Tag Archives: Gen Z

Why Gen Z Should Go Into Insurance

The summer is shaping up to be one of the most uncertain hiring seasons in years. Many companies are hedging their bets, waiting for consumer confidence to recover more fully before adding employees.

One industry, however, is not only intensely interested in Gen Z talent but also relatively immune to the ravages of economic downturns and even pandemics: the insurance field.

Many young people might opt for occupations considered more high-profile. Yet, perhaps surprisingly, insurance offers many of the things most Gen Z candidates seek most: work flexibility, good pay, rewarding work and job security. Insurance is embracing the kinds of technologies that Gen Z “digital natives” are comfortable with.

Insurance is known for its ability to support work/life balance and diverse lifestyle needs. For young people, the ability to work from home, either by preference or for present/future family reasons, is a major plus. As a result, insurance agencies are increasingly adopting a variety of remote and onsite alternatives that allow employees to design a work environment to fit their situations and wishes.

Few fields offer newcomers the kind of job satisfaction and stability that insurance does. Compared with many sectors that had to lay off employees during the pandemic, insurance job losses were small over the past year. The industry also matches many of the values Gen Z workers embrace. In a recent Vertafore survey of over 1,000 insurance professionals, respondents said their favorite part of working in the field is “the ability to work directly with my community.” Informal one-on-one chats, catching up on events in a client’s life and helping customers tailor plans to reduce risk are some of the ways that insurance work provides authentic personal benefits.

Increasingly Digital

As an occupation, insurance is ideal for Gen Z candidates who grew up with technology. The old pen-and-paper methods were on their way out even before COVID-19 hit; since then, the process has only accelerated and the industry is modernizing like never before.

Most Gen Zers would be surprised to see the extent to which technology has overtaken the insurance field. Digital tools are eliminating repetitive tasks and enabling employees to use their higher skills to analyze and interpret client needs. Technology has reached nearly every corner of agency operations. Cloud-enabled agency management systems, digital communications tools, e-signatures and digital payments have accelerated workflows and automated routine tasks. Data analytics, marketing platforms and other cutting-edge technologies are used every day, particularly at carriers and larger agencies. Mobile apps and mobile-responsive websites are also being used to improve customer experience through convenient self-service offerings.

The latest technology to enter the insurance field is artificial intelligence. AI-driven predictive tools are able to accurately determine coverage recommendations, automate personalized client communications and even flag which policies or clients are at risk for cancellation. Candidates with data analytics backgrounds will be increasingly valuable to manage such systems and will acquire marketable skills in the process.

See also: How Well Did Agents Cope With COVID?

For insurance workers, perhaps the greatest benefit from the introduction of technology is the personal and career flexibility it can provide. In the same Vertafore study, 70% of agency respondents agreed that their workplaces already have tools in place to allow employees to work effectively from home. The extent to which the industry will adopt flexible working conditions post-COVID is yet to be determined and will not be a one-size-fits-all solution. Each company will have to achieve a balance between business needs and the needs of the employees, and each company’s balance will look a little different. But, overall, the industry has seen a significant shift in what is possible for employees in terms of flexibility, and the potential for a new way of doing business will attract a younger employee demographic.

The industry is also embracing diversity and inclusion practices. Insurance is a field that recognizes the need to not only reflect the changing composition of its customer base but also to broaden its hiring practices. As a result, the field is creating more options to accommodate more people, more lifestyles and more life stages in more ways than ever before.

Demand Is Strong

According to the Bureau of Labor Statistics, demand for insurance agents will grow through 2029 at a faster rate than the occupational average. As agency principals retire, the need for skilled candidates is rapidly increasing.

Insurance also offers career-long opportunities for personal and professional development. New lines of business, new forms of analytics and risk assessment and continual upgrades in systems and technologies will be part of the business for years to come. Many insurance professionals expand their skills by branching out into financial planning and advisory services. 

For entrepreneurs, starting an agency or growing an established one can be lucrative. In an alternate career path, insurance brokers specialize in risk management and represent the customer in obtaining the best insurance coverage. 

