The New Demographics of Planning

Generational Transitions

The rise of the new life insurance customer

by Denise Garth

Ms. Garth is Senior Vice President Strategic Marketing for Majesco, a leading consultantcy providing technology solutions, products and services for the insurance industry across lines of business. She is responsible for leading marketing, industry relations and innovation in support of Majesco’s client centric strategy. Visit majesco.com

Today is May 1, 2025. You’re an advisor. Imagine your day. It may be tough to do.

When it comes to trying to predict what advising will look like a few years from now, about all anyone can say is that “past performance is not an indicator of future results.”

So, is there an upside to thinking ahead? Yes! The more we understand current trends in people, market boundaries and technology, the better we can envision their impact on future advising. In this way, we can use any trend to our advantage.

As a part of our industry research, Majesco keeps tabs on the business and technology trends that will serve the industry in the midst of change. What we have learned, however, is that new technologies are most relevant when discussed in the light of demographic and market trends. People, markets and technology are intertwined, pulling insurers forward together. Here are some of the trends that Majesco has identified during its consumer and small business research, both from original primary research and external industry studies.

Demographics Affecting Life and Annuity Companies

The new Millennial and Gen Z life insurance customer doesn’t think like, act like or purchase like a Baby Boomer or Silent Generation or even a GenXer. Life insurers know this. In January 2017, Majesco asked life insurers how actively their companies were responding to various business trends in strategic planning for 2017-2019. Their number one concern was…Millennials.1

Technology’s rapid adoption by Gen Xers and the “born digital” nature of the younger generations (Millennials and Gen Z) is forcing insurers to look more closely at multi-channel models, product development, customer engagement and data availability. Millennials and Gen Z have grown up “digitally native,” with stronger ties to texting than to face-to-face service, and Gen Xers have rapidly adapted to technology, shifting towards the younger generations.

Add to this, the fact that Millennials are taking longer to make traditional steps into adulthood, suc as marriage, buying a home and having children – common triggers for life insurance purchasing.

Demographic trends also point to an occupational impact upon insurance business models affecting engagement, distribution, and systems. A recent AM Best study found that among life/annuity insurers, 62.5% of productive agents are over 50 years old, while just 3.1% are under 35.2 A 2014 McKinsey report predicted that 25% of the professionals in the insurance industry would retire by 2018.3 An estimated 400,000 insurance professionals will need to be replaced by 2020, according to the U.S. Bureau of Labor Statistics.4

Certainly small face value policies and short-term products may not need an advisor. However, more complex needs such as larger policies, retirement planning, long-term care coverage and more will likely need a live interaction to provide advice and guidance. Individual advisors could end up with much larger portfolios of clients as the population continues to grow and as advisors retire and leave the industry.

Majesco research has also shown, however, that over a third of Millennials and Gen X have already purchased some kind of insurance coverage online as opposed to calling an agent. Though much of that shift has naturally come from the property & casualty market, a large amount of life, particularly term insurance, is sold online.5 The LIMRA U.S. Life Insurance Trends 2016 study indicated more customers are purchasing individual life insurance directly rather than from a financial professional. Depending upon the insurer, this new business may be referred to an agent for long-term service. But going forward, the customer will determine how they want to interact — not the insurer, nor the agent. As such, relationships and adding value is absolutely critical.

Product and Process Simplification

The new life insurance customer isn’t interested in the traditional processes for researching, buying and obtaining service. One of the problems currently plaguing the insurance industry is the complexity of its products and processes, which have influenced the decline in life insurance ownership. The LIMRA 2010 study noted life insurance ownership had dropped to a 50-year low, with only 44 percent of US households owning individual life insurance. The decline in life insurance ownership and a move to purchasing direct are key trends that today’s new InsurTech start-ups are taking advantage of with their simplified products and processes.

When Majesco surveyed Individual Life and Group insurers regarding their strategic priorities, one of the most important was the development of new insurance products such as single item, on-demand, limited duration products. Insurers have every reason to crave simplicity.

  • Regulatory Adjustment
    The transparency required for advising has resulted in regulations that are forcing insurers and investment firms to de-mystify and reconstruct products and related compensation.
  • Decision Making
    People are growing less patient. They will often opt for the simple and quick decision instead of the carefully deliberated decision. In our consumer research, we have found that behavioral economics principles like social proof are increasingly employed to help people make better choices faster.6
  • Streamlining
    For a long time, insurers have been trying to cut the time it takes to place a policy on the books. Now, however, they are using technology and new sources of data to not only issue instantly, but to quickly service policies all the way through claims. It makes logical sense that the simpler a product, the easier it is to quickly quote and cover.

Tech Trends and Touchpoints – Improved Customer Experiences

The new life insurance customer is going to be known and understood. He or she will be the recipient of a better overall customer journey and experience. Technology is going to be the full-contact provider of data, automation and insights. In many cases, it will also tailor itself to each consumer’s preferences.

