Generation X wants advice and Generation Y wants to buy online, the most recent LIMRA study on Canadians’ insurance consumption habits concludes. Consumers still value human advice, but insurers must also beef up their online offer.
LIMRA’s survey entitled Purchasing Insurance in Canada examined how Canadians use the Internet to purchase life insurance products.
Of the more than 1,200 Canadians surveyed in February as part of this study, 791 had bought at least one insurance product in the past 24 months. Of this group, 719 bought life insurance, 230 disability insurance, 151 Long Term Care insurance and 131 an annuity product. LIMRA defines Generation Y (adults) as Canadians born between 1981 and 1993, Generation X as those born between 1965 and 1980, and Baby Boomers as those born between 1946 and 1964.
Survey participants expressed clear-cut positions. “It is useful to have information available online, but I would not purchase that way ever. I need to ask questions, receive advice, and maybe someone needs to help point me in the right direction, not just the generic stuff online,” says a Generation X female.
“Make it easier to get information online. Make it easier to get a quote and buy [online]. It’s nearly impossible now,” a Generation Y participant counters.
A Baby Boomer worries she will be underinsured if she does business online: “If I select a product based on a website, I have no idea if that product really suits me and if it’s a bad fit or the “loopholes” are not fully laid out up front,” she says.
Advice is the cornerstone of distribution. Consumers value it when they are buying a life insurance product. The LIMRA survey finds that 81% of consumers who recently researched individual products turned to a professional for information.
In line with the 2012 study, about three in five consumers bought products from an advisor. The network remains strong: many of these consumers said they would buy from an advisor again.
LIMRA also reports that 95% of Canadians are online. In addition, close to two-thirds of participants in the 2015 survey say they look for information on products, prices and more online. Online purchasing increased slightly in the past three years, but few consumers go through the entire purchasing process online. Most consumers completed the transaction through another distribution channel like an advisor, by telephone or by mail.
Among the comments received, LIMRA observes that online buyers appreciate the convenience, better prices and lack of pressure. Generations X and Y are more likely to purchase online than are Baby Boomers.
“Younger generations of consumers are accustomed to seek information on a myriad of products online, so they are not only more comfortable online, but have higher expectations for content on company sites, such as the ability to complete the process and obtain service online,” says Mary M. Art, study leader and Director of Distribution and Technology Research.
This means that companies that want to boost online sales should offer calculators and videos on their website, and let prospective customers obtain a quote. Internet users would also appreciate advice and a chat window, and a number to call to reach an advisor, Art says. Attract customers to your site. “When advertising, include information about your website, and tell consumers to visit your site to learn about your products,” she continues.
Insurers’ sites already exert a strong pull on online customers. For example, 71% of online life insurance buyers got their product from a website selling only one insurer’s products, while 24% purchased insurance from a site that offers several companies’ products.
Intentions swing toward independent sites: 54% of consumers would buy insurance or annuities on a site that offers several companies’ products. One in two would purchase insurance from a one-company site, 29% on the site of a bank or credit union and 28% on their advisor’s site. What’s more,16% would be willing to buy insurance products on sites like Google or Amazon.
Convenience is a key draw, mentioned by 45% of online buyers; 21% said it is the most important reason.
Online life insurance sales are growing, yet personal advice is still central to the process. Of those who bought an insurance product on the Internet, fewer than half completed the process online without talking to a professional.
For example, 12% of consumers said they used this medium to buy life insurance, but only 5% bought life insurance via the Internet without talking to an advisor in person or by telephone.
Of those who did not purchase online, 51% said they prefer to meet with someone, the LIMRA report notes. “The desire to meet with someone in person — often a financial professional whom they already know — and to be able to ask questions are top motivators for consumers who purchase off-line,” Mary Art points out. One in four buyers say they want to ask questions, and 37% want to meet with an advisor they know.
The LIMRA study suggests avenues to encourage Canadian consumers to buy insurance online. Notably, 86% of the survey participants said they would be more inclined to purchase online if they understand the product, and 83% would shop on the Internet if the site helps them understand what they need.