What’s Behind Insurance Consumers’ Purchasing Behavior?
Most insurance consumers have their own purchasing requirements, preferences, and processes, often based on their generational cohort characteristics. But advanced technologies, particularly AI and predictive analytics that track and influence consumer behavior, can revolutionize the purchasing game. Stuart Hayman, Director of Sapiens insurance practice, joins Amanda Ingram, Sapiens’ P&C Product Strategy & Marketing Manager, to examine what’s behind today’s insurance consumers’ purchasing behavior, and how next-generation technology has become vital to attract, influence, and retain consumers for the long term.
Amanda Ingram|Stuart Hayman
Amanda Ingram: Hello! Welcome to the Sapiens Insurance 360 podcast. I’m your host, Amanda Ingram, P&C Product Strategy & Marketing Manager at Sapiens, and I’m so pleased that you’re out there listening; this is where we discuss the latest news, trends, and issues from across the insurance solutions and technology spectrum.
Consumer behavior, or what influences consumers in their purchasing patterns, has always been the result of a variety of factors: age, generation, as well as personal, cultural, and familial preferences. When it comes to insurance coverage purchasing, consumers of all ages have their own requirements and predilections. And when you throw in today’s sales and marketing technologies, namely AI and predictive analytics, the sky is truly the limit in terms of influencing consumer behavior. I personally have always been fascinated by consumer behavior patterns, and in today’s episode, “What’s Behind Insurance Consumers’ Purchasing Behavior?” we will see how consumer behavior, especially when combined with advanced, next-generation platforms, affects insurance policy purchasing. To walk us through this fascinating topic is Stuart Hayman, Director of Sapiens’ Insurance practice.
Stuart is a successful Life & Pensions Executive with over 25 years of experience in the industry gained from a manufacturing and outsourcing background. His roles have covered operational, IT, organizational, process and solution design and delivery to internal and external customers. His most recent roles have focused on sales and business development, new contract negotiation, and solution design.
Stuart, we’re very fortunate and excited to have you on our program! Welcome!
Stuart Hayman: Thank you, Amanda. I’m very pleased to be here, too!
Amanda Ingram: Fantastic, Stuart. So let’s start the discussion with the connection between consumer purchasing behavior and behavioral demographics.
Stuart Hayman: Okay, so this is of interest to me and has been now for the past two or three years, in particular as a member of the Sapiens insurance practice. I’ve been engaged with a number of customers over the past two or three years who have begun to start looking at behaviors. And what I mean by that is they’re starting to look at what needs to be done in order to make customers “sticky” or entice customers to their product and their brand. And in so doing, they’ve done with us a lot of what we call customer insights and have been able to produce a generic model called the behavioral demographic model. And this has looked at different cohorts throughout the ages. So moving from Gen Z and Gen Y up to Gen X, Baby Boomers, and what is described as at the top end, the relatively silent generation. And not surprisingly, there are some very, very differing behaviors that need to be considered and are being considered. When we look at behaviors, [what] each cohort exhibits towards things like technology, service, online research, and relationships, there are lots of differences. The over-sixties are in the main still wary of technology, but increasingly adapting to it. Whereas as we all know, the Gen Ys, Gen Zs just live and breathe technology all day long and all night long, in some cases. The older generation are very, very price sensitive. They want a good deal, but they also want to be served. And by that what I mean is, they want a human element to their experience. So whether that’s buying a new product or whether that’s popping up some existing pension or some existing life cover, they want the option to talk to somebody. And they are still quite trusting in what I describe as the B2C relationship, the business-to-customer relationship as they respect authority. Whereas at the other end of the spectrum, your Gen Ys, Gen Zs in particular, as I’ve said, they live and breathe technology. Incredibly dependent though on what I describe our C-to-C relationships. In other words, customer to customer relationships. Unlike the older generation, they hate call centers, they shop online absolutely anything, but they are massively influenced by peer group. And by that what I mean is, that if one of their group says something good about X, Y, Z insurance, you can bet your bottom dollar that they’ll follow line and start investigating. Or if they are massively influenced by somebody on a podcast or on social media, that also grabs their attention. And so what insurance companies have asked us in the past to do in the last two or three years, is to start thinking about not the omnichannel, which was the term that was used so many years ago, which meant that you had a telephone channel, a face-to-face channel, an online channel, an SMS channel. They’ve started to coin the phrase “unify commerce.” And this to me is the next evolution of omnichannel because it solves the cross-channel problem by connecting all the channels and merging them to one completely accurate and fully transparent ecosystem. And this is what Sapiens have been delivering, whether it’s for life savings or pensions. So it is very, very interesting. But in order to stay in the game and to recognize that your customers across the demographic need a different engagement strategy in order to maintain them, in order to keep them, but also in order to entice new customers, it is fundamental that this new unified commerce capability is adopted.
