Generation Z (say born after 1990) has grown up with internet. When they were very young, they demanded the computer playing games to be online & are getting increasingly networked, when they have come to age of sharing, they invented ITunes, when they have come to live in the ‘world of friends’, they invented Face book, YouTube. And now they are for the first time entering the workforce in increasing numbers. That means for the first time this generation will have more money (their own money!!) to play with than ever before. If they could bring about this change in the world order without the money, I wonder what they would with money power (I hate to see them get distracted/corrupted with money!) Would we see a gradual shift of buying & service expectation patterns that will shake up the Insurance Industry. Now this group when they get the money, the first indulgence, one would expect, will be a car (especially in US!) and there you have, their need for Car Insurance. I guess the first time they buy a car, they will continue to be with the Insurance cover their parents have & may end up buying with the same agent. A natural expectation, but I guess servicing requests will see a dramatic shift and they will not go along the line their parents are used to. I guess in next 2-3 years, we could very easily see the demand for online service channels far more than what many carriers are ready for.
A first time buyer of Life Insurance is between age 28-45 and that would mean 2018 could be a good inflection point when I suspect we will see online servicing requests taking over the traditional service requests in Life Insurance. So I guess Life Insurance has more breathing room (if one is looking to procrastinate!!). While it is relatively easy to predict that the servicing requests will become increasingly online, I do not have the same conviction in me to suggest that buying Life Insurance will move online ( May be Term Insurance will). The trust factor that plays so heavily in Life Insurance (a typical policy probably lasts 45-50 years!), I guess is not something, that is easily replicable thru online channels.
Well, I do not want to challenge this generation, but will be watching with interest on how they generate that trust & change the dynamics in Insurance Industry. I wonder what the gurus at Insurance companies are thinking about preparing their company for this change.
Comments
Insurance products fall under the category of credence goods. In other words, it is difficult to tell the utility of the product and hence almost impossible for the customers to ascertain the value.
And this is precisely the reason why insurance products have the most touch-points as far as selling is concerned viz- a personal agent.
I agree with Uma that as the generation Z grows - they would start buying the insurance policies over the internet, however you cannot take the human element out as you really need someone to build the trust and confidence that you have on the company or the product.
Also - as soon as the insurance companies start selling online, the industry would become highly commoditised and companies would compete on prices - a classic example is the auto insurance space.
In my view, insurance companies would have to look at new channels beyond the traditional agents to sell policies. Of course the web channel is a very legitimate option, but how about selling these products on-shelf through retailers like Walmart or Tesco ?
Posted by: Vinod Sisodiya | December 10, 2009 9:42 PM