The traditional focus on products, policies and paying claims will shift to services, experiences and creating value. Put another way, what customers want and need, not what insurers want to sell or have always sold, will be the dominant driver of innovation and growth.
How insurers engage insurance customers?
How insurers engage customers and the channels they use for distribution and service will change just as dramatically. In many cases, the “face” or “front door” of insurance will be distribution partners, including banks, manufacturers, health care providers and other high-profile brands outside the industry.
Today, more insurance leaders are recognizing how customer insights drive improvements in products, services and experiences.
In that sense, changing consumer needs and expectations are both an invitation for insurers to innovate and a blueprint for their transformation programs.
To satisfy those rising consumer demands, engage with new customers and retain existing ones, insurers will have to overcome their reputation for delivering subpar experiences and emphasizing standardized policies and traditional channels over customer needs and preferences.
The report, NextWave Insurance: Consumers & Small Businesses, focuses on nine key customer types that will define the market on the road to 2030.
The customer categories frame both the formidable challenges and unique opportunities insurers face in a highly dynamic market.
Of course, not every insurer will focus on all nine of these groups. But there are common themes across them, including the need for tailored coverage, personalized service and richer digital experiences – all of which add up to increased value.
The main customer types that will define the Insurance market
Point-of-sale purchasers
This group values the peace of mind that comes from knowing that the items they buy – consumer goods, jewelry, travel or concert tickets – are protected from the moment they’re purchased. Embedded finance and a growing market for point-of-sale insurance mean insurers can reach more customers, demonstrate the value of insurance and increase their relevance.
Virtual vanguards
With more people spending more time in the metaverse, there is rising demand for protections that cover digital assets (e.g., crypto keys, virtual identities and brands). Insurers can connect “metazens” by offering bulletproof identity protection that prevents hacks, breaches and theft; business interruption coverage for virtual events; and fully integrated “virtual life insurance,” which could be attractive for influencers.
ESG devotees
Some businesses view environmental, social and governance (ESG) as primarily a regulatory matter, but more consumers are putting their money where their values are. Specifically, they want to do business with environmentally and socially engaged companies and avoid those that are greenwashing. They are willing to pay a premium for products and services that match their value.
Bubble protectors
More consumers want holistic and dynamic coverage for entire lifestyles or “bubbles.” Designing integrated coverage for autos, homes, health, microbusinesses, appliances, travel, identities, and major new purchases is complex, but offers plenty of new revenue and stronger long-term relationships for insurers that get it right.
Data capitalists
Consumers are increasingly aware of the value of their personal data and expect more in return for sharing it. Insurers can engage this segment via customized offers, proactive insights for risk prevention and protection management with a portfolio of coverages that changes based on life events. The first step, though, is full transparency about data usage.
Minimalists
Looking to win entry-level business with budget-conscious consumers requires simple, understandable policies that are affordable and available via intuitive digital experiences. The end goal is to engage these customers for the long term, broadening and deepening the relationships as bigger risks emerge in their lives. By demonstrating the value of insurance and proving it can be affordable, insurers can both grow their business and protect the underserved.
Work-life integrators
By offering tailored protections for gig workers and small home-based businesses, insurers can boost their relevance with solutions that reflect how people live and work today. Such coverages must be easily adjustable and reasonably priced, and solutions for gig workers in specific sectors and roles (e.g., delivery and graphic design) are likely to gain traction.
Efficient entrepreneurs
Today, commercial insurance options don’t necessarily reflect the huge number and diversity of small- and medium-sized enterprises. The priorities for helping small businesses manage proliferating risks are real-time cyber insurance, plus monitoring and recovery services, and real-time, dynamic and usage-based pricing for certain operations. Every small business will appreciate 24/7 digital support and access to expert advice when necessary.
Conscious owners
Like the ESG devotees in personal lines, small-business owners are increasingly focused on sustainability. These customers are most drawn to insurers that have sector-specific expertise and services that help them further “green-up” their businesses. An authentic commitment to ESG and true depth of understanding of the risks they face, along with ecosystems of solutions to cover those risks, will drive further engagement and loyalty.
Shifting consumer needs are an invitation for insurers to innovate in pursuit of growth and to stay ahead of new competitive threats.
Though not every insurer will serve the full range of customers, those that put customers at the core of their business will gain a competitive edge.
They’ll also need to master a few crucial capabilities:
- Real-time risk protection: AI, machine learning, automation, digital platforms and data analytics enable insurers to deliver personalized protections and services – instantaneously and at scale – in homes, vehicles or anywhere.
