Digital Playbooks for Insurers, Part 1: Scouting Consumer Indicators

Football, in its infancy, had no plays. In the late 1870’s, the visiting team would travel to the home team, where both teams would agree upon the set of rules for that game. The home team would supply officials, causing occasional controversy, and the game would be off and running.

There was no quarterback, no set of downs and very few rules regarding possession of the ball.

It wasn’t until Walter Camp, a former Yale player, introduced the concept of a quarterback and a limited time of possession, that “plays” became important. Camp wished to provide more of a strategic element to game play. This resulted in more practice, more play calling and much more interest in the game.[i] We will see that growth in interest with “football consumers” on Super Bowl Sunday this week.

Play calling and playbooks have increasing value and tremendous application for insurers as we rapidly shift from Insurance 1.0 to Digital Insurance 2.0. A playbook is meant to provide strategic direction that fits with current or projected circumstances. When business strategists read the industry, the different market segments and demographic trends, they can apply their plays more effectively to capture new or additional marketshare. Those without playbooks and plays will find themselves scrambling from priority to priority, instead of confidently executing their strategies to earn the win.

Majesco is helping insurers build their unique digital playbooks with our strategic business platform solutions and market research-based thought-leadership reports. In two of our recent reports, we provided both generational consumer playbooks and generational small-medium business (SMB) playbooks that give insurers valuable insights into digital capabilities enabled by technology’s potential that will energize insurance plays. In my next four blogs, we will draw upon both reports in order to look at both Pregame Analysis and Ideal Offerings insurers can use to target consumers and SMB businesses.

Consumer Generational Playbooks — Pregame Analysis

Scouting the opposing team is the basis for creating and applying plays from the playbook to win. You’ll find an excellent scouting report of consumers (broken out by generational demographics) in Majesco’s recent thought-leadership report, The New Insurance Customer — Digging Deeper: New Expectations, Innovations and Competition. At a high level, the report highlights the demographic trends that are pointing to a different future for insurance, which we call Digital Insurance 2.0, recognizing that customer expectations, product needs, engagement and more are vastly different than the last 30+ years.  New experiences and technologies are becoming “the new norm” across all generations, but are more intensely and rapidly changing to the next generation of insurance buyers, Gen Z and Millennials.

Throughout time, the youngest members of society have traditionally been the early adopters of new technology.[ii] Millennials and Gen Z are the early adopters of our current, digital age. Both generations are digital natives. Millennials “grew up digital” in a world connected by the internet and Gen Z was “born digital” in a world dominated by mobile. In our Changing Insurance for the Digital Age report, we highlight that the U.S. Millennial market alone could exceed $7.2 trillion by 2025, and is the driving force behind increasingly personalized capabilities based on unique customer journeys involving engagement and real-time personalized product delivery.[iii] However, nearly 69% of Millennials remain either actively disengaged or indifferent with their insurance carriers.[iv]  Adding to this shift and momentum is the fast emerging Gen Z market, which is poised to surpass the size of the Millennial market.

Simply put, for these digital generations, the traditional products, the business models that support them and the customer experience do not align with their growing market dominance.   We found that Millennials and Gen Z expect and demand much more in personalized products and experience, putting innovative products and competitors at an advantage.

The scouting report highlights new consumer behaviors and expectations

Driving that point home, Majesco conducted consumer research in 2017 to determine the acceleration in changing digital behaviors across a number of technology and business indicators — the factors that are re-shaping insurance.  To capture the next generation of buyers, let alone retain current customers, insurers must begin to utilize playbooks that are aligned to the generational consumer needs and expectations, personalizing insurance, and place their companies firmly into the realm of Digital Insurance 2.0.

We found that all generations share the top three most-performed “new” activities that we used as consumer trend indicators. There are substantial numbers of people who have now:

• Paid for something with a company’s app (e.g. Amazon, Starbucks)
• Paid for transportation through a ride sharing service like Uber or Lyft
• Used a fitness tracker like Fitbit, Garmin, etc.

The Gen Z and Millennial generations are at about 45% to 60% in usage of the top three, indicating a critical mass of interest. And while Gen X and Boomers are in the 30%-40% range, given the growth in usage, we expect this to continue in an upward trend, as their comfort level with digital technologies increases. Customers across all generations have come to expect the convenience of researching, buying and paying for products, services and information on demand – any time and any place – via any device (phone, tablet, wearables) … and that includes insurance.

