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September, 2023

Gen Z and the CX in Insurance

September, 2023

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Table of Contents
01 The Insurance Monthly Roundup

02 What are the Emerging Trends in the Insurance Industry?

03 Financial Preparedness of Indian Insurance Consumers: Illusion vs. Reality

04 Increasing user adoption and usage of UBI in India

05 Gen Z and the CX in Insurance

News & Events

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The Insurance Monthly Round-Up

A quick roundup of the month’s insurance and insurtech news.

(India & Global)

  • Square Insurance secured $1 million in its recent funding round. 

The money raised will be utilized to open 15 new branches and expand its workforce.

  • Florida-based firm, Irys Insurtech closed $3.5 million recently.

The company plans to infuse the funding into scaling the platform and the implementation team.

  • South African firm, LeaseSurance garnered US$161K in seed funding.

The company will use the funds to extend its workforce and accelerate the development of its tech solutions for real estate customers. 

Unlocking Growth Potential for Indian Insurance Agents

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Mantra Research

Emerging Trends in the Insurance Industry

India’s wide-ranging demographic, socioeconomic, and geographical distinctions, the insurance needs of this vast populace are nothing short of varied. A 2021 report by Business Today indicated a mere 3.76% insurance penetration and $78 insurance density, showing an untapped market.

Economic Factors: 62% of underinsured 18-34 respondents were from lower-income households, indicating a correlation between economic capacity and insurance coverage.  Case in point, Pooja, a modestly earning receptionist, struggled financially when her health insurance didn’t fully cover her mother’s hospital bills.

Awareness Gap: Despite digital platforms, 55% were unaware of their insurance options. Consider the example of Ravi, an IT professional, who was surprised when his insurance only covered 80% of his medical bill.

Regional Disparities: 70% of urban respondents felt underinsured, compared to 30% in rural areas. Ramesh, a rural farmer, was underinsured due to a lack of outreach on government schemes that could cover his crops.

Gender Inequity: A gender gap emerged with 75% of female respondents feeling underinsured compared to 65% of males. Meena, a single mother, found her health insurance didn’t cover specific reproductive health concerns.

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Financial Preparedness of Indian Insurance Consumers: Illusion vs. Reality

India is experiencing a significant increase in the demand for insurance products. With the growing middle class and increasing awareness about the importance of financial security, more and more individuals and businesses are seeking insurance coverage. The Financial Immunity Study 3.0 released by SBI Life Insurance, in partnership with Deloitte, shows a concerning gap in the financial preparedness of Indian consumers. When it comes to financial immunity, insurance plays a key role. Building financial immunity has three major components: financial protection of the family from uncertain life events, a strong financial foundation to fulfill future aspirations, and wealth creation for the long term. Here are the key takeaways from the report: 

  • Even though 83% of surveyed consumers believe that insurance is essential to gain financial immunity. However, there is a huge gap between their perceptions and reality. 
  • 68% of people believe that they are sufficiently insured, and only 6% have adequate coverage under their current insurance plan. This means 94% of consumers who were insured did not have sufficient coverage. For insurance firms, this presents a huge opportunity. 
  • Among the consumers surveyed, those in their 20s emerged as the most uninsured group aligning with the lowest self-rated financial immunity score, in contrast with those in their 30s with the highest score. However, respondents in their 40s also reported a lower financial immunity score compared to their counterparts in their 30s, suggesting their lack of planning for their financial foundation during their 20s.
  • 20% of consumers said that the insurance buying process is a lengthy and time-consuming task and they have to rely on agents to purchase insurance. This means that insurance firms need to empower agents with tech-enabled tools so that the process can be completed quickly and efficiently.
  • 47% of consumers had given up or not renewed their policies in the last five years. 

It is essential for Indian consumers to break free from the illusions surrounding insurance and take a proactive approach to their financial preparedness. Education and awareness and a simplified insurance buying journey are what consumers need right now. And the technology could act as an enabler in addressing the needs of insurance customers and providing a seamless insurance experience that would keep the customers motivated and engaged at the same time. 

Read the full report, here.


Increasing user adoption and usage of UBI in India

Usage-based insurance (UBI), or telematics insurance, is a type of auto insurance policy that considers the insured individual’s traditional auto insurance. It relies on general demographic information and historical claims data to determine premiums.

UBI uses real-time data from telematics devices or smartphone apps to assess risk and calculate premiums.

Here are some suggestions to increase user adoption and usage of UBI in India:

  1. Consumer Awareness: Educate the customers about the benefits of UBI, such as personalized premiums, safe driving incentives, reduced frauds, and better claims management
  2. Subscription Options: At the initial stages of adoption, it is essential to help users with various payment structures to assuage fears. Similar to the “try and buy” and “cash on delivery” models adopted at the beginning of e-commerce shopping in India, companies can provide various types of UBI products to suit different customer segments and preferences, such as Pay as You Drive (PAYD), Pay How You Drive (PHYD), Pay as You Go (PAYG), and Distance-based Insurance.
  3. Transparency: This form of insurance relies on the free flow of data using technology to collect and analyze it. For example, with mobile apps, plug-in devices, GPS devices, onboard sensors, mileage detection, etc. Communication on how the data is used through videos, informational widgets, or notifications helps ensure the customer is aware of the data privacy and security measures undertaken by an insurer.
  4. Leveraging Channel Partners: UBI requires a robust ecosystem for easy adoption. Companies can partner with OEMs, dealers, aggregators, and other stakeholders for UBI distribution and service.

UBI is relatively new in India but is gaining popularity among car owners who want more control over their insurance costs. The way forward for UBI in India depends on several factors, such as adopting telematics technology, the regulatory framework, consumer awareness, and market competition. UBI has the potential to transform the car insurance industry in India by making it more transparent, fair, and customer-centric

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Gen Z and the CX in Insurance

As digital natives, GenZ has grown up in a world dominated by technology and has unique expectations when it comes to mobile banking. 

In 2022, Business Insider estimated Gen Z’s spending power to be over $360 billion in disposable income, a sizeable amount that will only increase in the years ahead. 

Brand Values

GenZ users hold high regard for social justice. They care about the world’s issues, be it environmental or social, and are willing to put their money where their hearts are. In a survey by Publicis Sapient, 67% of Gen Z consumers said they were interested in investing in sustainability organizations, and 35% were willing to invest in those organizations – even at the cost of lower returns.

Concerned about the ethical practices of brands, they are well-educated about the realities behind them and know how to access information quickly. If a brand advertises diversity but lacks diversity within its own ranks, for example, Gen Z is likely to notice and may choose to walk away from that brand. 

User Experience

With the luxury of growing up in a technologically advanced world compared to the early years of Millenials or Boomers, GenZ is quick to understand and use new tech products. Exposed to content with high-quality visuals early on, they expect a user-friendly interface and seamlessly crafted digital journeys.

From aligning brand values with what the demographic group resonates with to providing user experiences in line with the best-in-class applications and ensuring the appropriate features and functionalities are present and efficiently used within the application, we can help businesses meet the expectations of GenZ and build long-lasting relationships with this demographic.Read More

Business cognizance for the new-age digital insurers

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