See also: Intersection of AI and Cyber Insurance

High Satisfaction

Tallo, a firm focused on the Gen Z talent field, reports in its April 2021 industry rankings that the insurance business is securely in the middle for favorability among Gen Z candidates—above more seemingly progressive industries like renewable energy, real estate and consulting services. U.S. News & World Report puts insurance agents at #2 in its list of Best Sales and Marketing Jobs

Vertafore found that 90% of insurance professionals over the age of 40 would recommend a career in insurance. There aren’t many industries that can boast such a vote of confidence from longtime employees. It may be an uncertain time for employment, but the insurance field may be that sure thing Gen Z job seekers are hoping for.

Digital Playbooks for Insurers (Part 3)

In our last two blogs, we discussed why consumer playbooks and SMB playbooks have such an effective application for business. Insurers, especially, can use the idea of a playbook to put together a package of viable “plays” that will help them on their shift from Insurance 1.0 into Digital Insurance 2.0 — the second wave of technological and business model advancement within insurance.

In our pregame analysis, we looked at Majesco’s research into consumer and SMB behaviors and expectations. In this blog, we’re going to look specifically at the kinds of offerings that may be ideal for consumers. Of course, we won’t be developing low-level product detail, like an insurer would. Instead, we’ll connect high-level consumer indicators to the types of product and service attributes that could yield insurer differentiation and advantage.

New Consumer Behaviors and Expectations

Across all businesses, including insurance, disruption and change is driven by people. At its simplest, an offering can be created in two ways. First, we might observe changing behaviors and unserved or underserved needs that people have in today’s digital world to come up with an innovative idea that improves outcomes. Second, we might develop a new idea through some other inspiration or observation that meets a need or expectation — one that people didn’t even realize they had until the new idea came along — like Steve Jobs famously did at Apple. With either of these, we can create a value proposition that supports a new Ideal Offering.

See also: Digital Insurance 2.0: Benefits  

In 2017, Majesco set out to confirm consumer trends, across generational segments, looking at the attributes of new products and new business models in the marketplace. Using data from our 2016 research, we gauged increased use of new, digital activities that are influencing expectations and behaviors, highlighting year-over-year growth in today’s consumer practices.

The results can be found in our thought-leadership report, The New Insurance Customer — Digging Deeper: New Expectations, Innovations and Competition; a synopsis of areas of digital impact would include:

Sharing Economy: Ride-sharing, home-sharing and room-sharing are on the rise.

Connected Devices: Fitness trackers are gaining incredible traction across all generations. Telematics, though maturing, are still increasing in growth, especially among Boomers.

Payment Methods: Both use of company app payments (Amazon, Starbucks, etc.) and ApplePay and SamsungPay saw strong year-on-year growth among Gen Z and millennials.

Channels: Across all generations, 22% to 38% of individuals purchased insurance from a website.

Products: Between 25% and 30% of individuals had purchased on-demand insurance in 2017.

Other Emerging Technologies: Items such as drones and 3D printers are growing in use.

If we were in front of a whiteboard, we might use a word cloud to place some of these capabilities side by side and in groupings. For the purposes of the blog, we’ve created a list with many of the relevant concepts an organization will find, that will touch or likely touch Digital Insurance 2.0 offerings. This is the type of exercise that insurers may want to use during product brainstorming sessions. Included in the list are both the technologies themselves and the contexts that will drive the use of these technologies. In creating an Ideal Offering, insurers will want to take many of these capabilities and context drivers into account.

  • On-demand
  • Sharing
  • Telematics
  • Fitness tracking
  • Property monitoring
  • Pay-as-you-go
  • Mobile account management
  • Digital security
  • Digital assistant
  • Bundled insurance
  • Data-driven pricing
  • Gig employment
  • Peer-to-peer insurance
  • Artificial intelligence
  • Preventive services
  • Mobile messenger app-based communications and transactions

Given the pronounced generational patterns identified in Majesco’s research, it becomes clear that Ideal Offerings must take into account that different market and product strategies are necessary for each generation. To facilitate this thinking, we developed generational playbooks that summarize the attributes (the “ingredients”) that constitute the ideal insurance offerings (“the innovations”) for each segment (the “recipe model”).

