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Insurers risk being sidelined by internet-savvy consumer generation

Scarred by the financial crisis, price conscious buyers aged under 30 are driving a fundamental shift in how insurance is bought, according to Towers Watson. A survey  of over 7,000 consumers across Europe’s largest and fastest-growing markets - including the UK, France, Germany and Turkey – found the advance of technology increasingly distancing the millennial generation of buyers from traditional purchase channels and sources of advice and influence.

Tammy Richardson, UK head of insurance management consultancy at Towers Watson, commented: “Brand power and the traditional broker role are in decline as a new generation of buyers drive a rise in direct sales online. Consumers are increasingly in control and now more likely to ‘pull’ information from comparison websites, smartphones and social media than respond to ‘pushed’ communication.”

The survey, The shifting balance of power, also found many under-25s to be far more risk aware and interested in financial security than previously thought, underlining the need for insurers to find new methods of engaging with these younger buyers. Tammy Richardson noted that this shifting balance of power in the customer/provider relationship could present an opportunity for insurers. “With the right digital distribution technology in place, companies will be able to meet emerging consumer needs to more easily compare and choose financial products tailored to their preferences,” she said.

Previous Towers Watson research supports the position that technology platforms are expected to play a key future role, with more than four in 10 senior property and casualty insurance executives rating digital distribution as the most attractive channel for acquisition in the next three years.  A quarter of life insurers also put top priority on digital distribution capability.

Tammy Richardson said: “An important implication of this survey, in our opinion, is that insurers will need to further enhance their efforts to make product benefits more transparent and use data and analytics in new ways to improve their understanding of customer behaviours. This is likely to be central to future profitability, driving strategy for customer acquisition, retention and portfolio management. There is a lot of attention focused on data (big data), but the data itself will not provide a strategic advantage for insurers; how they use it is key and that is why analytics has such an important role to play."

“The danger is that if insurers do not get to grips with how buyers use of technology to make financial decisions is evolving, other digital businesses with relevant expertise may step in.”
The survey also reveals a high level of consumer ignorance across all age groups about the benefits and risks of the insurance products they are buying, which is likely to get worse as direct sales continue to rise. Sixty-five percent of consumers over 45 (50% of all ages) across Europe would still buy insurance products even if they did not understand the benefits or risks.

According to Towers Watson, these findings further highlight the risk that some products will be deemed by regulators to have been sold without sufficient understanding from those buying them or to have been inappropriate to the needs of consumers.

Tammy Richardson said: “Further changes in distribution channels will not devolve insurers of responsibility for explaining what their customers are buying.”

Key survey findings included:

  • Young consumers are the most likely to save regularly. Over 50% of 25-34 year-olds in the survey said that they save on a monthly basis, as did 46% of 18-24 year olds.
  • Under 25s across Europe have become more risk averse in the last five years than any other age group.
  • Less than 10% of 18-24 year olds would anticipate buying common forms of insurance from an agent or broker. Banks remain an important distribution channel in some countries, particularly for life insurance.
  • Price is the dominant consideration for 70% of UK 18-34 year olds when buying motor insurance.
  • Less than 10% of UK survey respondents cited brand reputation as an influence on their buying decision for life, home and motor insurance.


Towers Watson commissioned a consumer survey in 2014 across seven European countries to identify or confirm financial services buying trends. The countries covered were the six largest markets in Europe – France, Germany, Italy, The Netherlands, Spain and the UK – plus the region’s most rapidly emerging market, Turkey. A minimum of 1000 people took part in each country as part of a total survey sample of 7,136.

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