Insurance Shift: From Transactional to Relational

Insurance Shift: From Transactional to Relational

Long gone are the days of Lloyd’s Coffee House, where risks and coverage were based on the best available information carried indirectly from the high seas.

In those days, all available information was explained in a matter of minutes over a mug of rum. Relationships were built through face-to-face interactions. Competition was nonexistent. And because customers were uninformed and without options, they kept coming back.

A Different Insurance World

But today’s environment is different. An insurer now gathers their data from thousands of sources. Insurance companies engage with and manage millions of customers online rather than dozens of them face-to-face.

As a result, the strong relationships of the past have been displaced in favor of sporadic, burdensome written communications. These are often wrapped in a shroud of legalese jargon, leaving the customer disengaged and with little appetite for further interactions. But those strong relationships matter. Gallup found that engaged insurance customers purchase 22% more insurance products and stay customers 4 years longer.

It’s not just insurers that are changing, either. Today’s customers engage with vast amounts of information in real time. They compare offers from different insurers online with ease but often choose the cheapest option without understanding the actual value behind it.

For insurers, commoditization is already a reality. Research shows the total cost of unplanned churn is $35 billion in the U.S. alone, which comes at no surprise. While today’s consumers are rapidly changing, insurers have yet to adapt — creating a disconnect between them and their customers.

Understanding Today’s Customers

In order to understand how to avoid this growing commoditization, we first need to understand today’s customer.

One important group to pay attention to? Millennials. Currently in their late 20s to early 40s, this group holds the largest purchasing power of any generation, making them a force to be reckoned with in the insurance industry.

But Gen Z is joining the fray. The oldest zoomers are in their early 20s, and hitting many of life’s major milestones: getting their first cars, starting their first jobs and thinking about home-buying for the future.

Businesses are already adapting to this generation’s digital demands, as they’re set to surpass millennials when it comes to finances within the next 10 years. Think TikTok, interactive experiences and other increasingly popular digital trends that Gen Z loves.

While zoomers and millennials have their differences, they also have a lot in common. Gen Z and millennials alike are well-informed and embrace change. They’re no stranger to technology, and usually consume content on several devices — especially mobile. Gen Z makes up nearly 40% of all mobile users, and millennials spend at least 5 hours a day on their mobile devices.

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Both groups are also struggling to connect with their insurers. A Gallup poll found that, compared to other generations, millennials are 3x less likely to actively engage with their insurers and 4x more likely to actively disengage from them. Another survey found that 43% of Gen Z feels uninformed about available insurance products.

Millennials and Gen Z alike are struggling to connect with insurers. A Gallup poll found that millennials are 3x less likely to actively engage with their insurers, while another survey found that 43% of Gen Z feels uninformed about insurance products.
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All in all, these groups are disrupting the status quo, and aren’t afraid to demand more from their insurers. Specifically, they’re looking for digital communications that are:

  • Personalized: These generations expect the products and services they use to be tailored to them, and for the companies they interact with to engage with them personally. A new study shows Gen Z and millennials are 29% more likely to want more personalized communications in comparison to other age groups.
  • On demand: Be it products, content or services, today’s consumers want everything immediately. Amazon wins over customers with next-day shipping. Netflix delivers entire TV seasons in a day. Being in real time or near real-time is key to success.
  • Authentic: Today’s consumers want the brands they buy from to show their commitment to making the world a better place. Over 90% of millennials are willing to switch to brands associated with a good cause, and 94% of Gen Z believe companies should address key social issues.
  • Watchable: Video is on the rise, and both Gen Z and millennials are a driving force behind this trend. Millennials watch an estimated 2.4 hours of video per day, while Gen Z watches 3.4 hours.
  • Experiential: You might hear complaints about fake consumerism (or “fauxsumerism”), enjoying the shopping experience without actually making a purchase. Another way to look at it, however, is that millennials and zoomers favor experiences over transactions. Remember, even a transaction can be an engaging experience if done right. Pop into any Apple flagship store if you don’t believe me.

Making the Insurance Journey More Personal

As noted above, engaged customers are worth more. According to Gallup, a customer who is actively engaged:

  • Purchases 22% more insurance products from their primary carrier
  • Stays a customer 4 years longer
  • Is 3x more likely to sign up for other financial products
  • Is 4x more likely to recommend the carrier to an acquaintance

At Idomoo, we’ve found that Personalized Videos are a highly effective way to engage with millennials and zoomers in the insurance space. As it turns out, the “effort” of watching a short Personalized Video is acceptable — even welcome — for today’s busy consumer. Take a look at this video from USAA, and see how much you can cover in just over a minute.

Tailored to each and every recipient, a video like the one above gives the viewer the 1:1 connection they want in the engaging digital format they love. Plus, Personalized Videos work on any channel, from email to social media to in-app.

A relationship like this is the closest thing today’s insurer can get to Lloyd’s Coffee House. It’s an engaging experience that makes every individual feel valued as a customer, while also helping insurers avoid commoditization.

Personal touches work especially well during onboarding. Set the tone for your customer’s experience with a Personalized Video that gives them a warm welcome.

Putting everything customers need to know in a video made just for them creates an onboarding experience that’s easy rather than overwhelming.

We’ve consistently seen Personalized Videos deliver better business results in the insurance space. MetLife reported a 12 point NPS increase as a result of their personalized policy renewal video. AXA saw an 8x increase in conversion rates. And another carrier achieved an 85% renewal rate with their campaign.

Engaging Today’s Insurance Customers

While insurers are falling short in engaging both Gen Z and millennials, there is a silver lining. There’s an untapped opportunity to learn how to drive stronger connections among these generations. If insurance companies can crack the code, they’re sure to see a boost to their bottom line.

The key to that engagement is to communicate with customers on their own terms. Personalize every touchpoint with dynamic videos that speak to what your customer cares about. Deliver it in-app, by email or even SMS for an omnichannel approach. And use a powerful platform, like our Next Generation Video Platform, to deliver those videos in real time and at scale.

To try it for yourself, schedule a 15-minute call. We’d love to hear from you.

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