We also identified behavioral targeting opportunities for specific product, service and process offerings for sub-segments within the generations, based on experiences with certain technologies and trends. Here are just a few of our findings:

Gen Z Offerings

Gen Z tops the list for groups that are ready to purchase Digital Insurance 2.0 offerings. These offerings would use highly ranked attributes such as preventive services, rewards-based products, messenger apps, mobile quoting, charitable sharing, on-demand products, bundled products and usage-based products. They are also a prime market for targeting products based on usage of new technologies. For example, those Gen Z members who use fitness trackers (41%), are more interested in having health and life insurance premiums that are partially based on their tracking data. They are also willing to join an affinity group that shares their interests, especially if it helps them reduce the cost of insurance.

So, an insurer trying to identify an Ideal Offering for Gen Z should consider that real-time, personal data tracking tied to fluctuating usage and variable-premium products (premiums based on behavior/activity levels) may be highly attractive to this group. And on-demand products fit their lifestyle needs. They are the industry’s newest buyer that aligns with the new products and models, reflecting the opportunity to capture and engage them today as they emerge as a dominant buyer.

Millennial Offerings

Millennials are likewise open to having personal data drive usage-based insurance. They are mobile users who will be happy transacting via messenger apps. They like the idea of telematics-based auto insurance. They like on-demand offerings and any service that can prevent or minimize accidents and claims. They are willing to share their data if it improves pricing and service. If they have ever used a device that monitors driving, they are highly likely to consider on-demand, device-tracked insurance for other areas of insurance.

Because millennials are also experience-seeking consumers, an insurer looking to capture millennials may want to create products that match up with experiences and trackability. Marine insurance, motorcycle and ATV insurance and any products that can employ both telematics and a mobile-based on/off switch will be highly valued. Because personal watercraft and ATVs are often rented and borrowed instead of owned, on-demand personal liability insurance could be an excellent product, sold both D2C and through rental companies.

In general, all generations, including pre-retirement Boomers, are showing signs that using insurance to cover an event with a specific duration will be a desired capability.

See also: Global Trend Map No. 6: Digital Innovation 

Gen X Offerings

There is really very little difference between Gen X consumer desires and those of millennials, reflecting the rapid adaptation to digital by this generation. However, there is greater growth in the Gen X segment regarding mobile payments. Year over year, more of the Gen X cohort paid for transportation through a ride-sharing service like Uber or Lyft, and more of them began using ApplePay and SamsungPay. Though some of this is driven by work/life maturity and lifestyle, it shows a general acceptance regarding mobile transactions and a desire to make transactions as simple as possible.

Ideal Offerings for Gen X will concentrate highly on ease of use and seamless functionality between quotes, admin, payments and claims. Much of this, clearly, is less product-based and more service-based, but when it comes to Digital Insurance 2.0, the two should never be separate considerations, rather should be an integrated offering. Back-end capabilities, front-end digital capabilities and lifestyle-relevant products are all part of the same agile environment.

Pre-Retirement Boomers

It was once thought that pre-retirement Boomers would simply be happy with traditional insurance products serviced in traditional ways. Once again, active lifestyles and our research are proving this to be false. The greatest jump in online insurance purchases falls within the pre-retirement Boomer segment. Because they tend to drive fewer miles, they have also latched onto the idea of usage-based auto insurance, leading the wave of growth in this area as well. Year over year, they are using substantially more fitness trackers, 3D printers and drones — and they are much more likely to have worked as an independent contractor or freelancer. This is not your previous generation of retirees!

Because they tend to travel more, they are excellent candidates for property-monitoring devices as well as on-demand insurance. They want to protect their earnings, so they are price-conscious. When we tested business models against generational segments, pre-retirement Boomers were highly receptive to online life insurance products that included quick quoting and simplified issue.

