Sure recently unveiled new research, revealing a striking divide of digital insurance preferences between younger and older consumers. The results of Sure’s 2024 Consumer Sentiment Report: Preferences for Insurance in a Digital World are clear.
The future of insurance is digital.
See where the digital puck is going
There’s an old saying in hockey: Don’t skate to where the puck is, skate to where the puck is going. As younger consumers come of age and more frequently purchase insurance, their preferences are to do so digitally. Companies that don’t adapt now to their digital preferences will be left behind as everyone else skates toward the digital puck.
The first mover advantage is real, and it gives those prescient enough to pursue it the mind share, resources, and learnings first. This was true with the emergence of credit cards and cashless payments, as we’ve seen the first mover advantage at work in Visa and MasterCard. Those companies had the foresight to adapt to buyers’ changing preferences for a seamless purchasing experience, and in the process, they revolutionized their industry as they connected the rails between merchants and banks to enable commerce.
Now, the insurance industry has the opportunity to make a similarly radical shift to redefine the industry.
Younger consumers are coming of age and want digital experiences
The data is clear about which way the future of insurance is heading. While older consumers have traditionally purchased insurance in a way that required human interaction, younger consumers are just beginning to research and purchase insurance for the first time – and their preferences are clear.
64% of Digital Natives believe that insurance should be primarily purchased and managed online in today’s digital world. This group will define the next few decades of insurance, and those who don’t get on this train will be left behind as the market shifts to meet digital preferences.
A perfect storm of change preferences and external factors
In addition to changing preferences, external circumstances are already forcing insurers to reconsider how they produce and distribute insurance products. The combination of climate change and eye-popping premium increases over the last few years has exacerbated the core problem in the insurance market: the sheer challenge and complexity of bringing new insurance products to market rapidly and updating them once in market.
This, combined with the hurdles of launching insurance programs digitally, has kept the legacy players in the industry unable to adapt to the market quickly enough to serve consumers with the options they need – and the way they want to transact.
The power of partnerships
By establishing partnerships with insurance infrastructure companies, insurers can get ahead of this generational shift and external pressures to better serve consumers with the insurance products that they need, in the way that they prefer to purchase them. Their fate depends on it.
As more Digital Natives come of age, they will represent the bulk of U.S. purchasing power over the next two decades — and 3 out of five of them are open to switching providers if their current provider doesn’t offer digital insurance experiences. This means that if insurers aren’t willing to adapt, digital natives aren't afraid to take their business elsewhere.
What’s more, Digital Natives as well as Digital Immigrants won’t necessarily take their business directly to a carrier. As more and more brands have emerged as insurance providers, consumers have grown more eager to engage in insurance transactions with brands they already have a strong relationship with.
63% of all respondents believe there should be more options to purchase insurance directly online from the brand (e.g., purchasing homeowners insurance digitally from their bank or lender). What’s more, 65% would be more interested in purchasing insurance online from a brand that’s underwritten by a reputable insurance provider than they would be going to find insurance independently. This further reinforces the power of partnerships between brands, carriers, and insurance infrastructure providers in today’s digital insurance world.
Everything works better digitally
Today, everything is already online – but this hasn’t been the case for insurance. Consumers have become accustomed to buying almost everything online and autonomously, but insurers have not adapted to the desire for this convenience. But with independent players building the technology rails of digital insurance and brands emerging as trusted insurance providers, everything works better. Transactions happen more quickly, and consumers are able to secure the coverage they need, in the way that they prefer to purchase it — quickly and seamlessly. For their own survival, legacy insurers had better open their eyes to see where the puck is going and skate towards it.
