What does it mean to be a Digital Insurer?— A story of a Generation Z
Something about me and Generation Z
My name is Jessie. I’m a 26 year old software engineer. I came to the San Francisco Bay Area two years ago looking for a job at a tech startup, after studying Computer Science in Boston and finishing an internship at a digital marketing firm in New York. Age-wise, I might be on the border of Millennials and Generation Z. Persona-wise, I’m definitely more Gen Z, no matter how much that’s gonna make a difference to you.
Well, I keep hearing about this hype about “Generation Z’’ and how brainless, adrenaline junkies we are. That’s right, I mess with my smartphone every minute, living ¼ of my day on Instagram, Snapchat and what not. From the psychographic point of view, I can’t be more self-conscious and self-focused than any of the earlier generations. Having said that, there’s much bias going on in the way that the media portrays “me” — almost to the extent that “I” am being viewed as such an aggressive dude with a loaded gun in my hand.
To be fair, I must say that some of their persona analysis is not entirely wrong. I am what they call a digital native, have ## social accounts with clueless IDs thrown out here and there on the internet. What they don’t know about Generation Z, however, is that we can be smart, sensible and even frugal. We put a decent amount of interest on ethics and social issues. We know how to work out data way better than earlier generations. We tend to be information-rich and are pretty adaptable with those multiple omni-channels.
And I own insurance policies too
Based on this profile, you might think that insurance is probably one of the last commodities that my generation would be interested in buying. Not exactly. I own a bunch of insurance policies just like you, including health, automobile, and renters insurance. I buy everything online, but I have this not so digital-savvy Legacy Insurance® too, which I inherited from my parents. My parents, coming from Generation X, tend to make purchasing decisions around “status and brands”. They bought Legacy Insurance® when they got married, which was a top notch product for their generation seeking for “a companion for life-long security”. Based on their cost-calculations back then, Legacy Insurance® was undoubtedly the most sensible and reliable product too, in their minds.
Times have changed. And here I am, a mature enough age to own my own insurance policy. After working my ass off for a couple years on the new job, I finally came to buy a new car, and the zero moment-of-truth came when I found this policyholder review about DegiSure® at DigitallyCompare.com. If you didn’t know, DegiSure® is an acronym of digital, desirable, and insurance. As you can tell, the value proposition of this young digital insurer is all geared towards making digital natives happy.
From the initial consideration point to the post-purchase experience, my customer journey with DegiSure® has come without much friction. Disintermediation of sales folks, no unnecessary costs, no delays in purchasing, making claims or receiving benefits. No funky disclaimers. The way I see it, its value chain business model and even the organizational structure (although most of its key functions operate predominantly on Uber-like algorithms) are everything that is NOT Legacy Insurance®. OK then, here is my story about how I got rescued by this DegiSure®, when I had a car accident just 24 hours ago.
DegiSure® — How it can save “people”
I live in Alameda, a small island city that’s some 15 miles away from San Francisco. My commute to the Financial District, where my startup office is located, usually takes 30 minutes. The car crash happened on I-80 East, a point closest to Exit Hwy 24. If you’ve ever driven on I-80 East, you’d know how bad having an accident can be in that area. My lovely SUV, the largest ever purchase that I’ve made in my life, got hit by this huge truck that was hydroplaning in the rain. My car got totaled in such a funny shape. Luckily, I made myself out of the car un-injured and came face-to-face with the jerk truck driver, who apologized to me like a dozen times. We exchanged our IDs and took photos. But, how can I get myself out of the highway?
Helpless and completely soaked in the rain, I pulled out my smartphone and launched the DegiSure® app that I had downloaded and installed when I purchased the policy. In just a couple minutes, I finished filing my claim online. The claim was done through their digital agent, on this cute walkie talkie chat interface. I answered their AI-generated claim questions, sent the photos of the accident and our driver licenses using just a few fingertip touches.
However, it was not the claim filing part that healed my broken heart — it was their digitally inspired after-service that came along in a few minutes. Based on its geo-location data, DegiSure® notified me that an Uber will be there in a few minutes to take me to the nearest Bart station. All I had to do was just tab a few buttons on Purse@, a virtual wallet where DegiSure® had sent me fresh Uber credit to use.
Thank God, I was able to make it to work on time, totally un-disrupted. As soon as I got on Uber, DegiSure® notified me of a bunch of rent-a-car suggestions that matched my interest, all within my expectation. A clean, interactive dashboard magically demystified their price metrics for me, who has 0 insurance knowledge, based on my profile tied with their coverage scheme. The app kept me informed about the status of the rent-a-car delivery, time and at which area at the Downtown Berkeley station parking lot I would be able to pick it up so I can drive back to my home in Alameda.