“DIY” Ideal Offerings for Insurers

Ideas are business tools. They are just as important as systems and processes. Ideas, however, rely on capabilities. Insurance offerings are obviously constrained or enabled by the digital readiness of an insurance company. In other words, to make the playbook work, there must be a foundation in place. For insurers, that foundation is Digital Insurance 2.0.

Digital readiness opens insurer doors to rapid testing of ideas and rollout. It allows a greater amount of freedom in product development, easier business configurability and exponentially better data gathering and digital service. Digital efforts provide speed to value, converting ideas to offerings while opportunities are fresh.

In our next blog in this series, we’ll look at Ideal Offerings within the SMB market.

Are You Ready for the New Customer?

In our new consumer research report, The Rise of the New Insurance Customer: Shifting Views and Expectations, we captured the views and expectations of today’s consumers in the midst of the disruption and change rapidly unfolding in the insurance industry. Insurers, MGAs, reinsurers and others must embrace this shift by understanding changes at play and accept that everything we have known about insurance was good for yesterday, but not good enough for today or tomorrow.

The trends are fueled by the insurtech movement that wants to take advantage of the disruption and by a rapid, perpetual shift in customer expectations. Our research took a deeper dive into the people component, to understand 11 key insurance industry perceptions across the spectrum of researching, buying and servicing, consumer response and the implications for the insurance industry. Specifically, the research dives into this shift with more insights on the move to digital, an expected shift by millennials and Gen Z — and highlights that Gen X is often dramatically aligning with the Millennial and Gen Z consumer behavior.

See also: Dare to Be Different: New Ways to Communicate With Customers

The Rise of the New Insurance Customer compares insurance against nine other industries across the spectrum of consumer experience. The resulting perspective is that insurance is not “easy to do business with.” Some key insights from the research are:

  • Insurance is “dead last” in terms of industries that are easy to do business with and are a good value. Life and annuities is significantly lower than P&C compared with the other industries/businesses with which consumers regularly interact.
  • The Net Promoter Scores across the industries/businesses show insurance as relatively low.
  • No industry is perfect when it comes to creating customer experiences for research, buying and servicing, but online and national retailers set the standard for all industries. We refer to this as the “Amazon effect.”
  • Millennials and Gen Z clearly show different expectations than the silent generation and baby boomers. Gen X often aligns with millennials and Gen Z, highlighting the gap between traditional insurance over the last 50 years to insurance today and looking forward.
  • The generational gap reflects an insurance industry steeped in tradition, where business models, business processes, channels and products are becoming rapidly irrelevant for the younger generations. The result is an open door to fresh, culture-savvy competition.

The implications for insurers are enormous. Over the last decade or so, many insurers have focused on transforming their businesses by replacing their legacy core systems with modern solutions surrounded by digital and data solutions. But the rise of new customer expectations does not necessarily align with these transformations. Why? Because many insurers did not anticipate the needs of the rise of the new insurance customers by transforming their business models, channels, products, services and engagement to meet the new generation of buyers. The result will be a potential shift in market leadership, with customers selecting insurers that best meet their needs and expectations. In North America, for both P&C and L&A insurers combined, this puts $1.4 trillion of premium at risk.

The large differences between the generations on many aspects of the insurance experience highlight that established insurance companies (decades or centuries old), were built for the two older generations, the baby boomer and silent generations, which are declining in size and revenue power. In contrast, the two younger generations, Gen Z and millennials (and increasingly Gen X) have different experiences and behaviors that are at the core of why insurers need to redefine and reinvent themselves. Loyalty is now influenced by how well insurers meet their needs and expectations for products, engagement and value.

The five generational groups underscore a shift that insurers must make to be relevant and competitive. It is a fundamental shift of a decades-old traditional business model, products, process and technology that were built to support the focus on products, mass standardization, operational efficiencies and automation. These are no longer effective in a market that demands customer-driven, personalized engagement, innovative products, simplification, transparency and everything digital. It’s time for “it’s always been this way” thinking to go away.

Each company must ask itself strategic questions, such as: “How do we bridge between the past, today and the future? How do we keep current customers loyal and engaged as we redefine our business for a new generation?” If traditional insurers don’t ask these questions and act, others will.

