Present-day Millennial consumers are a far cry from the customers of the first reported insurance company, which came to America in the mid-1700s.
Yet while plenty has changed since then in the industry, studies show that insurance has evolved more slowly than many other industries—particularly when it comes to new technology adoption.
Where We Are
The 2015 Insurance Marketing Survey found that while referrals are agents’ primary marketing channel—delivering up to 60 percent of all of their new business—80 percent of the agents surveyed still rely solely on informal phone, email, or in-person requests.
In other words, while most insurance agents understand that referrals are their lifeblood, they lack a consistent digital referral strategy to help them grow their business.
Meanwhile, other industries, like financial services, have generated 15x message amplification—and 10 percent new customers per campaign—via formal referral marketing programs, according to research in a study called The Connected Consumer.
Other experts agree that the insurance industry is ripe for change.
A recent article in Tech Crunch stated: “Outside of the Affordable Care Act, next to nothing has changed in the insurance industry for years.” In the article, author Brendan Dickinson added, “The insurance industry is begging for disruption.”
Where We’re Headed
The problem with the insurance industry’s lag time is that the industry’s customer base is rapidly changing.
As low-cost, tech-enabled carriers are beginning to challenge established players, more and more Millennials are flocking online to shop for insurance. Meanwhile, a growing middle class is surfacing as a huge underinsured market, while retirees are clamoring for financial management.
What’s more, as the economy continues to shift its focus from owning to renting assets (think Uber and Airbnb), there are significant ramifications for the insurance business. “Existing policies offered by big insurers don’t handle these new use cases and will have to be replaced,” said Dickinson for TechCrunch.
“But the bigger shift is that in this new world, the concept of insuring an asset over many periods is outdated; instead, we will move to a more transactional consumption model: just-in-time insurance delivered on mobile and underwritten in seconds.”
This long overdue change that’s affecting the insurance industry means that agents are now required to compete on two levels—marketing a wider range of products, and attracting a younger, more tech-savvy, consumer base.
Yet amid the flux, many agents are still using yesterday’s tools to try to compete in today’s marketplace—a marketplace where Millennials rely on social media and mobile technologies to check on what their friends and family are doing, and what they buy.
Fortunately, even an old industry can reinvent itself and stay current.
In the TechCrunch article, Dickinson noted that “the biggest opportunities for startups will be in four areas: new products for a new economy, better insights from better data, new ways of managing risk and funding regulatory capital and new structures for acquiring customers.”
In other words, thriving in today’s market and preparing for the future means that agents need to move away from traditional marketing tactics.
More specifically, they need to start making it easier for customers to spread the agent’s message to their social circles by offering online referral platforms with increased functionality for both agents and insured alike.
The right technology can help agents modernize their referral process and leverage social media, while tracking and measuring outcomes across multiple channels.
How We’re Getting There
This isn’t a pipedream; it’s happening now.
To show the range of creative solutions that are currently being unleashed in the industry, BenefitsPro recently featured a story on “The 20 Most Creative People in Insurance.”
The article makes it clear that a cross-generational, cross-disciplinary, cross-regional group of creative minds are starting to make a big difference in how the industry markets insurance today.
Among those honored were Gregory Bailey, a partner with Insure.VC, who said: “The modes of distributing products, the very products themselves and the expectations consumers place on their insurance companies will see large-scale changes in the years ahead. There are massive opportunities for those willing to look out onto the horizon and build to take advantage of these large-scale changes.”
Karen Joyner and David Lear, managing partners of LifeTrends, were also among the winners.
They said: “The industry is dealing with new generations of consumers, whose needs are much different than the traditional clients of the past. The way in which clients use insurance products will quickly change. The way in which products are distributed has to change. Carriers have to build products that are suitable to these emerging client markets.”
To that end, Vinay Murthy—vice president of business development at KnownCircle and one of the 20 innovators honored by BenefitsPro—offered this: “Agents are operating within their comfort zone, yet catering to the fact that consumers are getting more savvy and depend on the newest innovations, especially in social and mobile technologies, to make purchase decisions. KnownCircle bridges this gap perfectly. Agents understand the value of referrals and the simplicity of getting onto KnownCircle. Consumers leverage KnownCircle to find trusted providers.”
Murthy added that what excites him most about the industry today is that insurance agents are now open to new ideas—and in some cases wanting to be the change agents themselves.
The insurance industry may have historically lagged in adopting new methodologies, but we are seeing increasing evidence that they can catch up.
Embracing new ideas and new technologies to reach the younger new insurance customer is a great start.