What Implications Will Millennials Have on the Future of Commercial P&C Insurance?
Millennials are the largest consumer generation the U.S. has ever seen. So it’s not surprising that there is currently plenty of discussion and research on this hot topic. As a millennial, it’s clear to me that this generation will change my industry and the way we do business in the future. A recent by The Economist shows respondents only score the insurance industry 3 out of 5 in preparedness for upcoming challenges in the next five years.1 As such, this post (and my future posts on this topic) aims to focus on what the future could hold for those operating in the commercial P&C insurance space as a result of the “unique” millennials.
The sheer size of this generation has shifted the balance of power to consumers, requiring many businesses to redefine “normal.” The millennials’ need for personal insurance products is continuing to grow, and as they get older, they are challenging providers and supplier networks in an unprecedented manner. Will their unique generational traits force a change of corporate insurance buying habits in the commercial P&C sector?
As personal lines insurance buyers, millennials are looking for (and getting!) customized capabilities - such as self-service portals where they can view and make changes to their policy details or pay their bill, real-time personalized product delivery, and social media channels for reviews and dispute resolution - all designed to suit their lifestyle. As a result of the personal lines trends, I looked at the implications for the commerical sector that are being spawned by enhanced service and speed demands:
- New, cutting-edge and differentiating products - Previously, commercial insurance has been slow to change but, as we’re seeing in the personal sector, new niche players that understand the millennials' demographic are beginning to compete in this space. Unless commercial insurers simplify complex accounts and offer customization at all levels of corporate buying - and multiple delivery channels, they risk losing market share to new entrants to this space.
- Automated underwriting and comparison websites - We are already seeing trends seep into some lower value, well-defined commercial lines, such as small auto but we are seeing it less in larger commercial because of non-standardization of industry products. To avoid this trend of commoditization, the personalization of products and marketing will be key, as will better distribution channels with quicker quotes through semi-automated systems.
- Social media - Social media may have less influence on buying patterns in the corporate world because of corporate culture priorities (relationship, security, structure) being slower to change. However, customers at all levels will expect more frequent value-added contacts from their insurers, which will involve a social media platform presence for real time updates (such as advice, current trends and risk consulting) and even small dispute resolution. It will be key for agents to remove geographical limitations when servicing and reaching clients.
So, what can commercial P&C insurers do now to sell to millennials in the future?
- Have transparent policies, pricing and marketing material - According to a J.D.Power survey, millennials strongly favor companies that have easy-to-navigate websites, with transparency over products and how they work. Therefore, website-based selling or not, don’t make it hard for a generation that is used to having full information and access before making a purchase decision.
- Push brand awareness from personal to include commercial - Start creating loyalty and recognition through a variety of traditional and non-traditional (but already trusted) channels before this generation starts making corporate buying decisions. Demonstrate a corporate social responsibility by publicizing social causes and charity work.
- State the value-added services, and educate - If millennials can’t make product-to-product comparisons in the P&C commercial world because the offerings are too diverse, then jump on the opportunity to educate them on why your product differs, and at the same time gain their trust and loyalty. This is a chance to differentiate.
- Keep ahead of the curve for legacy and claims systems - This will aid fast-pace product development and adaptability in the future.
Finally, remember that this generation is being pegged as one of the most financially conservative ever - and that can create an abundance of opportunities for risk transfer companies with the foresight to adapt.
Stay tuned for more thoughts from me on educating millennials as employees and how their demands will be reflected in the P&C claims space.
To learn 3 Ways Life/Health Insurers Can Improve Their Relationship With Millennials, view Gen Re’s SlideShare presentation.