Both existing insurance companies and new entrants are responding, as evidenced by the large amount of activity in the insurtech space. Many think there is a better way for insurance to work, and they are acting on this belief and getting significant capital to make it a reality. In so doing, they have the opportunity to steal substantial market share from those companies that don’t ask themselves and act on the same questions.

See also: How to Get Broader View of Customers

And while many of these are in the early stages and are yet to be proven, consumers are very interested in these efforts, as demonstrated by the early results of Haven Life and Lemonade. Consumers are looking for fresh alternatives to age-old formulas. They will note whether an organization is completely new, with an innovative idea, or whether the organization is established but progressive in its approach. They will also know which organizations may be established, but not willing to cater to their preferences. In all cases, they will be looking at value, service, ease and understanding.

How should insurers proceed? There are alternative paths that insurers can take depending on their strategies and resources. But the bottom line is that, based on the perceptions, reality and implications outlined in the research, companies must stop talking about the opportunities and being digital, and start doing something about it by using the disruption and change as a catalyst for “real change.”

This change requires companies to rethink their business model and realign it with the customer needs and expectations of those who will be their customers for the next 10 to 20 years, not those from the past 10 to 20 years. There needs to be a renaissance of insurance to capture the revenue growth potential presented by the rise of the new insurance customer.

Insurtech: One More Sign of Renaissance

Just before the Italian Renaissance, guilds were formed in Florence and throughout Italy to bring together people of like occupations under a social network. Their purpose was to agree upon standards and rules, represent the group to government, improve upon their art, science or trade and provide support services to families and widows when needed.

Working together, these guilds fostered Renaissance attributes. They were patrons of the arts. They contributed to the advancement of medicine and technology. They advanced construction methods and learning in all spheres. In fact, the end of many guilds was brought about when they were merged into universities. The Renaissance created a cultural bridge from the Middle Ages or past to modern history.

However, the Renaissance didn’t just sprout up overnight. It was spurred on by a convergence of factors, the greatest of which was increased wealth. Trading in Florence had produced a new class of financier who was willing to fund artistic and scientific endeavors. Wealth created ease. Ease allowed time for thought and innovation.   Innovations in practical sciences, such as mathematics and architecture, benefited from broader thinking. Fast forward to today, and the comparison to that time is striking, with a similar influx of money and a new class of insurance technology investment via insurtech.

Insurtech as a concept has grown to become, not an official organization, but a collaborative movement. It has become a bridge from the old to new being created in the insurance industry today.

Insurtech:  A New Era of Innovation

Insurtech as a movement branched out from fintech (financial services focus) earlier this year following reports of significant capital entering the market for insurance startups … from insurers and MGAs to technology providers. Significant capital investment in insurtech for new insurance greenfield or startup companies is fueling massive innovation in products, services and business models and de novo options. These de novo options are a driving force underpinning the insurtech movement and why new and existing companies are looking to new business models to innovate, test ideas and bring new products and solutions to market.

See also: The Insurance Renaissance (Part 1)  

A host of venture-backed startups have propelled property & casualty insurance tech investment deals to a new high in 2016, with total funding to insurance tech startups topping $1 billion in the first half of 2016, according to CB Insights. 63% of deal activity to the insurance tech market went to U.S.-based startups in the first half of 2016.  Startups that distribute policies or provide software and services across the P&C insurance value chain have risen 50% compared with all of 2015. And life insurance is now also ramping up.

We saw an innovation movement in spades last week at the much awaited InsureTech Connect Conference in Las Vegas, which brought together more than 1,500 entrepreneurs, technologists, venture capitalists, insurance executives and startups. The energy, engagement and enthusiasm were infectious. It had the feeling of the “dot com” era… but with more substance. This gathering sent a clear message to the insurance industry, that we have rapidly entered a new era that is more profound and important… a renaissance. It has placed the importance of innovation and technology on a stage and signaled that, from here forward, insurance must and will be innovating. But like the forming of guilds, insurtech demands cooperation and conversation.

