Omnichannel and a twist
Three years ago, I attended a bootcamp organized by a major insurance company with young people from ‘Generation Z’. On the first day of the event, a boy in his 20s said: “I guess most of the insurance will be sold online.” The directors and employees of the insurance company present in the room could not contain their laughter.
His statement not only contrasted —and contrasts— with the data of the sector, but also showed that the majority of young people do not even understand that there is any other way to purchase insurance —or any other product or service— that is not through the Internet.
However, Insurance is far from being the online business that that boy imagined. E-commerce barely accounted for 0.91% of the sector’s turnover in 2019 (1). Even in Autos, a branch in which it may sometimes seem that online sales have greater weight, this channel only accounted for 3.6% of premiums.
But these figures must be properly interpreted. That the proportion of internet sales is so low does not mean that this channel is not important. First, because there is an upward trend (+ 8% in 2019). And secondly, because last year many things changed. For example, many people bought online for the first time during the pandemic.
With the lockdown and subsequent restrictions, the sector accelerated the adoption of new technologies. Remote working was established and a firm commitment was made to telemedicine, video expertise, new online communication channels —social networks, WhatsApp… -, new means of payment —Bizum—, and so on.
And this trend does not stop. 87% of insurers say they will invest in digital enhancements (2). Entities especially value the advantages that digital channels offer in terms of 24/7 availability, ease of updating information, and search capabilities. However, just 32% of them trust the effectiveness of these sales channels, due to their inability to offer personalized and in-depth advice to clients looking for more complex products, such as pension plans or annuities, for example.
Online marketing may not yet have a significant weight – although it has surely increased in the last year – but it is indisputable that both customers and entities are digitizing and moving towards an omnichannel model. In fact, more and more people come to the Insurance through the internet, even if the sale ends up materializing by phone or in an office.
In addition, clients are predisposed to contract outside the Insurance ecosystem. 27% of consumers welcome the possibility of purchasing a policy through online providers such as Amazon or Google (3). Likewise, 24% of those consulted consider the option of taking out insurance in a hypermarket or other type of store.
In any case, Insurance has some peculiarities. On the one hand, it is a sector with very different customer profiles, from 100% digital young people to people with little contact with technology or who simply prefer human contact.
On the other hand, the sector has to give a twist to adapt to young people, a segment that is difficult to reach. Traditional insurance is closely linked to vital moments of mature age and/or linked to the acquisition of some good: Life and Home insurance when requesting a mortgage, Auto policy when buying a car, individual Health insurance or for the family, funeral policy …
Young people may not find it attractive to take out insurance, but they do want to be insured. Perhaps it is necessary to look for different solutions, more oriented to use than to property – rental housing, car/moto sharing, etc. – or to protect other types of property, such as electronic devices, bicycles, etc. The challenge is to offer insurance as a service, rather than a product, and almost invisibly. For example, microinsurance linked to the execution of certain acts – when using a shared car, buying a smartphone, going on a trip … – with coverage that is activated at the time they are needed, either automatically or on-demand, only by clicking on your smartphone.
Likewise, young people are used to a self-service model, so it will be necessary to develop simple products and services that can be understood, configured and acquired digitally from start to finish, although offering the possibility of finalizing the purchase or making inquiries through other channels, with a homogeneous user experience. A real omnichannel, not a simple multichannel. And another important aspect will be the ease of payment, avoiding friction and allowing the use of solutions such as Bizum, PayPal, Google Pay or bitcoin, for example.
(1) ICEA. ‘Canales de distribución. Año 2019’
(2) Capgemini y Efma. ‘World Insurance Report 2021’
(3) Accenture. ‘Accenture’s Global Insurance Consumer Study 2021’
Article in collaboration with Inese (WILMINGTON INESE S.L.U.). With the collaboration: