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AN EXL WHITE PAPER
Millennial Access for the Under-insured
James WoodVice [email protected]
Written by:
New Approaches are Required Much has been written on how to best
attract Millennials to purchase insurance
products. As a group, Millennials are
greatly under-insured and firms see a
potential pot of gold in winning this new
customer group. Several large insurers are
focusing on attracting this cohort through
marketing campaigns using sports figures,
social events, and humorous advertising
messaging to attract Millennials.
Insurers may be getting it wrong. Despite
these efforts, Millennials engage with their
insurers the least compared with any other
generation.
Access is more important than messaging
when doing business with Millennials. The
25 to 35 year old group has grown up with
the web and access to cell phones. They
are comfortable browsing the internet,
messaging, and buying a wide range of
products and services over their mobile
devices. According to the KPCB 2016
Annual Internet Trends Report, Millenials
are not only early adopters of technology1.
They require new methods of access.
Millenials continue to push the envelope
to require new distribution channels which
are rapidly evolving due to technology and
distribution. Just as one in five shopping
malls are forecasted to close due to a
changing buying pattern driven by the
ability to browse, compare, and shop on-
line, Millennials are the leading indicators
of a shift in insurance buying habits.
A recent study found that young people
spend an average of three hours a day
on their smartphones. Because they now
expect every website they use to interact
with companies to be well designed,
insurers who expect spruced-up insurance
web sites alone will not win the day. A
major insurer recently celebrated a new
customer web site only to have one of the
first questions: “but where is the app?” The
old adage “give the man what he wants”
certainly holds true to the new generation
of Millennials. Affluent buyers will do
THE CHALLENGE AND OPPORTUNITY: Millennials represent a paradox for the insurance industry. While
Money reports that Millennials will have more buying power than any previous generation, they are
also the most underinsured. The Transamerica Center for Health Studies (TCHS) reports that while
Millennials had an unprecedented 23% uninsured rate in 2014, as of 2016 this number has dropped
to an 11% uninsured rate. Millennials are the new golden ring for insurers – but only if they can only
attract and retain these elusive consumers.
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business in the format that they find is best
suited to their life styles. They are more than
comfortable researching and purchasing
goods and services over the internet-in fact
they almost insist on having an easy to use,
fast purchase experience.*3.
Fortunately, technology has evolved to
meet customer expectation of both fast and
easy. By leveraging advanced analytics and
automation, insurers can target customers,
assess risk and conclude a purchase in a
much shorter timeframe.
Let’s take Bob as an example:
Analytics for Customer Segmentation and Automated UnderwritingBob is married, 30 years old, gainfully
employed, and has recently become a
proud father. While he has given some
thought to purchasing life insurance to
protect his expanding family, he is busy
and has not taken any action. Firms could
leverage expanding family, financial and
demographic data to proactively identify
Bob as a good prospect and proactively
reach out to him.
A direct to consumer or targeted marketing
campaign based on customer analytics can
significantly touch more qualified prospects.
In this example, let’s say Bob is contacted
directly through an insurance app on his
smartphone with an invitation to apply for
insurance based on his profile.
Now that you have Bob’s interest, how do
you provide a meaningful and quick buying
experience? Bob is guided through a series
of personal and health related questions.
Based on health analytics, Bob’s profile
indicates he is an excellent prospect and
using automated underwriting capability,
he is offered a $500,000 life policy within
10 minutes. Bob is happy with a good
customer experience. Experience has
shown that up to 75% of purchases can
be done via straight through processing if
they meet certain medical guidelines. The
remaining prospects are quickly routed for
any indicated medical tests to move along
the transaction.
If a better mousetrap is possible, what
is keeping insurers from creating and
deploying more innovative, easy to use,
platforms?
The challenge for insurers is threefold:
1. How to attract and target customers you
want to do business with?
2. How to provide a quick, high-quality
quote and purchase experience?
3. How to adequately manage underwriting
risk?
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Leveraging Automation, Analytics, AI and Design ThinkingThe skills, tools, and approach to
accomplish these three tasks are available
today. If an insurer lacks the skills or the
experience, partners can be of great
assistance in providing or sharing such
levers. A customer survey at the June
2017 EXL Digital Transformation Summit
indicated that over one-third of customers
looked to partner with suppliers to round
out the skills and technology required to
rapidly digitize operations. The trick is to
create, then test, then refine, and finally
build to scale. Let’s look at each of the
challenges presented.
How to attract the right customers? First
off, what is the correct prospect profile? By
leveraging existing underwriter analytics,
a clear picture of what groups have the
lowest risk and greatest likelihood to buy
insurance or any product can be obtained.
Once identified, this data becomes the
springboard for two independent projects:
targeting and obtaining. This requires
access to hundreds of customer variables
for millions of prospects and the ability to
mine credit bureau data. This data can be
used to segment the lowest health risks
coupled with the highest credit scores
within a ZIP code to establish a target profile
to generate sales leads.
Having identified and contacted the
targeted prospect list, the next step is to
use design thinking to deliver a best-in-
class customer experience when delivering
quotes for policies. Leveraging design
thinking lets insurers approach the quote
process from a consumer perspective
customize it to meet the needs of individual
consumers.
For example, design thinking could
minimize the number of questions a
customer must answer to get a quote.
Say every person who requested a quote
was asked whether they had ever been
diagnosed with several common conditions.
The insurer could use design thinking to
identify that many customers requesting
quotes didn’t have any conditions. Changing
the quote process to ask whether a
consumer had been diagnosed with a
condition in general, and then only showing
the list of common conditions to those who
answered yes would speed up the quote
process and cut down on the number of
questions.
Artificial intelligence can also be used to
create a better quote experience. These
advanced programs can use machine
learning techniques to anticipate the next
questions for a customer and lead to a
quick quote.
At this stage insurers can also better
manage underwriting risk by creating an
automated underwriting program that can
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quickly analyze buyer behavior that may or
may not result in a claim. If an insurer does
not have such a rules engine, then they may
benefit from utilizing a third party tool to
automate such insights. In the example of
Bob, once he inputs his personal profile, an
automated underwriting system can rapidly
rank his insurability, do a price look up and
present an on-line quote.
Robotics and automation also ensure that
the customer experience is preserved when
someone decides to make a purchase.
These tools can automatically validate a
quote to ensure its accuracy, and then
convert it into a policy. This speeds up
the process for both the consumer and
underwriter.
ConclusionThese disruptive technologies mean risk
is shifting, decreasing and becoming
more transparent, which require
insurance companies to change how they
fundamentally assess and manage risk
and how they appeal to new generations of
customers. The take away is those insurers
who are able to leverage technology
to effectively target the underserved
and provide access and speed stand to
benefit from the changing buying habits of
prospects of all ages.
References1. www/kpcb.com 2016 Internet Trends
Report, May Decker
2. http://www.consultparagon.com/blog/
millennials-buy-insurance-2017
3. http://info1.exlservice.com/hubfs/EXL_WP_
Technology_Speed_Loyalty_Millennials.pdf
4. http://www.nielsen.com/us/en/insights/
reports/2015/millennials-in-2015-
insurance-deep-dive
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