- Ecosystems and partnerships: As industry lines blur and barriers to entry fall, insurance will become ubiquitous for all types of purchases and companies; insurers can orchestrate their own ecosystems and embed in those led by others.
- New risks necessitating new products: Evolving societal norms and cultural values – from the rise of ESG issues to personal data ownership to virtual worlds – have created new risks and thus require product innovation from insurers to provide the necessary coverages.
Senior industry executives have been asking: How can we make sense of and navigate these trends in pursuit of growth? It starts with envisioning how to meet the changing needs and expectations of different customers by developing intelligent micro-segmentation and hyper-personalization capabilities, aligning offers, operating models and transformation investments to win in a hypercompetitive environment.
A key customer segments for insurance companies
The insurance market caters to a diverse range of customer types, each with unique needs and characteristics. Understanding these key customer segments is essential for insurance companies to effectively design and market their products.
Here are some of the key insurance customer types:
- Individual Consumers: This segment includes private individuals seeking insurance for personal needs. Common products for this group include life insurance, health insurance, auto insurance, homeowners insurance, and personal liability insurance. Their decisions are often driven by personal factors like family needs, financial stability, and risk aversion.
- Families: Families often require a combination of insurance products to protect their members and assets. This might include life insurance for breadwinners, health insurance for all family members, and homeowners’ or renters’ insurance. Family plans can offer bundled services at more affordable rates.
- Small and Medium Enterprises (SMEs): This segment includes small businesses and entrepreneurs who require insurance for their operations. Common products include property insurance, liability insurance, workers’ compensation, and business interruption insurance. These customers value tailored insurance solutions that align with their specific business risks.
- Large Corporations: Large businesses and multinational corporations have complex insurance needs due to their size, global operations, and the variety of risks they face. They often require customized insurance solutions, including property and casualty insurance, cyber risk insurance, directors and officers liability insurance, and global commercial policies.
- Senior Citizens: Seniors might look for products like annuities, long-term care insurance, and senior health insurance plans. They are generally more concerned with securing their finances for retirement and ensuring adequate healthcare coverage.
- Young Adults: This group is generally characterized by a lower demand for insurance products, but they represent a significant future market. Products like auto insurance, renters’ insurance, and health insurance are common among young adults. They are more likely to be influenced by digital marketing and online services.
- High-Net-Worth Individuals (HNWIs): These customers require sophisticated insurance solutions to protect their wealth and assets. This includes high-value property insurance, luxury car insurance, yacht insurance, and bespoke life insurance policies. They often seek personalized services and privacy.
- Non-Profit Organizations and Charities: These entities require insurance for their operations, assets, and events. Common needs include liability insurance, property insurance, and special event insurance. They often operate with budget constraints and require cost-effective solutions.
- Government and Public Sector Entities: This segment includes government agencies and public institutions requiring insurance for their assets, employees, and operations. Policies might include public property insurance, liability coverage, and health benefits for public employees.
Each of these customer types has distinct needs and preferences, influencing how insurance products are designed, priced, and marketed. Recognizing and understanding these segments helps insurers to create targeted products and marketing strategies, ensuring better service to their diverse customer base.
FAQ
Insurers are increasingly prioritizing customer needs and preferences, moving away from product-centered approaches. The emphasis is now on offering valuable, personalized services that enhance customer experiences rather than only selling standard policies.
Insurers are forming partnerships with banks, healthcare providers, and other high-profile brands to meet customers where they already engage. These partnerships help insurers reach more people, making insurance a more integral part of everyday life through familiar, trusted channels.
Customer feedback informs improvements in products, services, and experiences, guiding insurers toward more relevant offerings. Insurers are now designing solutions around what customers need, helping them to stay competitive and grow.
Key segments include point-of-sale purchasers, virtual asset holders, and eco-conscious consumers. Each group has unique needs, from protecting digital identities to finding eco-friendly policies, which push insurers to create innovative coverage options.
Digital interactions are crucial for meeting today’s customer expectations. Insurers are investing in digital solutions that offer seamless, intuitive experiences, making insurance more accessible, especially for digital-savvy and younger customers.
Yes, insurers are increasingly providing customizable policies that adapt to individual needs, whether it’s tailored coverage for gig workers or dynamic pricing for small businesses. Flexibility in coverage and pricing builds stronger customer relationships and trust.
By using customer data responsibly, insurers can offer tailored risk insights, proactive protection, and customized coverage. Transparency about data usage is key, helping customers feel secure and understood while receiving valuable, personalized services.
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AUTHOR: Chris Raimondo – EY Americas Insurance Technology Leader / Contributors: Charlie Mihaliak, Isabelle Santenac, Ed Majkowski, Peter Manchester, Anita Sun-Young Bong