InsurTech and Insurance Renaissance

Just like the original Renaissance, today’s Insurance Renaissance is spurred by the converging factors of people, technology and market boundaries. Insurtech is powered by all three. Within insurance, this new Renaissance represents a real shift with significant business impli­cations beyond legacy modernization. It represents a whole realm of new opportunities via greenfields, startups and incubators to cover a fast-changing market landscape.

In our view, based on our Future Trends – A Seismic Shift Underway thought leadership report in January 2016, and picked up by many in the insurtech movement, there are three main areas of impact:

  • People – Expectations, products and business models that were built around the silent and baby boomer generations, do not meet the millennial and Gen Z expectations or needs. More importantly, Gen X is the “swing group” tipping with millennials and Gen Z. These changes in people’s lives drive changes in their expectations and their risk profiles/needs, reflected in our coming primary research on customer expectations for individuals and small business owners.
  • Technology – How often do you use your smartphone in your daily life for researching, buying, servicing and convenience? Think Amazon, Uber, news and music. These new expectations drive businesses and institutions to use technologies and processes to develop new business models and channels, which give customers the capabilities they’re seeking.
  • Market Boundaries – Market boundaries are being erased. New competitors and new channels are at the forefront of the insurtech movement. Consider how the largest number of startups are build around new distribution options. Then think about how existing and new businesses from Tesla, Ford and Trov are looking to offer insurance as part of an auto purchase. These new business models and capabilities will drive additional changes in people’s lives, leading to new needs.

Insurtech Leadership and Options

As we have tracked, observed and talked to our customers and other influencers/leaders in the industry this year, we are convinced this is not a “new fad” but a movement with substance that is just getting started. Unlike the “dot com” era, many of the insurtech participants have real capabilities, real business plans and real substance in how they can enable the industry through our renaissance to meet and exceed the expectations of our customers.

But it requires leadership, vision and active collaboration/participation.  Standing on the sidelines waiting to be a fast follower or thinking you can do it yourself will likely not work this time.  What is different?  Chunka Mui reminded our customers at the Majesco Convergence Conference, just before InsureTech Connect, that the industry is moving at such a rapid pace that the gap between today’s technology and future technology possibilities is being filled by insurtech active participants. From here forward, tech advancement won’t slow to allow followers to catch up.

See also: The Insurance Renaissance, Part 2  

It is an exciting time for the industry…a time of great change, challenges and opportunities.  While insurers have different strategies and paths to their future, we are convinced that insurtech will be a big part of that future and are committed to helping shape, embrace and engage in the movement to enable the renaissance of insurance.

Wave of Change About to Hit Life Insurers

A tsunami of change is poised to disrupt the life and annuity market in terms of regulation, products, distribution channels, business strategies and customer expectations. The new regulatory ruling from the Department of Labor (DoL) will initially disrupt annuity product sales related to IRA rollovers but will likely have significant impact in the medium to long term with all the products that U.S. life insurance companies provide.

The new ruling places a fiduciary standard on all types of financial services companies and advisers that provide investment advice or sell insurance or other products that affect qualified retirement accounts. Unlike the previous suitability standard that applied to most annuity and other investment product sales, the new fiduciary standard will require that financial advisers be completely transparent about their conflicts of interest and compensation and will make it very difficult to justify commission payments by product companies. To help guarantee objectivity, the preferred fee structure for retirement account-oriented advice and product sales will become fees directly from the consumer. While the fiduciary standard will apply initially to qualified retirement accounts, the recent experience in other countries like the UK and Australia makes it clear that consumers will come to expect a similar level of transparency and objectivity for other types of financial advice and financial products like life insurance.

See Also: 8 Start-ups Aiming to Revive Life Insurance

Life insurance companies that write a large volume of high-commission, retirement-oriented products like variable and indexed annuities will experience the most significant, immediate and potentially negative impact. Traditional life insurance and other lines of business will experience the impact of the fiduciary ruling more gradually, giving life insurance companies early warning and much-needed time to evolve their products, technologies and distribution strategies.

Insurers should assume that group-led individual product sales sold under something resembling the fiduciary standard will ultimately become the norm for the whole life insurance portfolio.

