3 ways life insurers can use technology to attract and retain young clients

Life insurers know their product is a crucial financial tool that provides security and peace of mind for policyholders in the event of the unthinkable. Historically, younger generations have said they had hesitations about acquiring life insurance. However, recent LIMRA research reveals that there has been an increase in younger people purchasing coverage. Although this is a positive trend, insurers still struggle to connect with younger consumers, largely due to the continued proliferation of manual processes and paper-based transactions as they move through their digital transformation journeys.

As digital natives, younger generations have different expectations and preferences when interacting with businesses and organizations. If life insurers want to be able to compete for young consumers’ business, they must adopt digital solutions that enable them to determine what questions and concerns this audience has and to find effective ways to address them before, during and after the sale.

For life insurers looking for a leg up on the competition, here are three key practices to adopt that will help attract and retain younger policyholders.

1. Make more diversified communication channels available.

Life insurance companies must meet younger customer demographics where they are. One way to do this is to create more communication channels for current and future policyholders to easily contact insurance distributors and learn more about life insurance. This omnichannel approach includes leveraging traditional communication channels such as email and phone calls, while also incorporating modern channels like chatbots, text messaging, online chats, online scheduling software, video calls and even social media.

Moreover, these communication channels need to be implemented by all insurance distributors, not just insurance agents. According to research commissioned by Equisoft, one of the most challenging aspects of the broker-carrier relationship is the digital tooling. Carriers noted they wanted brokers to expand and add more digital capabilities, like SMS text and online appointment setting, but brokers lack the technology to make it happen. If both carriers and brokers see this as a pain point, they need to work together to improve the customer experience by updating their core systems to support these new capabilities.

Expanding available communication channels also creates more touchpoints for insurance distributors to chat with policyholders and learn about their needs. By meeting consumers where they are, insurers can gain an immense amount of valuable insight. This data can improve customer experience, as well as inform product development and enhancement.

2. Create seamless digital experiences.

According to 2017 joint research from Deloitte and LIMRA, of the 58 life and annuity companies surveyed, 39% had at least one legacy policy administration system while the rest had multiple systems — sometimes as many as 26 unique systems. Most of the companies averaged around four systems each, but 54% had yet to complete changes and updates on at least one of their systems.

Clearly, insurance companies must upgrade their legacy technology systems in order to be able to share data in real time more easily. Doing so will allow for faster and more efficient processes that align with the expectations of younger customers, especially when they’re already receiving that fast-paced, on-demand and online experience from other sectors such as banking and retail. If insurers streamline the insurance buying process by integrating more technology into what currently requires manual and repetitive steps and offering user-friendly digital platforms, they can make life insurance more accessible for the younger generations.

3. Address the knowledge gap.

One of the reasons younger generations may be hesitant about purchasing life insurance is because of a lack of knowledge – particularly when it comes to insurance pricing. Younger generations are trying to build their wealth and establish financial security during a time of economic volatility and a fluctuating job market; some 46% of Gen Zers are even taking on side jobs in addition to their main jobs to get by. A misconception that life insurance is an expensive product can severely hinder this generation’s interest in obtaining coverage. So, it’s concerning that LIMRA also revealed that more than half of Americans overestimate the cost of insurance by more than three times the actual amount — something that is more prevalent among younger generations.

Additionally, research shows that when purchasing items from a new brand, 78% of Gen Z buyers like to research the company and product beforehand. In the context of life insurance, the implication is that Gen Z will likely want to do their own research before purchasing a policy. If life insurers want to reach young customers and educate them on the value of life insurance, they must publish more educational tools and resources that empower these generations to pursue this valuable financial asset.

These resources and tools can come in multiple forms, including online financial literacy programs, workshops and webinars, or simply posting accessible resources online. Through regular education and guidance initiatives, insurers can help young individuals make informed decisions about their money and demonstrate how life insurance provides financial security. These programs also offer an opportunity to understand the questions and concerns of a young audience so that insurers can address them.

Younger generations present an attractive customer opportunity for life insurers but reaching them and earning their business requires a different mindset – and toolset – than the industry has previously employed. Connecting with these potential policyholders will take work, but it is an effort that will pay off not only in increased business, but also in improved capabilities and practices for the carriers who choose to pursue this audience.

Brian Carey is senior director, insurance industry principal, Equisoft. He may be contacted at [email protected].

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Brian Carey is senior director, insurance solutions, Equisoft. Contact him at [email protected].