB Group's Life Index, applications to life insurance policies increased 3.9% year over year in 2020 in the US alone. This is the single biggest increase since 2012. The applications for individuals under age 45 in 2020 were up by 8%, while 2021 saw an increase of 3.4% for all individuals from ages 31 to 50. One recent LIMRA study found that millennials are the most likely to be influenced by the pandemic to purchase life insurance; 45% of millennials said they are more likely to buy life insurance due to COVID-19, compared with 15% of baby boomers and 31% of Gen Xers. Imagine what the change in these numbers would be if more life carriers were able to educate and market their products to the growing millennial and GenZ market the same way Instacart has. Considering Instacart was responsible for over 50% of absolute growth that occurred during 2021, the impact on the life market would be seismic.
Online interactions and experiences are a fast lane change for many life insurers, but customer service is not. The same type of exemplary service that agents once delivered door to door can be the very driver for brand loyalty and competitive edge, simply with a digital spin. During the next several years, the investment in Life Insurance - products, technology, core systems and partnerships, will need to take priority - and become more INSTANT. As opposed to fulfilling and delivering tangible products by a personal shopper, who picks, packs, and delivers within the customer's designated time frame (be it one hour or even scheduled up to five days in advance), carriers can design products that support self service but still can provide exceptional, personalized experiences and deliver them in omnichannel environments.
Going forward, the winners will be those Life carriers who are not necessarily able to predict the future, but rather prepare for it, with the ability to act quickly and assertively, and to change and develop strategies to exploit the resulting opportunities. Life Insurers are equipping themselves for the digital transformation as well as business transformation, moving from paper and physical assessments to digital data capture and exam-free policies, but there is still much more to be done.
One of the reasons I enjoy working at Sapiens, a leading provider in the insurtech space, is the fact that we are always helping carriers realize their transformational needs to meet the new demands of customers. Our Life Insurance solutions offer a mix of intelligence offerings, digital journeys, decision, underwriting and core products. While our award winning platform is enabling carriers to become more adept at using advanced technologies to enhance decision making and productivity, lower costs, and optimize the customer experience, we continue to gaze into our own crystal ball to ensure that we not only continue to help carriers survive in this new dimension, but also thrive, now and well into the future. If Instacart can add tech-provider to its already financially lucrative resume, why then can't Life insurers add "Customer Experience connoisseur" to theirs?
Colleen Wells is responsible for Product Strategy for Sapiens North America P&C, as well as Sapiens' Digital Product Suite globally. She possesses expertise in professional services, customer success, running product teams and her true passion - understanding market trends and providing valuable solutions to carriers and customers.