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June 8, 2015

The Misconceptions About Millennials

Summary:

Insurers have important misconceptions about Millennials as customers. They are not all technology geeks with blind trust in social media.

Photo Courtesy of zeitfaenger.at

When it comes to successfully engaging with a new generation of customers (and employees), there’s very little doubt that insurers have their work cut out for them. There can be very little doubt that members of the Millennial generation generally consider insurance to be boring and that reputation of insurance brands among this group is low. So how can insurance companies bridge this gap and find a way to meet the challenges that this new generation of customer present?

Perhaps the first thing to do is to challenge existing preconceptions of this group. Many insurers may well be oversimplifying and mythologizing the digital and financial behavior and attitudes of Millennials. Indeed, contrary to popular opinion, the vast majority of Millennials are not technology geeks. What this means for insurers is that developing and offering an app isn’t going to have the impact expected among this group. Technology for technology’s sake will not interest Millennials; they have to see clear value.

More broadly speaking, insurers still have much to do when it comes to connecting Millennials and insurance companies. It’s clear that younger customers view insurance brands as solid, safe and staid, guarantors when something goes wrong. However, they also see insurers as faceless organizations that have little understanding of their needs. The successful insurance brands of the future will be those that can provide the established, safe reputation that Millennials have come to expect from insurers, alongside an understanding of their lifestyles, which aligns with the way they interact with one another.

It’s also interesting to consider, in this context, how Millennials make strategic decisions about financial management and, specifically, around how they buy insurance. What many insurers may not realize is that many are using word-of-mouth recommendations and advice from family and friends, which can bring the reputation and brand of the insurer to the fore. For this reason, establishing brand reputation and using word-of-mouth campaigns will be key.

Because the customer journey of the Millennial is less certain, it will also be increasingly important for insurers to invest in a sound omni-channel strategy. Because they are dealing with customers – or at the very least, potential customers – who are savvy across a diverse range of channels, and who will dip in and out of them at regular intervals before they make a purchasing decision, it can be almost impossible for insurers to know exactly which channel they will use or prefer.

What is particularly striking, however, is how small a part social media plays for Millennials when it comes to how they experience customer service. Contrary to popular belief, most seem to have fenced off social media interaction into their personal world and are not convinced that this is where they’ll engage with insurers on customer service issues. Perhaps we should give greater credit to Millennials’ understanding of how social media attacks can backfire and public castigation is a waste of energy.

In any case, when it comes to complaints, insurers should consider that Millennials are probably no different than any other generation. They ask for efficient and effective response to direct complaints. While less concern should be given to Millennials causing reputational damage via social media “flaming,” they are likely to take decisive action earlier, with a third willing to switch immediately.

It’s important to remember that Millennials aren’t looking for digital-only channels, and that they place great value on personalization and self-service. Millennials want just-in-time advice and support, delivered right at the moment they need it. They do not want to get “just in case” advice and support that is delivered at some inappropriate moment (and through an inappropriate channel) and that may not be the right content (which they will have forgotten by the time they need to apply it anyway).

Perhaps the most significant consideration is the extent to which Millennials might be willing to share personal data in exchange for a discount or a reduced premium. This seems to justify experiments in telematics and may be the basis for insurers to innovate around newer technologies like wearables. All of this should strongly influence technology choices for how insurers make sure their businesses are responsive to customers. Systems that embed consistent best practice every time, as part of every interaction, to give the absolute optimum outcome for both the insurer and the customer as an individual are critical.

In summary, while not all Millennials are the same, they all share similar traits – namely, that they what they want, when they want it (just in time), and they want all of it. With this in mind, there seems very little doubt that the most successful insurers when it comes to dealing with Millennials will be those that are authentic and trustworthy and that are able to offer pricing at the “right” level. Those insurers that can incorporate all of these facets into a personalized service, which sees and leverages every previous interaction and anticipates their next requirement “like magic,” will be those that bridge the generational insurance gap and get ahead.

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About the Author

Nigel Walsh joined Deloitte in 2016 as Partner in the Insurance Consulting team. His key focus areas include technology transformation, digital and insurtech. Prior to Deloitte, Walsh served as Vice President and Head of UK Insurance for seven years. Walsh has been actively engaged with clients across multiple lines of business as they embrace transformation.

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