How insurers can tap into the vital young-adult segment

How insurers can tap into the vital young-adult segment | Insurance Business Canada

Insurance News

Survey shows the age group is ‘fertile ground’ for growing customer loyalty

Insurance News

By
Gia Snape

Insurers looking to deepen engagement and build longer-term relationships with customers should look no further than young Canadians.

A new survey by global consultancy firm Capco showed that individuals aged 18 to 34 are not only more prepared (92%, compared to 83% of all respondents) to share data with insurance companies, they’re also most likely to hold only one insurance policy, making them ‘fertile ground’ to grow customer loyalty.

Young adults are more inclined (39%) to share such personal data specifically to receive more tailored services, compared to 32% of middle-aged adults and 27% of older adults.

Capco stressed the importance of leveraging data to refine and tailor insurance offerings, to ultimately craft a differentiated approach that stands out in the market.

“Canada’s insurance industry is experiencing a profound transformation driven by technological advancements, evolving customer expectations, and shifts in market dynamics,” said Lance Levy, CEO of Capco.

“It is imperative that organizations double-down on establishing a data-driven and customer-centric culture to enable them to make timely and informed business and technology decisions.”

Consumer attitudes toward insurance and personal data

Capco’s survey polled 1,000 Canadian policyholders between the ages of 18 and 65 years. Other findings include:

Canadians’ most desired personalized offerings are long-term savings such as investment linked-insurance, annuities, and endowments (76%); income protection (75%); pet (68%); travel (66%); and health (65%).
Telephone (62%) remains the first choice for communicating with an insurer. Email (53%) is second, followed by online forms (38%) and insurance apps (25%). AI-based chatbots are cited by just 4% of respondents, but this number is expected to increase as generative AI comes into more use.
In terms of their preferred methods of data sharing, smart home devices (31%) stood out as the top choice, followed by fitness and health tests (27%) and smart watches and wearables (23%).
Affordability (54%) and value for money (53%) remain top considerations in choosing insurance policies across the board, but especially for older Canadians.
When it comes to selecting an insurance provider, Canadians value scope of coverage (48%), reputation (46%), speed of service, such as application processing and claims settlement (36%), and ease of application process (29%).

The survey also revealed that Canadians’ openness to sharing their personal data – provided the data is handled safely and used for the agreed purpose – has grown across the board.

For Ben Kosic (pictured), the survey has implications for insurance companies in the midst of their digitization journeys.

“There’s a lot of effort, money, time, and organisational attention being spent on the digital journey, and there’s a danger if organizations are not being selective about the areas they invest in,” he told Insurance Business.

“The important thing is to stop and reflect periodically with information and changes in the market, and then look at that digital roadmap you’ve created and be willing to course correct on some things.”

Customer education plays a role

For insurers looking to attract and retain customers of all ages amid an increasingly competitive marketplace, differentiation will be paramount, Capco said.

Understanding customer behavior through data analytics will empower insurers to tailor products and services more effectively to individual preferences.

Kosic also highlighted the role that education can play in tapping into the vital young-adult segment.

“There’s an education component to help young people understand the benefits and the options associated with insurance as they move through their lives,” he said.

“In the survey, we talked about device insurance, which isn’t a high-demand, lucrative market for insurers. But there are options to start to build loyalty and stickiness between the next generation, which eventually, as they mature, will start to buy more products.

“The number of policies that people have increases as have kids or as they get older. The sooner you can get in front of them, build a brand, and build some education, it’s an opportunity to convert them later.”

What are your thoughts on Capco’s survey of insurance consumers? Share them in the comments.