How disruptive technology is changing the scene
Internet of Things, AI, Cloud, Big Data… No question that much of our experience is fueled by those algorithms these days. But no matter how smart they are, the pure metrics alone can never win your heart. With its powerful machine learning, DegiSure® came to “understand” my daily routines as well as driving behaviors.
After the quick learning curve, the app provided me with a bunch of policy info, and even prescriptions about how I can manage my policy better. This morning, the digital buddy sent me a notification when I got on the rented Honda car, advising me that I have a phone call with an agent to discuss next steps. I tabbed “Respond to Call” button in their notification and instantly got connected with Emily, who knows the ins and outs about the structure of my policy and the benefits that I can claim further.
Hearing Emily’s voice on the phone was a reassuring experience. But our chat got interrupted when I was parking my car at the Bart station to get on the train. At that point Emily suggested that I switch to an online chat. For the 10-min Bart ride, Emily’s job was delegated to her voice-enabled digital assistant on DegiSure® app, who was pre-informed about my accident and insurance plan that I am on. The final remaining task was to send my e-signature, over the chat screen which was completed in a minute.
DegiSure® is a digital experience that is such a delight. The digital buddy knows my daily routines, and preferred channels, frequency and timing of communication. Surprisingly, its notifications never cause any disruption through my day. Their data utilization, mix-and-match of those data and real-time communication enable personalized, accurate and transparent value offerings with high levels of engagement for its customers.
Here you are, Legacy Insurance®
Well, my experience with DegiSure® tells me there’s no way that the incumbent insurers will beat the newer, smaller and agile digital players in the customer experience race. More and more digital attackers like DegiSure® will make a foray into the current ecosystem, silently but exponentially. The accumulated data and branding leverage that the incumbent insurers have had will fade out, as insurtechs like DegiSure® can buy much of such data through their own ecosystem.
Digital players are growing in double digit, compared to 0–4% of incumbents. The flat organizational hierarchy and reduced decision gate enable them to push for agile go-to market strategy, meaning their customers can enjoy a weekly feature release or update. 40% or more access points are through mobile, versus the predominantly physical channels that’s being used by the incumbents. An onboarding experience cannot be easier with only 20 or less questions to be answered by prospects, versus 30–40 questions for Legacy Insurance® that can literally push its prospects to drop off before any conversion is made.
Coming back to the persona of Generation Z, we aren’t just frugal shoppers. We also care for ethical consumption and we love the concept of sharing economy. We believe that technology centricity doesn’t mean “technology-centered” — rather, it means deep understanding about how to leverage technology to empower both customers and businesses, and it should also mean a shift to transparent distribution and business models that are socially viable too.
Average car insurance in the USA is $914 per year, yet only 6.1% claims on their car insurance are made. Where does the top-dollar go? Contracts and policy wordings that can never be understood by policyholders, real cost of insurance that’s unknown until “after”, and experts training their AIs to “cheat” based on decades of data… Is Urban Dictionary right about its interpretation of “Insurance”, which is a business that involves selling people promises to pay later that are never fulfilled?
Insurtechs, new heroes in the market
Digitized, disruptive and dematerialized. Democratized, demonetized and deceptive of exponential growth. The insurtechs will become the new heros in the market. The “Diffusion of Innovations’’ model will see less and less laggards in the scene, as innovators and adopters continue to populate the space. For the incumbents like Legacy Insurance®, the digital tipping point is approaching faster than expected. The message is clear — Legacy Insurance® is already late in this digital race. But the lessons from history have taught us to be — Better Late than Never.
Legacy Insurance®, it’s time to adopt exponential technologies, increase data utilization, and revamp distribution channels on the very distribution model and value chain you have. First thing first, you need to reset your focus on “customers” and reinvent the customer experience. Legacy Insurance®, you will see my generation growing mature enough to become your target customer segment. Let us know what kind of new value propositions and customer-centric game plan you have, in order to self-disrupt yourself before you get disrupted by digital attackers.
So here I am, a newer generation of policy holders
My name is Jessie. I’m a 26 year old software engineer. They call me and my buddies Generation Z. True, we might look different in the way that we think and believe. When it comes to the desire to stay safe and secure I don’t think we are any different from your generation. Just like you, I own a bunch of insurance policies and I want those policies to keep me safe and secure. So, do you guys think you know me a bit better by now?
No matter how good predictive analysis may be and what machines can do — too bad. Because my persona will keep on evolving. The market, too, will keep on evolving. So Legacy Insurance®, what do you think? What are you up to? Are you and your buddies up for self-disruption?
Don’t you want to know what kind of digital reality there will be ahead of me and my generation, and how our needs and wants will keep on evolving together with it?
