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Insurers need to do more to capture the millennial market

ESTABLISHED insurers aren't doing a very good job of delivering value to their younger customers.

That's one of the major findings of Bain & Company's survey of more than 174,000 retail insurance customers in 18 countries. As part of our Customer Behaviour and Loyalty in Insurance report, we asked customers to rank the qualities they value most in a provider. We based our questions on the Elements of Value®, 30 fundamental attributes, displayed in a four-level pyramid, that Bain has identified as critical to the ability of companies to connect with their customers.

Insurers are falling short on providing value to customers of all ages, but the gap is most pronounced among digitally active millennials - people who expect instant, personalised service on their smartphones and tablets. That raises the question of how fit insurers are for the future.

Generally speaking, insurance customers have a few fundamental needs. They want to be able to choose from a good selection of policies at reasonable prices. They want clear, transparent information, and they want smooth, hassle-free interactions. When they're filing a claim after an incident - often a time of great stress - they expect their insurers to help alleviate their anxiety, not add to it. Increasingly, insurance customers also want their providers to provide non-insurance services, such as roadside assistance and advice on leading healthy lives.

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Young people are looking for all these things - and more. In addition to the basics, they're seeking a sense of community and purpose, traits characteristic of the upper tiers of the Elements of Value pyramid. And they're not happy with what they're getting. Fewer than 20 per cent of millennials in the US give their property-and-casualty providers high scores for key upper-level elements, such as "motivation", "affiliation and belonging" and "self-transcendence".

Incumbent insurers are grappling with this value deficit at the same time as they're facing the kind of digital disruption that has roiled many other industries, from retail to travel to banking. No insurgent has achieved the critical mass necessary to become a power player in a major insurance market - there's no Apple or Google of insurance on the horizon, at least not yet - but aggregator sites, insurtechs and other newcomers are making significant inroads, particularly among younger customers.

In all but one of the countries we surveyed, a majority of customers are open to buying insurance from new entrants, including those from outside the industry, such as tech companies, car manufacturers or retailers. Among digitally active millennials, that figure can soar to 90 per cent or higher.

Insurers know they have a problem, and many are taking steps to address it.

Some insurers are trying to disrupt themselves by creating a company-within-a-company that aims to be digitally oriented, low-cost and customer-centric. The jury is still out on most of these efforts, but insurers are learning that they can't just put a low-cost, digital veneer on old-school products and processes. They need to radically reimagine their approach.

Our survey shows that the insurers with the highest loyalty ratings stand out in a few key areas, helping them keep up with evolving customer needs and stay a step ahead of insurgents.

Loyalty leaders excel in their core business. They deliver high-quality products at competitive prices and provide customers experiences that are personalised and simple, both online and offline. The companies pay particular attention to the "moments of truth", such as those times when policyholders need support after an accident, injury, fire or theft.

Insurance leaders go beyond insurance. They establish themselves as central players in an ecosystem of interconnected services that attract customers and build loyalty. Insurers that offer ecosystem services are able to connect with consumers on emotional and life-changing elements - the ones prized by millennials.

Insurance leaders innovate - constantly. Insurance is a highly regulated industry, creating barriers to entry. But, as disruptors have shown in other sectors, such obstacles can be overcome. Incumbent insurers can't afford to be complacent.

Leading insurers start by revamping fundamental activities, including making processes more efficient and improving customer service. Some companies are creating new business models, including digital-first platforms, sometimes as standalone units. The most proactive insurers are taking innovation further by radically reinventing their entire business, not just discrete pieces. This strategy carries the greatest risk, but also has the potential to deliver the greatest rewards.


Insurers that do the hard work of understanding and delivering the value that matters most to all their customers - including the smartphone-wielding consumers of the next generation - can put themselves on a path to sustained loyalty and lasting growth. Their future is on the line.

  • The writers are from Bain. Henrik Naujoks leads its Financial Services practice in Europe, the Middle East and Africa, and is based in Zurich. Darci Darnell leads the firm's Global Customer Strategy & Marketing practice, and is based in Chicago. Harshveer Singh is a partner in Bain's Financial Services practice, based in Singapore.