The on-demand context of these behaviors, based on location, time and activity, lend themselves well to insurance applications, as risks are influenced heavily by where (location) a person (or thing) is, what they are doing (activity), and when and how long (time) they are doing it are highly viewed by Gen Z and Millennials.  Interestingly, and counter to perceptions of older generations, there is strong on-demand interest by Gen Xers and Pre-Retirement Boomers … emphasizing why digital engagement needs to be personalized to be effective.

The report categorized analysis of the activities into seven key areas: Gig economy, sharing economy, connected devices, payment methods, products, channels and other emerging technologies. Here are some of the highlights.

• The 2016 Upwork and the Freelancers Union’s annual survey estimated that 55 million people or 35% of the U.S. workforce chose freelancing as their means of work. Our survey results confirm that participation in Gig Economy activities across all generations

is similar to the Upwork survey. However, a smaller percentage have “side hustles” via ridesharing or renting their rooms/houses or cars.

• Consumption of ridesharing services is a dominant behavior across all generations. Home/roomsharing services are used about half as much, yet still have a strong and growing appeal.
• Connected device use is seeing tremendous gains. Fitness trackers are the most popular type of connected device across all generations. The nearly 33% of Gen Z and 25% of Millennials using connected home devices could also rapidly help intensify these new needs and expectations.
• Use of ApplePay and SamsungPay saw strong year-on-year growth, with over a third of Gen Z and Millennials, and a quarter of Gen X now using them regularly. The increased use of digital payment capabilities is raising the bar of expectations across all generations for all types of purchases, including insurance.
• Across all generations, 22% to 38% purchased insurance from a website, with Gen Z and Millennials clearly leading the use of this channel. This suggests the increased ease and desire of the younger generation to buy online.
• On-demand insurance was surprisingly strong with 25% to nearly 30% purchasing it for a specific item or event, such as the kind of insurance that Trov offers. On-demand and subscription-based models are rapidly gaining acceptance in a shorter period of time, as compared to website purchases that have been around for nearly 20 years.
• Not surprisingly, Gen Z and Millennials lead the older generations in their use of drones and 3D printers (or items produced by one). These are two rapidly growing technologies that present significant risk implications for the insurance industry.

What this conveys to insurers doing their own analysis, is that “new” is increasingly “normal”, more quickly. Using research responses, we extrapolated valuable “plays” that insurers may pull for use in their own playbooks.

The game has already started…your team better join soon  

Many new business models and new products emerging in the market are focused directly on exploiting these new behaviors and expectations.  These Digital Insurance 2.0 teams are intent on challenging the traditional products, services and processes of traditional Insurance 1.0 teams.  And while customers and the market will ultimately determine their success, we tested five of them and learned they stand a good chance of succeeding, especially among the younger generations who are the new generation of insurance customers.

Furthermore, we decomposed these new products and new business models into 30 distinct attributes and tested them with customers to determine their interest in buying and potential in switching to them. And the interest to buy and switch is strong.  As such, existing insurers need to seriously begin to understand, plan and develop new offerings and capabilities aligned to these … which represent Digital Insurance 2.0.

In my next blog, we’ll look at customer reactions to those business models, assess their viability for use in insurer playbooks, and discuss how the 30 attributes can be used to create some Ideal Offerings for different customer segments. For a preview, be sure to read, The New Insurance Customer — Digging Deeper: New Expectations, Innovations and Competition.

Digital playbooks are already in use. Does your company have a strategy to embrace the digital age and shift to Digital Insurance 2.0 to drive growth? The time for developing and using the digital playbook is at hand.

[i] Miller, John J., The Big Scrum: How Teddy Roosevelt Saved Football, HarperCollins, 2011: 70-85

[ii] “The 5 Customer Segments of Technology Adoption,” On Digital Marketing

[iii] Source: Genre, 2014 http://www.genre.com/knowledge/blog/what-implications-will-millennials-have-on-the-future-of-commercial-pc-insurance.html

[iv] Source: Q Sample Blog, 2016 http://blog.qsample.com/millennials-vs-insurance-how-millennials-are-changing-the-insurance-industry-2/