Amanda Ingram: It’s fascinating, Stuart, and we could talk about all of the different generation divides and all the rest of it, but it’s like you said, some of these are chief influences and they are indeed generational factors. So how about behaviors that impact the actual buying process? For example, price, choice, simplicity, et cetera?
Stuart Hayman: Yeah, so with life insurance, basic life insurance price is important. Whether you are buying term assurance, critical illness insurance, disability insurance, it is important. You want to be as a provider, there or thereabouts, in the top quartile of the table that are published. However, let’s think about the consumer. Let’s think about who’s buying these products. And the consumer can be the independent financial advisor, the broker or the consumer direct. Now, they might all have different requirements. The independent financial advisor who’s doing all the groundwork or his or her customer will want ease of access through a very, very efficient portal, or he’ll or she’ll want a very quick automated decision process, whereas the direct to consumer will want an Amazon-type experience. But let’s not forget that you have to overlay that with the demographic. So with the older cohorts, and by that what I mean is the over-sixties, over-seventies, you have to be conscious of the fact that they want to be served, they want to be listened to, they have a lot of respect for authority, and they are still very trusting of companies.
The almost opposite of Gen Z, X, and Y, they hate call centers, absolutely detest them. They want to be served themselves, do it all themselves, make decisions themselves, but they can only do with the right information. They’re shopping online for everything these days, and they are massively influenced by social media and by peer group. So yes, price is important and I don’t think that’ll ever go away. Simplicity is important and I don’t think that’ll ever go away. In fact, I think what we’ll see as time moves forward, is the process is getting simpler and simpler. All this will be enabled by new data, new AI, and hey, I think that whereas before we used to live, and I’ve lived through it in what we call a financially glued environment. And what I mean by that is there were a large portion of populations who for one reason or another were glued. They either probably thought that insurance was too expensive or they probably thought of speaking to a broker was going to be too complicated. We have the means to wash that completely. We can educate people online, we can make buying online very, very simple with portals, with chatbots, with SMS, everything that digital these days. And we talk about machine learning as well. That is something that is gathering a lot of momentum at the moment. So you’re right, price will always be there, but I think simplicity will get even simpler.
Amanda Ingram: Your insights are fascinating, Stuart, and they certainly resonate with me. Let’s switch gears a little bit and let me ask a question that is probably in the minds of all of our listeners. How do modern technologies, particularly things such as AI and predictive analytics, influence consumer behavior and how do you think they’ve influenced consumer purchases, if at all, since these technologies have been available?
