Changing Customer Behavior and the Impact for Insurance

What does the customer want?

A far-reaching consequence of digitization is the changing preference of customers.  

The Global Digital Insurance Benchmarking Report states that online activity will continue to replace traditional channels at an ever increasing pace over the course of the next three to five years. 20 – 40% of the activities being conducted via traditional channels (in-person, phone, and mail) will move online (daily digital user behavior transmits into insurance landscape).

Customers want

  • Personalized Service (tailored to their need)
  • Real-time communication and feedback through digital communication channels
  • Value at the point of sale or point of need
  • … in their daily life

Insurance Customer Behavior in 2018


1. Impact for Insurance


Insurance companies must adapt to new market conditions driven by changing consumer behavior, by advanced technology. The daily routine in the digital world of customers and new understandings from behavioral economics are great opportunities to develop new systems more effectively which unite the needs of digitization, personalized, real-time service and a value. Additionally, customer behaviour is also shaped by the large internet platforms. Although we are concerned about data privacy, we are willing to share data if the value in exchange is high enough, as Google and Facebook show, to whom many provide vast amounts of their personal data.

If insurance companies provide products that provide enough value, they can strategically influence customer and prospective customer behavior.

We shouldn’t forget that today’s customers are used to being offered products at the point of sales or need and gain trust into digitally sold products through comparison engines, generous cancellation policies and increasing transparency via third party accreditation programs.

In particular young millennials find the thought of buying standard insurance products from a broker in person awkward, as they are used to acquire most products and services at the tip of a finger without personal interaction. They want the apps they use, like N26 or Revolut to provide  them with the same one click experience, as they are used to from platforms like e.g. Amazon, Netflix and the likes. Brokers sell the largest portion of insurances in many markets, like Germany, today. They will likely remain a primary sales channel, however, will have to adapt to consumers, demanding communication on the go via video chat, What’sApp and other interactive omnipresent channels.

Pre-purchase customer research, purchasing, renewals, product cross-sell and upsell, policy servicing, claims management, billing/payment, and customer service will be handled via digital channels primarily.

According to the Insurance Consumer Trends, Customers are open to buying insurance from non-insurers: “Over 60 percent of customers surveyed reported they would be comfortable buying insurance from a bank. Smaller, but substantial, percentages would buy insurance from a tech company, a home service provider, or a retailer. This openess to buying insurance products from non-traditional insurers has grown significantly in all categories since 2013” (

Technology plays an important role in customer relationship management. For insurance companies that means they need to be much more robust to acquire, manage and act on all of this data.


2. Turning the change into a new opportunity: Insurance products should not be sold today as they have been sold


We will stop buying insurance and start consuming security including end 2 end assistance service

Imagine, your TV breaks during the world soccer cup, while being moved into the garden to watch with friends and the same TV model is being delivered as a replacement in less than  24 hours after you filed the claim. In the future, a young digital audience consumes insurance products like “friendly helpers” incorporating  assistance services. 

Imagine, a basic coverage that can be configured as easily as searching for a rental apartment covers home content, personal liability, basic cyber risks and many other goods owned on demand, rather than having multiple individual insurances, as is the case today. 

Imagine, if you buy a  bike, kitesurf equipment, or a snowboard and the price of your  private liability policy adjusts in real-time and incorporates the above mentioned products and corresponding liabilities automatically. Thus, insurance coverage in the years to come, will be much more comprehensive with less exceptions. The efficiency gains save costs, resulting from cheaper processing that can be passed back to consumers partially, allowing to fund comprehensive coverage packages. Consequently, consumers can expect less complex and more comprehensive products.


Another uprising trend is the distribution of insurance products at the point of sale or the point of need


Imagine you buy a GoPro sports camera for a skiing vacation and as you download its app to your smartphone and log in to set up your online profile, you get offered liability and damage protection insurance right in the sign up user flow at the click of a button, covering you immediately.

Imagine you go on a skiing trip and your digital banking app recognizes that you just spent several hundred Euros on renting skiing equipment (using PSD2 banking data) and offers you, via a gentle notification, personal liability insurance for your skiing trip including abroad health insurance at the click of a button. No login or extra data required, as you are already logged into your banking app with all relevant data.

Read about the ‘Top Insurance Trends 2018‘, here.

At this level of convenience provided by a trusted company, users start to appreciate the service and lose their concerns of disclosing personal data and rather start consuming the subtle offered security coverage. Users no longer feel, they are being sold into something, like a credit card at an airport before the security line, but rather they are being provided a service when they truly need it.

In five to ten year from now the majority of customers will be purchasing goods or services through digital intermediaries like messaging platforms, connected devices or smart assistants in five to ten years from now. More insurance products will be incorporated seamlessly into products you buy primarily, such as e.g. buying an antivirus program, including additional cyber security insurance coverage against non virus cyber risks.

Offer diversity, speed and individualized products and the customer willingness to adopt non-traditional forms of points of sales of insurance is a chance for insurance technology and shows: The change of customer behaviour drives change and creates opportunity for the insurance industry. We need a seamless user experience, added assistance services and especially an all coverage service, rather than several different policies and offline means to administer them.

Change always means chance – and changing customer behaviour is one of the most powerful forces, as the portals where customers spend most time with, set the standard for user’s expectations and subsequently their preferences in consumer behaviour for all products.