Millennial X factor: How does your digital strategy stack up?
Learn the questions insurers should ask themselves when building a digital claims strategy.
Millennials have overtaken baby boomers as the largest living generation, and while this group is still lumped into the “younger generation” category in many circles, the reality is that the oldest millennials are now in their 40s and are projected to earn 46% of all income in the United States by 2025.
Of the 78 million millennials living in the United States as of 2019, 45% own a house, and 80% own a car. It’s safe to say that this group has come of age as the first digitally native generation, with Gen Z following in rapid succession. Consequently, the demands and expectations of younger generations — of which 85.9% of millennials were digital buyers in 2020 — should be front and center for today’s insurers.
In tandem with the “millennial” effect, COVID-19 fast-tracked digital interactions between insurers and policyholders across all generations. It’s one reason why insurtech funding reached a whopping $7.5 billion in 2020.
Yet, while digital investments and implementations are front and center for all insurers, there is much to consider when designing a thoughtful, forward-thinking strategy. Younger generations, while certainly more tech-savvy than their older counterparts, are complex in their own right and may surprise insurers in terms of expectations.
Digital vs. human: A delicate balancing act
Predictably, a recent report from Liberty Mutual Insurance and Safeco Insurance found that millennials are more likely to research and connect with agents through digital channels than their older counterparts. And while digital interactions are important, the report also found that they still value human interaction.
For example, millennials are more likely to buy insurance online than older generations, but only 36% reported purchasing auto insurance this way. Even fewer bought homeowners insurance via digital channels. Notably, 80% of millennials wanted an agent to help them understand their insurance.
Simply put, today’s consumers are accustomed to receiving a high level of customer service that combines the best of digital and human interaction. While millennials value convenience, they also seek authenticity and transparency from their insurance partners throughout the claim lifecycle.
It’s a delicate balancing act. Today’s insurers must identify where digital interactions make sense from both customer service and ROI perspectives. When policyholders are in crisis, both empathy and speed are important. For example, following a hurricane, an optimal approach may require video chatting capabilities that bring a human touch to the claim process as drones are deployed to assess damage get money into the pocket of families in need quickly.
Strengthening relationships with millennials
While millennials want to know their agents and understand their insurance, claim processes should be supported by digital offerings to get policyholders to the finish line as quickly as possible. Payment is one area where millennials and Gen Z agree that digital is preferred. A recent VPay and Engine Insights survey found that nearly all Gen Z and millennials deemed instant or same-day payment of some importance and that speed of payment and ability to access funds quickly impacted satisfaction.
The desire for streamlined claim processes is good news for both insurers and policyholders. While investments in digital offerings that speed the claim lifecycle can improve net promoter scores, they also improve operational efficiencies for insurers. Consider that investment in digital payment alone can immediately eliminate the cost of printing and mailing paper checks as well as ancillary costs such as rental cars when claim processes are delayed.
To strengthen relationships with millennials, insurers can start by answering the following questions when forming a digital claims strategy:
Q: In what areas of the claim lifecycle are human interactions most important?
- Millennials want to know their agents have got their back in difficult situations. While live chat and texting can help streamline interactions, insurers should consider ways to implement easy offboarding ramps from digital to human to ensure policyholders’ needs are met.
Q: Which digital investments stand to deliver the most value in terms of meeting the expectations of younger generations and positioning operations for the future?
- While many digital investments can generate ROI, not all are created equal. Payment is an easy win in this area, especially considering that most younger generations have limited familiarity with paper-based check processes and more importantly, expect their payments to happen quickly with a digital option.
Q: How can our agency best personalize the claim experience to appeal to millennials?
- A growing body of research points to the power of personalization as a key factor in successfully engaging with millennials. From a customer satisfaction standpoint, millennials increasingly expect personalized claim experiences. For example, in terms of digital payment strategies, insurers should consider offering more than one option whether automated clearinghouse, virtual cards or push-to-debit.
Technology is a key ingredient to successfully engaging with this and upcoming generations, but it must be thoughtful in approach. Millennials may expect simple, fast and transparent processes, but they also value human interaction. Insurers that expect to remain relevant will understand this nuance.
Elisa Logan is vice president of growth at VPay. She brings more than 25 years of B2B strategy and marketing experience to her role and has worked as a senior executive with a variety of Fortune 100 technology leaders and start-ups in healthcare and technology.
Opinions expressed here are the author’s own.
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