The new Millennial and Gen Z life insurance customer doesn’t think like, act like or purchase like a Baby Boomer or Silent Generation or even a GenXer... Life insurers know this

However, many life insurers are restrained by their core systems technology. Many are still accommodating legacy systems that will stifle their best ideas and flatten opportunities. Majesco found that L&A insurers are significantly behind P&C insurers in their replacement of legacy systems. They are threatened by startups from inside and outside of the industry that have no long-term system baggage. Companies such as Haven Life, Fabric, and Ladder Financial address consumer pain points with simpler and more transparent products. They use multiple data sources and advanced analytics to provide excellent digital experiences.

To compete, some traditional insurers are electing to “skip” legacy system replacement by launching a new business model with new products, processes and capabilities on cloud-based, SaaS business platform systems as a way to build the business of the future that captures the new generation of buyers. At the same time, they are optimizing their legacy systems to serve their current customers with new digital engagement solutions that leverage new data sources and integrate with the legacy system to provide an improved customer experience.

Data, Analytics, Telematics and the Internet of Things

For the last century, it has been the advisor’s job to know the insured. Today’s technology has the potential to reverse the pipeline of knowledge. Data streams will be cross-examined, analyzed and acted upon with increasing frequency so that insurers will truly begin to know their insureds, provide them with protective, relevant information, offer new services around the information and feed valuable information back to advisors. Advisors will receive a clearer view of clients and opportunities. Advisor dashboards will improve as well as automated alerts and triggers.

New sources of data will contain unique insights regarding consumer behavior, attitudes, and preferences. Soon, we will see the expanding integration of behavioral, personal, loss, production and other data that will help fully interpret the customer value drivers within the insurance ecosystem. Once defined, these drivers will assist insurers in product development, give them the evidence they need to create relevant value added services and help them design transformative end-to-end customer experiences.

A simple example would be an insurer designing a variable premium life product for cyclists. The cyclist might be willing to allow a life insurer to monitor data from the Strava app in exchange for premium discounts. GIS data, GPS data, and health monitoring data could be used to calculate risk. According to Majesco research, 50% of Gen Z and Gen Y participants are willing to allow insurers to access this kind of health data in exchange for life and health premium discounts.
John Hancock’s Vitality program may be the best current example of wearable/life insurance integration.

Robos, Chatbots, Artificial Intelligence and Cognitive Computing

Data gains value when paired with cognitive computing, chatbots, robo advisors and robotics. In some cases, robo advisors and chatbots will simply improve communication channels. In other cases, real predictive analytics will be automated to reduce risk to both the insurer and the insured.

Chatbots offer immense potential for customers to interact with an insurer through direct interactions within messaging or social media apps. A December 2016 article from Business Insider noted that 80% of businesses will be using chatbots by 2020, with 42% believing that they will improve the customer experience.7

The promise of chatbots and robo advisors is their ability to deal with low-level requests without human intervention. This fits well into the world of consumer impatience and process streamlining. Robo advisors are essentially a two-way street. They can keep up with many of the smaller agency tasks, keeping the advisor face and insurer brand in front of the client without a human touch. They can issue protective advisories that will reduce risk and they can dramatically improve consistency in customer experience.

When utilized with cognitive computing, agency-facing robo advisors will automatically identify opportunities for sales and generate additional leads. They can utilize complex data sets to predict unseen risk and they will even assist marketing with selecting good risks with a high probability for policy uptake. The new life insurance customer may be the perfect combination of less risk with greater sales probability — a win-win for the future advisor.

Trend Soup

Just like the trends themselves, the products and processes designed to meet them will require an intricate mix of technology, market and people elements, in order to create simple, elegant solutions.

Technology, data, device, social, cultural and product blending will be normal. Market boundaries will blur. Life insurers may have a vested interest in maintaining a safe home environment. Health insurers may begin to care more about geography. Property & Casualty insurers may have increasing interest in financial goals. Through product bundling, data sharing and robotic automations, it is certainly conceivable that connected insurance products will erase the lines between life cover, financial planning, property protection and health monitoring.

What will an advisor’s role be in that environment? It will still involve education, engagement, service and selling … often in a multi-channel world. Those who understand the new insurance customer will remain the most valuable producers. ◊
Endnotes
1. Garth, Denise, Westlake, Glenn, Strategic Priorities 2017 — Knowing vs. Doing, Majesco, April 2017
2. “A.M. Best Special Report: Shifting Dynamics Could Lead to Distribution Channel Innovation,” Best’s News Service, December 9, 2016
3. Harman, Patricia, “7 things the insurance industry needs to know about the looming talent gap,” Property Casualty 360, August 7, 2015
4. Liakopoulos, Andrew, Baumann, Neal, Talent 2020: Surveying the talent paradox from the employee perspective: The view from the Insurance sector, Deloitte, 2013
5. Durham, Ashley, 2016 Insurance Barometer Study, Life and Health Insurance Foundation for Education, www.lifehappens.org/industry-resources/agent/barometer2016/
6. Garth, Denise, Westlake, Glenn, Future Trends 2017: The Shift Gains Momentum, Majesco February 2017
7. “80% of businesses want chatbots by 2020,” Business Insider, December 14, 2016