The World Insurance Report 2016 – Report by Capgemini and Efma
Article Synopsis :
The evolution of the Internet of Things combined with changing behaviors and preferences from Gen Y customers is pushing the insurance industry in new directions.
This year’s “World Insurance Report” by Capgemini and Efma explores how insurers are transforming to keep pace with changing market demands. The report, based on a survey of more than fifteen thousand respondents globally, builds a comprehensive view of the motivations, habits, preferences and behaviours of the Gen Y customer segment. Key findings include:
Insurers around the globe improved overall customer experience levels, but a generational disparity was evident with Gen Y customers having customer engagement scores nearly 20 percentage points lower than customers in other age brackets.
Gen Y and the Internet of Things (IoT) will act as major disruptors to traditional insurance impacting everything from risk assessments to customer interactions. As connected technologies take hold key risk variables face realignment leading to fundamental changes in product development, underwriting, and risk management.
The competitive threat from technology firms is growing. Globally, almost a quarter of Gen Y customers are likely to purchase insurance from a technology firm, compared to older customers. This trend is especially strong in the emerging markets of Latin America (49.0%) and developing Asia-Pacific (47.2%).
Affluence, more than age, may be a better predictor of early adoption of the Internet of Things. Affluent Gen Xs, for example, are more likely to adopt new technologies than non-affluent Gen Ys. Technologies related to IoT, including smart ecosystems, wearables and driverless cars, are expected to have a large impact on daily consumer life and, in turn, insurance service providers.
The report also contemplates responses from over 150 insurance executives in 30 countries aiming to help insurers devise strategic responses to coming changes. Recommended actions include:
- Assess current levels of digital customer experience with an eye toward Gen Y customers who are difficult to please.
- Better understand Gen Y customers in terms of (digital) engagement.
- Size up the competitive threat from Internet of Things (IoT) realizing nearly one-quarter of Gen Y customers are likely to purchase insurance from a technology company.
- Understand rates of technology adoption in your customer base with an eye to affluence as the primary driver.
The report also explores the short-, mid- and long-term business implications of digital capability-building, customer research and strategy.
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Digital Insurer's CommentsIt’s understandable why this year’s edition of the World Insurance Report focuses on Gen Y. a) They’re the wealthiest segment of future insurance customers, and b) They typically purchase services via digital channels, not necessarily a strength for legacy insurers.
The industry needs to focus on mobile engagement strategies leveraging social media platforms. Solutions offering instant gratification through self-servicing will help insurers connect with a generation of buyers owning very strong digital attributes.
As Gen Y consumes more insurance legacy carriers will either meet them on their smartphones or lose them to competitors who will.
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