Stuart Hayman: Yeah, sure. So what it’s enabling organizations to do, and again with the Sapiens capabilities, we’re able to help companies target certain cohorts. And by that what I mean is, that if you think about what a customer goes through in their life, they go through what I describe as the seven stages of life. They go through being single and a school leaver or college leaver. And the second one is they’re a young saver. They might get married and start looking for their own property. The third is children come along. So they’ve got added responsibilities and the consequential financial responsibilities that go with that. Then they’ve got potentially cost of university for those children. Then all of a sudden, they become what I call empty nesters and they start focusing their attention on retirement savings. And last but not least, they go into care of some description. Now that is pretty generic, but what I’m trying to say here is, with AI and predictive analytics and the multitude of data that companies capture on their clients today, if you look at those seven cohorts as I call them, again, it is very easy to say, well, what would be of interest to each of them bearing in mind where they are in life’s circle of change. And what we’re also able to do, obviously, and this is the simplest form of AI, I guess, that anybody in insurance will come across, is when somebody changes their address, the company to say, well, perhaps they’re taking out a new mortgage, perhaps they need additional cover. Or when somebody changes their name and they get married, have they got divorced? All these are lifetime triggers to help providers starting to target customers. So I think it’s [a] fascinating era we’re in at the moment and more and more use is being made of predictive analytics and AI to not only attract customers to buy more from you, but also to retain customers because life insurance is long-term. People sign up for a life insurance contract for 10, 20, 30 years. That’s a long time. And in those 10, 20, or 30 years, their needs change. And it is incumbent upon the companies to recognize that not only do the needs change, but also those customer behaviors will change as well. And so having all this capability at one’s fingertips is absolutely vital to succeed in today’s market.
Amanda Ingram: Thanks for that, Stuart. It’s fascinating. Think it’ll also be interesting to see how consumer purchasing continues to be affected by sales and marketing technologies, particularly as AI and predictive analytics is becoming more and more sophisticated with each passing year. So one other key question, we know that some of the younger generations such as the millennials and the Gen Z members may not have the resources, much less the intention to purchase insurers at this point in their lives. How do you see through understanding these generations and some of the behaviors that you’ve talked about, do you think we can start to address this issue?
Stuart Hayman: Yes, I do. I think we’re starting to see quite a bit of traction in that space. So if I take you back to the behaviors that are exhibited by those in Gen Z, Gen Y in particular, they put a lot of credence on relationships, far more than any other demographic. They shop online, shop absolutely anything. And they are huge followers of social media and influencers. So what we’re seeing increasingly is the social media in particular and online using influencers, we’re seeing increasing amounts of educational material come through from insurance companies, which is targeted at these younger cohorts. And there’s a key message in this education, one that’s perhaps not surprising, but the insight that was established suggesting that they thought buying insurance cover, whether that’s life insurance, disability insurance, critical illness insurance was expensive, but we all know it’s not. And we particularly know that it’s not at a younger age as well. So by critical illness in your twenties is far cheaper than delay than buying it in your thirties for obvious reasons. And so that message is starting to get across and influencers are being used by a number of insurance companies to in front of that message, but also to start educating this group of people, because this group of people quite happily ensure their mobile phones. But the thing is, you can replace a mobile phone, your life or your health, [is] far more important and so commensurate with the cost of ensuring your mobile phone, there are examples that for the same price, you can buy a quite decent level of cover of crystal illness or disability insurance. And so yes, technology is enabling us to start penetrating this group of people and the sooner we can get them on board, the stickier they will become. And by that’s what I mean is, you would hope that somebody in their twenties or thirties who takes out life insurance or critical illness or disability remains your customer for the rest of their life and goes through all the sudden life stages that I described earlier.
Amanda Ingram: It’s fascinating, and I certainly know when I was younger, I never considered the life insurance and the critical illness cover because when you’re younger and in your 20s, you’re indestructible in your own head. But it’s definitely a question that must always crop up and certainly an issue that I’m sure is perpetually on carriers’ minds about how to address that.
Stuart, I want to thank you for presenting so much insight on insurance consumer behavior and what the future holds for it as modern technologies continue to ramp up and continue to change the consumer purchasing game. The insurance industry, of course, is a very old one and it will be interesting to see what insurance coverage purchasing influences look like in 10, 15, even 20 years’ time. To our listeners, as always, thank you so much for spending your time with us here today. We love hearing from you, so if you have comments or you would like to follow us on social media, please reach out to us on our channels and don’t forget to subscribe to the podcast. We’ve got more coming, so be sure to tune in next time to Sapiens Insurance 360.
