How is technology improving the protection experience for millennials?

In the protection industry, technology has been able to help providers engage with younger clients, often referred to as millennials, in particular.

But protection providers have been accused of not being very quick to adapt to the changing needs of customers by using technology.

In fact, many believe the sector is still some way behind where it should be if it wants to engage new and younger clients.

Closing the gap

Paul Yates, product strategy director at iPipeline, believes tech has helped in two ways.

He explains: “Firstly, technology is helping to engage younger users, making them aware that they have a protection need and nudging them to do something about it. 

“Second, it is using technology to make the process simpler and faster to source and buy protection products. There have been huge strides over the past three years, but we still need to up our game if we are to close the massive UK protection gap.”

Today’s average first-time buyer is in their 30s, meaning millennials are not exposed to financial planning and risk planning until a much later stage than previous generations.Craig Brown

BlackRock’s Investor Pulse survey, which was conducted in the first quarter of 2017 among 4,000 people, 750 of whom were millennials, found six in 10 millennials (those aged 25-34) in the UK manage their everyday savings at least once a week online or on a mobile or tablet device.

If this is the case, then it stands to reason that protection providers will be better able to communicate with this generation if they too adopt the right technology.

Speaking to FTAdviser back in August 2017, Nick Telfer, head of product and propositions at British Friendly, acknowledged new technology was an “ongoing challenge” for the protection industry.

In answer to a question about whether the protection industry has adapted by introducing technological advances to produce ranges, he replied: “I think it’s something we haven’t probably as an industry been great at.

“We need to be more mindful of what our potential customers expect from a company that’s trying to get them to buy something from them.

“We’re seeing more and more protection advisers or intermediaries looking at new ways of distributing,” he added.

Mr Telfer revealed a mutual benefits programme set up by British Friendly for all its members is starting to use more technology.

“For example, one of the key benefits we have within mutual benefits is a relationship with Square Health, who are a long-established company providing a medical screening service and other services to insurers, and they’ve developed a customer-facing proposition which we’ve embedded using a unique app they’ve developed,” he explained.

“That allows our members using this app to get a virtual GP appointment, to get a medical second opinion, or arrange physiotherapy or counselling.”

Enticing millennial clients

Vitality’s use of tech to entice new, younger customers is well advertised (as discussed earlier in this guide), offering an Apple watch as part of an insurance policy, which tracks how much exercise the customer is doing and dictates the monthly premium they pay.

Legal & General is trialling a selfie-based life cover app in the US, which it hopes to bring to the UK market soon.

The idea behind selfiequote.com is the app allows the user to take a selfie and based on the photo it estimates their age and body mass index, providing an indicative price for term assurance (see below for example).

In an interview with FTAdviser in August last year, Mark Holweger, managing director of Legal & General Insurance, explained: “It's basically an engagement model that can break down the misconception that protection is expensive, and act as a stimulant with millennials in particular to help them think about taking out protection.”

Exactly the kind of technology many believe the industry more widely should be adopting.

Iona Bain, founder of the Young Money blog, suggests insurers are increasingly taking advantage of mobile and wearable technology to the benefit of millennials.

“Firstly, younger customers who do all their ‘life admin’ through their smartphone can now see their insurance policy, giving them benefits through intuitive, appealing apps – this helps them keep on top of their health in real time.”

She continues: “Insurers can use the information provided by this technology to provide policies that are priced most appropriately, offer the right benefits at the right time and can be of the most use to their customers.”

Financial decision-making

“There is no doubt technology has improved the protection experience. From being able to compare different companies and products, to making the application process more efficient so customers are able to manage their own policy, technology has made a huge difference,” says Craig Brown, director, intermediary at Legal & General.

But he asserts more needs to be done with technology to help generate greater interest in protection, particularly as many millennials are leaving big financial decisions until later in life.

As Mr Brown points out: “Traditionally, the first main trigger to taking out protection has been buying your first home. However, with many younger people now starting life with bigger debts, such as university fees, and struggling to get their foot on the property ladder, this trigger is becoming less important. 

“Today’s average first-time buyer is in their 30s, meaning millennials are not exposed to financial planning and risk planning until a much later stage than previous generations.” 

He urges: “This is precisely where technology can be used to reach out to younger generations and promote the benefits of protection to these customer segments much more in the future.”

Many protection providers see it as an opportunity, rather than a simple box ticking exercise.

Mark Cracknell, head of protection distribution at Aviva, explains: “We have got to react to those market changes and say, this segment of the population has a different buying need and therefore how do we service that.”

He reveals the company is “constantly talking” to advisers about how it evolves the technology being used.

“We need to make it as easy to deal with Aviva as it is to deal with Amazon, and as easy as it is to use your iPhone,” he claims.

If the protection industry can do that, it should have no problem attracting and retaining millennial clients.

eleanor.duncan@ft.com