The report underscores that consumers are nearing a tipping point with insurers driven by the significant rise in insurance costs across all insurance sectors. Rising insurance costs, coupled with inflation and high interest rates are putting immense pressure on consumer financial well-being. As their customers navigate these challenges, insurers need to maintain a strong focus on building and maintaining trust by understanding and delivering on their changing needs and expectations and ensure the protection gap is not increasing.
A key focus of the report highlights the demographic differences between Boomers and Gen X as compared to Millennials and Gen Z, who now represent the dominant consumer group. The research uncovers how insurers are woefully unprepared to meet the demands and expectations of this younger generation. While insurance’s traditional products and servicing have always been pivotal in creating peace of mind, new and expanding risks, market dynamics, and evolving needs and expectations of insurance buyers, particularly the younger generation, require innovative ideas and approaches. The report provides valuable insights into these generational differences and offers strategies for insurers to effectively engage with these tech-savvy, value-driven consumers.
“The insurance industry is at a critical crossroads,” said Denise Garth, Chief Strategy Officer at Majesco. “Consumer expectations have drastically changed in the digital age but are now rapidly changing again due to converging factors of a new era of risk and macroeconomic conditions that are driving up the cost of insurance, creating a growing protection gap and brand challenges for insurers. The result is changing expectations for insurance products, how risk is assessed, how consumers can manage or reduce risk, and the use of technology to do so. By understanding and addressing the unique needs and expectations of different generational groups, while leveraging technology and AI, insurers can build trust, improve customer satisfaction, and drive loyalty.”
The report delves into the role of advanced and digital technologies, mobile payments, smart devices, GenAI, and AI use by consumers and how it can transform insurance. It spotlights the growing acceptance and use of these technologies among consumers, highlighting that there is no better time than the present to get out ahead of this by experimenting with and leveraging the technology to make insurance accessible, affordable, and relatable.
Key findings from the report include:
- Financial Concerns: Both younger and older generations are primarily concerned with household finances, inflation, retirement planning, highlighting a high percentage cutting back their budgets.
- Protection Gaps: Increased insurance costs across nearly all lines of business are unsustainable for consumers, forcing them to make difficult decisions such as not buying insurance, switching for a lower cost, increasing deductibles and more, creating a growing protection gap across all lines of business that will negatively impact insurer trust and brand.
- Loyalty Gap Growing: For both generations, 50% have researched, shopped, and switched auto insurance due to service, and 25% switched due to price, highlighting the declining satisfaction and loyalty.
- Personal Data for Risk Profiles: The younger generation would be willing to share personal data for homeowners, individual life, and benefits to get a better product and price as compared to the older generation. Both generations would do so for auto insurance.
- Digital Technology: Consumers are increasingly using digital payment methods and smart devices, but there is a gap in their use for insurance purposes.
- AI and GenAI: As it relates to AI and chatbots, 31% of the younger generation has used them on insurer sites as compared to 20% of the older generation. Most importantly, both generations believe they help get the job done easier and quicker and improve the overall experience, highlighting a strong potential for insurers to enhance services through AI and GenAI.
