Over 80% of Canadians are connected to the Net, representing 28 million potential customers for insurers. Since many consumers describe their experience on insurance company websites as mediocre, insurers should redouble their efforts to reach them.
Only 7% of 1200 Canadians surveyed in 2012 by international life and health insurance research firm LIMRA cited the Internet as a medium that triggered their decision to consider an insurance product. Most often, the trigger was an insurance professional (32%) or someone they know (30%).
While 61% of respondents went online to find out about a product, only 9% of life insurance buyers and 12% of annuity buyers completed these transactions on the Net. The search for information online has skyrocketed from a modest 23% in 2003, the first year LIMRA included this question in its survey. At the same time, printed materials declined from 27% to 15% between 2003 and 2012 as the trigger of an individual life insurance need.
The 2012 survey was completed by a Canadian panel of consumers who said that in the last 24 months they purchased or researched one of the following products online: life insurance, disability insurance, long-term care and individual annuities. Respondents’ average salary was at least $35,000. The survey generated the four-volume series The Role of the Internet in Canada. Two of these reports, Need Identification and Information Seeking and Identifying Online Markets, are summarized in this article.
The conclusions of 2012 echo those of 2003: while people turn to the Web for product information, few purchase there. In 2011, LIMRA CEO Robert Kerzner urged the industry to tap into this technology as a business engine.
Mr. Kerzner pointed out that iPhones and other mobile devices are revolutionizing the way consumers buy insurance products. The industry should use these technological advances to boost the productivity of traditional distribution networks. It should also devise new ways to reach consumers directly, frequently and in varied ways, he underlined.
These objectives are far from met, judging the findings of the two LIMRA reports. Because Internet use varies between customer segments, insurers should adopt a multi-network approach.
Much more than members of Generations X and Y, BabyBoomers were prompted to consider the need for an individual insurance product by an advisor. In contrast, consumers in Generation Y were influenced by a friend or relative more often than older Canadians. They are also more likely to report that advertising is a significant factor.
LIMRA defines Generation Y as people born between 1981 and 1990, Generation X as people born between 1965 and 1980 and BabyBoomers as those born between 1946 and 1964.
Friends and relatives
Insurers should also groom their sales force, because advisors are best positioned to raise customers’ awareness of individual insurance needs. LIMRA finds that the role of friends and relatives as triggers of an insurance need is more important in 2012 than it was in 2003, because of Generation Y.
“Encourage producers to contact clients regularly to offer reviews. While providing reviews, they may learn of any life changes that warrant changes in product ownership or coverage amounts,” suggests Mary M. Art, author of the study Need Identification and Information Seeking. Study results show that the advisor-Internet alliance is a winning formula. Only 9% of consumers who recently sought information on a product used neither the Internet nor advice from a professional. The two networks can actually fuel each other. Several prospects used one source of information to verify or clarify the other, Ms. Art notes.
Some consumers look for information online to find out what products interest them and what questions to ask. The study also found that consumers were most interested in finding product information, at 68% for all generations combined. Most often they seek information on the website of a company with which they do not own financial products (52%), followed by that of a company whose product they own (44%). They also consult general interest financial sites not linked to insurers (31%). Bank websites are a source used by 27% of respondents. The total is higher than 100% because most respondents indicated more than one source.
The study Identifying Online Markets divided survey participants into three segments. Older and less educated people, the segment LIMRA calls “traditionalists,” prefer human contact by far. They value professionals and want to ask questions before they buy a product. The majority of traditionalists do not purchase online, regardless of the other factors, even if online products are cheaper.
The youngest segment, educated but less affluent, are called “Mobile Networkers.” Most of them compared individual life insurance products on the Web. Many did so both before and after meeting with an advisor. Yet the human element is important. At least 90% of this group are more likely to buy online if the insurer answers questions over the phone, and if they know the insurer and the company.
The largest segment in the survey, Flexible Buyers, are the most educated and have the highest income and assets. Most turn to advisors but several also look online. They often do pricing on the Net. At any rate, insurers have no time to lose. Citing different sources of information, LIMRA underlines that the Internet economy in Canada will grow by 7.4% annually until at least 2016. Canadians are the world’s most voracious Internet users, averaging 45.3 hours per month.
Canadians with the highest income and those under age 45 report the highest Internet use, at 94%.
Facebook is popular among 53% of Canadians. In 2009, 52% of English Canadians and 44% of French Canadians watched videos online. Over half of Canadian cell phone users owned smart phones in May 2012, compared with slightly more than one third in 2011. And, 17% of Canadians were expected to own tablets by the end of 2012.