Research from Capgemini reveals that insurance customers trust online research and social media testimonials over broker advice

Social media is the driving force behind a new trust equation that is changing the way consumers buy insurance.

The Capgemini World Insurance Report 2020 found that some 60% of consumers are influenced in their purchasing decisions by online reviews and ratings, while just 40% of shoppers still seek input from traditional sources such as sales staff, agents and brokers.

Despite this, the Capgemini research found that while more than 60% of insurers believe brokers and agents are an effective way of selling policies, less than 30% consider online channels such as websites and mobile apps to be effective sales drivers.

And this backwards looking approach to digital distribution could be detrimental to the future success of the insurance industry, with all generations now seemingly at ease with using online methods of conducting transactions.

Indeed, while the percentage of millennials frequently conducting transactions online or via mobile apps has grown from 54% in 2018 to 62% in 2020, the number of people born in 1980 or earlier conducting regular online transactions has grown from just 30% to almost two-thirds (64%) over the same period.

Capgemini Research

“Gen X and previous generations have realised that digital channels are convenient and easy to operate – and have broadly embraced their use,” the report reads. “The irresistible appeal of conveniently accessing services 24/7 eroded the generational digital divide and drove mobile apps and online channels mainstream for day-to-day engagement by just about everyone.

“Moreover, as prolonged Covid-19 virus lockdowns force people to learn about and extensively use digital channels for day-to-day transactions – irrespective of age or tech-savviness – the digital divide will narrow even further.”

The research found that more than a third of consumers would now be willing to buy insurance from a big tech firm such as Amazon, Apple or Google, up from just 17% in 2016.

This change in consumer behaviour means that insurance is now bought by consumers rather than sold by companies, and insurers will need to adapt to this new normal.

The Capgemini research found that real-time data that explores the customer mindset and shopping preferences will be the key to future success within the insurance industry.

“Insurers must evolve quickly from one-size-fits-all products to offering experiences that align with policyholders’ specific and individual preferences,” the report reads. “Results from Capgemini’s 2020 Voice of the Customer Survey decidedly indicate that traditional products promoted through digital channels will not serve up experience-led engagement. Customers are hungry for new, innovative and more personalised offerings to cater to their needs du jour.”

One way of achieving this, the research found, was through reaching out to consumers at the time of important life events.

The research found that events such as assessing finances, purchasing high-value items or catastrophe or global health crises such as the Covid-19 outbreak can all influence insurance buying behaviour.

Despite this, only about 35% of insurance executives said they empower their agents with digital tools that offer a heads up about policyholder life events, even though around half of insurers believed the most impactful promotions were those times to coincide with important life events such as marriage, the birth of a child or purchasing a home.