Adding further momentum to this wave of change are Millennials, now the largest living generation. As also the most educated living generation, they expect objective advice and fees for products that represent fair value. While often very self-directed, Millennials want advice from experts in complex, important areas like employee benefits. Millennials want to receive employee benefits advice from their current employers but then often buy individual products that can follow them to future jobs at new employers. This represents another wave of change because of the dynamic, “gig” economy.

Right behind, Gen Z, is a generation ‘born digital,’ with technology incorporated into all aspects of their lives. They live and breathe innovation, as noted in our Future Trends: A Seismic Shift Underway report. What does this mean to their employers and their desire to build employee loyalty?

This new customer expectation is reinforced in a recent MetLife employee benefits study where nearly two-thirds (62%) of employees say they’re looking to their employer for more help in achieving financial security through employee benefits as compared with 49% in 2011.  Furthermore, the study noted that Millennials were twice as likely compared with baby boomers, 44% versus 20%, to say that their employers “ought to help them solve their financial concerns.”

So what does this mean for life insurance companies? It means a new world of transparency, objectivity, fee-based adviser compensation, lower-fee products and employee job hopping will together create a wave of change to long-held business assumptions, operations and more. With the pace of change gathering strength and with limited resources, life insurance companies should seek partnerships that will help them ride this wave. This could involve partnering with technology companies to provide a single modern platform to support both individual and group needs that match the emerging customer needs. It may mean working within an ecosystem of innovative, new investment and insurance distribution platforms that were built with business and operating models that fit properly into the context of this new world.

Rather than acquiring these platforms and stifling innovation, the distribution partnerships provide valuable insights to understand how the platforms connect with Millennials and Gen Z and how to provide value to them. The new “robo adviser” technology-enabled platforms act as fiduciaries and have shown strong, early success with accumulating investment assets from Millennials and other types of consumers by providing automated, institutional-style asset management. Some of the robo platforms like Betterment express an interest in implementing retirement income-oriented advice and product delivery capabilities but will need help understanding the nuances and complexities of retirement income. Interestingly, life insurance companies are in a stronger position than other types of financial services companies to explain the benefits of having a “retirement income floor” and then providing the deferred or immediate income products that can actually provide that floor.

With insurance protection products, the new employee benefits distribution platforms focus almost exclusively on health insurance benefits, but will inevitably diversify into non-health employee benefits products. While technology will help with making protection products more consumer-friendly, combining technology with expert advice from people will provide the formula that Millennials will want.

To provide the multi-channel employee benefits advice that Millennials prefer, life insurance companies should consider investing in dedicated agents/advisers who can act as fiduciary equivalents for employee benefits products and provide objective advice based on the employee’s particular needs. These dedicated agents will find an attractive opportunity in helping employers with fewer than 100 employees level the playing field with larger employers — providing a compelling service to Millennials and other employees that will help to retain and motivate them.

Furthermore, life insurance companies should also seek to partner, tightly integrate with and learn from a few of the early self-service enrollment platforms for employee benefits like Gravie and Connecture, even though they are currently focused on health insurance products. Only by partnering with these types of companies and by understanding how they generate revenue by providing objective advice to Millennials will life insurance companies be able to succeed. For an industry that has relied for many decades on selling commission-based products through traditional, third party intermediaries, this will require a completely new way of thinking and a new business model that is currently foreign to most U.S. life insurance companies.

Finally, to put this all together as a “platform” solution, insurers must look to new technology software that will provide some key elements, including:

  • a core platform that supports both individual and group, to enable portability of insurance,
  • a digital platform that will enable multi-channel environments and provide a compelling customer experience, and,
  • a platform that will easily integrate innovative solutions and partners to differentiate the organization within its market.

It all comes down to adaptability, innovation and speed in life insurers’ ability to ride the wave. These corporate mandates are explained in greater detail in Majesco’s latest research paper, Riding the Wave of Change in Group and Employee Benefits.  

Why not treat partners and new players like expert surfers that can help to ride the new  wave?