Millennials recently passed baby boomers as the largest demographic in the U.S., so it’s essential for insurance companies to understand their habits and preferences. (Photo: Monkey Business Images/Shutterstock.com)The use of digital tools in the insurance industry lags behind similar fields. Although more people are digitally managing their insurance policies, there’s still room for improvement, particularly among younger generations. While nearly 60% of 18- to 39-year-olds use mobile apps for banking, less than one-third use these apps to manage their insurance.
As businesses across industries continue to enhance their digital capabilities, insurance companies need to focus on providing the right mix of digital tools for younger insureds as well as other generations of customers.
Mobiquity recently released its Insurance Loyalty Drivers Report, which surveyed more than 1,000 insurance customers 18 years of age or older in the U.S. about five types of insurance: auto, homeowners, renters, “toys,” and business. The results highlight opportunities for insurance companies to improve their digital tools to strengthen loyalty and new customer acquisition.
Three key findings
Our report revealed the habits of policyholders and what might influence them moving forward. Overall, we found that older policyholders tend to be more loyal. But we also discovered several areas for improvement related to digital tools, especially for younger customers.
- Older consumers are overall more satisfied with insurance providers than their younger counterparts. There’s an inverse relationship between customers’ overall satisfaction with their providers and age. When it comes to auto insurance, 91% of respondents ages 56 years and older said they are “very satisfied” or “satisfied” with their current providers, while less than 80% of those ages 18 to 39 responded similarly. Considering that millennials recently passed baby boomers as the largest demographic in the U.S., it’s essential for insurance companies to understand their habits and preferences. Millennials also are much more likely to switch providers than baby boomers, making them the most opportunistic area for growth.
- Customers under 55 are almost three times more likely to switch insurance providers than those over 55, with digital tools being a prime motivator. Older customers’ predominant reason for switching providers is to receive a lower rate for equivalent coverage, followed by the desire to find an agent closer to where they live and better in-person experiences. Younger generations did not place as much emphasis on better in-person experiences or lower rates, and placed significant emphasis on better digital tools. We found that younger policyholders are approximately twice as likely as their older counterparts to switch to an insurer with better digital options and a stronger mobile app. And nearly a third of policyholders under 55 would switch to an insurer with positive online reviews, versus only 19% of those over 55.
- While better digital tools can attract younger customers, they can just as effectively retain them. Overall, digital tools are more relevant in younger consumers’ lives. Compared to older customers, younger generations are much more likely to have increased their frequency of digital tool usage to manage insurance policies in the past 12 months. Of the respondents that increased their mobile app usage, more than 90% were under 55 years old. When asked how important various factors are in continuing business with a provider, younger customers placed more emphasis on digital innovation than those over 55. Specifically, 57% of those over 55 responded that an easy to use mobile app was important to them, versus 85% of those under 55.
Listen to your customers
Across age groups, satisfaction with digital insurance tools is relatively consistent. But even the highest satisfaction scores didn’t exceed 79%, which means there’s plenty of room for improvement. Since loyalty is much stronger among older policyholders, future growth will likely be driven by younger generations who have higher expectations for digital experiences.
Discovering what your younger customers are looking for in an insurance provider is crucial for growth, and you can start with primary research. Do they want an easier-to-use mobile app, digital claims tools for self service or a feature that enables bill payment via text? Or maybe you can hook them through new digital offerings that transform their insurer into a trusted advisor by tracking their home and car value or offering smart home monitoring. The majority of younger customers will say that digital onboarding is a must. By simply asking your customer base questions, you can discover which digital tools are worth implementing.
Younger generations are becoming more important demographics for insurers. And that makes it critical to invest early and get ahead of their digital needs. Implementing digital tools now will help you provide relevant services for younger customers, gaining their loyalty and enabling business growth.
Brian Levine ([email protected]) is vice president of strategy and analytics at Mobiquity.
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June 15, 2021 at 04:00PM
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