Gen X and Y are overlooked by Canadian life insurers, according to an EY report. Exploring this underserved consumer market will help insurers achieve growth and relieve pressure on costs and margins.
“Traditional insurance products and distribution channels aren’t well suited for Generations X and Y – a market segment that continues to grow,” says Marc-Andre Giguere, EY’s national insurance leader. “They look for simplified products that deliver value and are easy to understand.”
They’re also much more likely to do their own research on insurance products, mostly online. While catering to Gen X and Y may be a challenge, the adjustments may lower the insurers’ high expenses that have made these markets difficult to serve.
Insurers can appeal to this market in two notable ways: improve direct-to-consumer relationships and develop a multi-channel approach.
As Gen X and Y are more open to dealing directly with insurance companies, insurers must explore a more direct-to-consumer approach, using data analytics for more efficient underwriting. A streamlined underwriting process means faster service, more sales and lower expenses. In the long run, this analytics-based approach can evolve into online sales systems that target consumers via websites, mobile apps and online videos.
To satisfy the younger generations’ need for convenience and better customer experience, insurers have to embrace a multi-channel approach. They need to develop a digital platform to interact and share information among agents, brokers and consumers alike. The availability of customer information across channels is the minimum required to offer self-service options and an enhanced customer experience.
By providing life insurance and annuities to these markets in ways they want to access and evaluate the products, insurers may be able to achieve growth and improve the industry’s reputation. According to EY’s recent Consumer Insurance Survey, customer trust in life insurance companies is low.
“Insurers that stay on the sidelines as others make these investments to serve next-generation markets risk losing existing customers, while limiting their opportunities to connect to new customers,” adds Giguere.