How habits of digital adoption are impacting the insurance sector

An aspect of digital innovation often overlooked is the changing behaviours and expectations of customers in a digital era. The expectation of speed, digital onboarding, choice of communication channel, self-service, and being able to communicate via multiple digital channels are all regarded as common needs among digitally native millennials. However, as earlier generations have become familiar with digital tools and increasingly reliant on them, this trend in customer behaviour is becoming universal.

This trend has received a shot in the arm during the pandemic as the average person’s screen time has surged by over 60%¹. However, screen time can be seen as a crude measurement of how more reliant people have become on their digital devices. What may be more insightful is to simply look at what the recent Covid lockdowns have forced people to become comfortable with:

  • Ordering groceries, household goods, clothes (and even garden plants!) online.
  • Adapting to exercising through digital means, as a consequence of being unable to visit the gym.
  • A surge in remote meet-ups with family and friends using apps such as Zoom.
  • Digital consultations with nurses and doctors (particularly valuable for the elderly and clinically vulnerable).

These are just some examples of the activities and behaviours that many people, especially those above the Millennial age bracket, may not have engaged in regularly before. As a natural consequence, this increased familiarity with digital tools has led to increased digital adoption across all age groups.

How Insurers can use lessons from the Fintech sector

Many of these new behaviours and traits that we tend only to associate with certain generations now apply to a range of customer groups seeking to buy insurance.  As a consequence, those insurance companies that are still trying to understand the changing needs of the different generations, need to adapt quickly.

What changes can we expect? Lessons from Fintech has shown us the following:

  1. A more customer-centric view where all data on a customer is integrated. Consumers will increasingly wonder: Why can’t I see a dashboard with at least all my products from my provider, and how can I include my products from other providers?
  2. An omnichannel communication and distribution approach becomes a base requirement. Given the plethora of communication tools available, digital customers want to have a choice of communication methods, based on the most convenient for them at any one time, whether that is via the company’s website, phone call, WhatsApp or email.
  3. The desire for instantaneous assistance opens up opportunities for insurers to expand their robo-advisory capabilities. This is an opportunity because it allows insurers to save on call centres as customers embrace a self-service mindset – something the big technology firms have established as the norm – when was the last time you tried calling a human being at Uber/Airbnb/Amazon? The only way is through layers of mostly easy to follow self-service to make sure you can solve your query before a human being (whose time represents a cost) is needed.
  4. Composability wins. Composability is a term used to describe how different companies and services can build products around each other’s products to create newly composed offerings for customers (or internal efficiencies within the insurers themselves). Despite there not being too many examples of this currently in the insurance industry, the exploding innovation from decentralised finance has shown how permissionless composability has the potential to create innovative and powerful products. As new digital ecosystems strengthen, where different companies connect their services/data in ways that delight customers, the importance of benefiting from composability is paramount to the success of an insurer looking to compete in a vastly more digital playing field.

Things have changed rapidly over the past 18 months and more of the population has embraced digital technology. The digitally native consumer is fundamentally different to the traditional customer. But having spent a year in lockdown, reliance on our digital tools has bred familiarity on a societal level (even in societies where the population is ageing rapidly). It has never been more important for insurers to develop the tools and capabilities required to embrace the changing needs and expectations of a digital customer.

This article is the third in the series from Tyron Fouche about changing habits and their impact on the insurance industry.

[1] Carroll N, Sadowski A, Laila A, et al.: The Impact of COVID-19 on Health Behavior, Stress, Financial and Food Security among Middle to High Income Canadian Families with Young Children. Nutrients. 2020; 12(8): 2352.

Tyron Fouche