The company polled 9,281 global consumers about the life insurance they hold, their opinions on digitally buying life insurance, and what would persuade them to purchase through digital outlets. Results indicate that in a market where customer centricity is a key differentiator, life insurers must explore faster, more flexible and more cost-efficient ways to keep pace, engage consumers, and provide customized solutions.
“Digital is a catalyst and accelerator of 'total-customer centricity,'” states the report. The sharp increase of social media, smart mobile devices, analytics and cloud computing (SMAC) have opened new avenues for life insurers to engage with, and accommodate, their consumer base.
By 2017, the study claims, a new type of customer will dominate the market. These “digital natives” grew up with technology that empowers them to be better informed, more vocal and increasingly connected. In order to meet their needs, companies across all industries have implemented new business models to become more transparent, lower barriers to customer interaction, and address new types of security threats.
Today’s consumers are expected to live longer and have more wealth to protect, which implies a prosperous future for life insurers. However, data shows that most companies do not recognize the full potential of their growing audience. Many agents solely focus on middle-aged or wealthy consumers because of easy win rates and increased commissions while ignoring other demographics.
Life insurers face a challenge in that young consumers, which compose the majority of digital natives, do not see life insurance as relevant to them. The likelihood of policy ownership decreased for those under age 35 or with low incomes, a group that believes life and pensions policies are unaffordable or not created to suit their needs.
The rise of digital is providing life insurers an opportunity to grow closer to these untapped sections of the population and provide them with the digital access they have come to expect from other industries. They now have the ability to build informative consumer profiles, which they can use to create solutions that meet individual needs.
Alternative channels, such as social media, also provide a means to send information to young customers. The survey found that respondents under age 34 were much more likely to use social media to access life insurance information than older customers. When participants were asked what would persuade them to make electronic purchases, the three most critical factors were access to telephone support (32%), online professional advice (30%) or an online information tool (26%).
The adoption of digital capabilities would also lower costs to consumers, the study found, which is significant given that price is the most important factor in choosing a life insurance provider. In a market of increased price competition and low investment returns, efficient methods of customer engagement will enable companies to boost returns.
When considering new digital initiatives, life insurers must act quickly, as a slow response time will leave the market open to new entrants from the financial services and telecom industries. PwC recommends that life insurers acquire the now-critical analytical and engagement skills that will help them better resemble these competitors.
Kelly Sheridan is Associate Editor at Dark Reading. She started her career in business tech journalism at Insurance & Technology and most recently reported for InformationWeek, where she covered Microsoft and business IT. Sheridan earned her BA at Villanova University. View Full Bio