‘Insurance for Digital Natives’ – study by W&W Digital and MSR Insights
02. November 2016
What makes the young, digitally savvy target group ‘tick’ when it comes to insurance? This is the question addressed by W&W Digital, the joint venture between Wüstenrot & Württembergische and etventure, together with the market researchers at MSR Insights. The ‘Insurance for Digital Natives’ study provides some indications. By using traditional sales channels and offering standard insurance products, insurance companies are losing touch with younger target groups. They are therefore relinquishing this field of business to digital InsurTech companies.
Educated, digitally savvy and underinsured
Educated and digitally savvy – but underinsured. Digital natives are finding it difficult to find a proper connection to the insurance market. At the same time, however, they are generally open to innovative insurance products. They know how important insurance is and are very well-informed. Yet these customers have reservations when it comes to the sales channels traditionally used for insurance. What’s more, they have different requirements of insurance products and the low closing rate is evidence of this. Although 12 percent of consultations end without a sale in the market as a whole, 42 percent of digital natives decide not to buy an insurance policy, even after a consultation.
Transparent, flexible, easy to understand, digital
But what does this young target group actually want? By using an innovative style of research that combines traditional market research with startup innovation methods, a great deal has been learned about this target group of digital natives. According to the study, above all else, digital natives want easy-to-understand, transparent insurance products that are tailored to their specific needs. Each insurance product should therefore have a clear pricing structure, a short contract duration, and a flexible cancellation policy. Among the young target group, there is also the expectation that insurers will interact via digital channels and mobile devices, and that it should be possible to manage insurance products online.
Insurers are losing the market segment to InsurTechs
As yet, these requirements have not been fulfilled by traditional insurers, which has meant that digital ‘InsurTechs’ have been fulfilling them all the more. Digital natives are particularly attracted by young startups and their innovative, user-focused services. These startups are gaining an increasing number of digital points of contact with customers. Traditional insurance companies urgently need to rethink their approach and gear themselves toward the new needs of the digital natives. Otherwise, they risk losing this attractive target group to the InsurTechs. Losing these customers would not only mean doing without a high-income target group. Indeed, with their openness to new technology, digital natives represent an avant-garde – they will provide insurers with an early indication of how the demands of the market as a whole will be changing in the future.
You can read the press release about the study here.
The full report containing all of the study’s findings (in German) can be ordered here.