AN EXL WHITE PAPER

Millennial Access for the Under-insured

James WoodVice Presidentlookdeeper@exlservice.com

Written by:

New Approaches are Required Much has been written on how to best

attract Millennials to purchase insurance

products. As a group, Millennials are

greatly under-insured and firms see a

potential pot of gold in winning this new

customer group. Several large insurers are

focusing on attracting this cohort through

marketing campaigns using sports figures,

social events, and humorous advertising

messaging to attract Millennials.

Insurers may be getting it wrong. Despite

these efforts, Millennials engage with their

insurers the least compared with any other

generation.

Access is more important than messaging

when doing business with Millennials. The

25 to 35 year old group has grown up with

the web and access to cell phones. They

are comfortable browsing the internet,

messaging, and buying a wide range of

products and services over their mobile

devices. According to the KPCB 2016

Annual Internet Trends Report, Millenials

are not only early adopters of technology1.

They require new methods of access.

Millenials continue to push the envelope

to require new distribution channels which

are rapidly evolving due to technology and

distribution. Just as one in five shopping

malls are forecasted to close due to a

changing buying pattern driven by the

ability to browse, compare, and shop on-

line, Millennials are the leading indicators

of a shift in insurance buying habits.

A recent study found that young people

spend an average of three hours a day

on their smartphones. Because they now

expect every website they use to interact

with companies to be well designed,

insurers who expect spruced-up insurance

web sites alone will not win the day. A

major insurer recently celebrated a new

customer web site only to have one of the

first questions: “but where is the app?” The

old adage “give the man what he wants”

certainly holds true to the new generation

of Millennials. Affluent buyers will do

THE CHALLENGE AND OPPORTUNITY: Millennials represent a paradox for the insurance industry. While

Money reports that Millennials will have more buying power than any previous generation, they are

also the most underinsured. The Transamerica Center for Health Studies (TCHS) reports that while

Millennials had an unprecedented 23% uninsured rate in 2014, as of 2016 this number has dropped

to an 11% uninsured rate. Millennials are the new golden ring for insurers – but only if they can only

attract and retain these elusive consumers.

Millennial Access for the Under-insured

EXLservice.com | 2

business in the format that they find is best

suited to their life styles. They are more than

comfortable researching and purchasing

goods and services over the internet-in fact

they almost insist on having an easy to use,

fast purchase experience.*3.

Fortunately, technology has evolved to

meet customer expectation of both fast and

easy. By leveraging advanced analytics and

automation, insurers can target customers,

assess risk and conclude a purchase in a

much shorter timeframe.

Let’s take Bob as an example:

Analytics for Customer Segmentation and Automated UnderwritingBob is married, 30 years old, gainfully

employed, and has recently become a

proud father. While he has given some

thought to purchasing life insurance to

protect his expanding family, he is busy

and has not taken any action. Firms could

leverage expanding family, financial and

demographic data to proactively identify

Bob as a good prospect and proactively

reach out to him.

A direct to consumer or targeted marketing

campaign based on customer analytics can

significantly touch more qualified prospects.

In this example, let’s say Bob is contacted

directly through an insurance app on his

smartphone with an invitation to apply for

insurance based on his profile.

Now that you have Bob’s interest, how do

you provide a meaningful and quick buying

experience? Bob is guided through a series

of personal and health related questions.

Based on health analytics, Bob’s profile

indicates he is an excellent prospect and

using automated underwriting capability,

he is offered a $500,000 life policy within

10 minutes. Bob is happy with a good

customer experience. Experience has

shown that up to 75% of purchases can

be done via straight through processing if

they meet certain medical guidelines. The

remaining prospects are quickly routed for

any indicated medical tests to move along

the transaction.

If a better mousetrap is possible, what

is keeping insurers from creating and

deploying more innovative, easy to use,

platforms?

The challenge for insurers is threefold:

1. How to attract and target customers you

want to do business with?

2. How to provide a quick, high-quality

quote and purchase experience?

3. How to adequately manage underwriting

risk?

Millennial Access for the Under-insured

EXLservice.com | 3

Leveraging Automation, Analytics, AI and Design ThinkingThe skills, tools, and approach to

accomplish these three tasks are available

today. If an insurer lacks the skills or the

experience, partners can be of great

assistance in providing or sharing such

levers. A customer survey at the June

2017 EXL Digital Transformation Summit

indicated that over one-third of customers

looked to partner with suppliers to round

out the skills and technology required to

rapidly digitize operations. The trick is to

create, then test, then refine, and finally

build to scale. Let’s look at each of the

challenges presented.

How to attract the right customers? First

off, what is the correct prospect profile? By

leveraging existing underwriter analytics,

a clear picture of what groups have the

lowest risk and greatest likelihood to buy

insurance or any product can be obtained.

Once identified, this data becomes the

springboard for two independent projects:

targeting and obtaining. This requires

access to hundreds of customer variables

for millions of prospects and the ability to

mine credit bureau data. This data can be

used to segment the lowest health risks

coupled with the highest credit scores

within a ZIP code to establish a target profile

to generate sales leads.

Having identified and contacted the

targeted prospect list, the next step is to

use design thinking to deliver a best-in-

class customer experience when delivering

quotes for policies. Leveraging design

thinking lets insurers approach the quote

process from a consumer perspective

customize it to meet the needs of individual

consumers.

For example, design thinking could

minimize the number of questions a

customer must answer to get a quote.

Say every person who requested a quote

was asked whether they had ever been

diagnosed with several common conditions.

The insurer could use design thinking to

identify that many customers requesting

quotes didn’t have any conditions. Changing

the quote process to ask whether a

consumer had been diagnosed with a

condition in general, and then only showing

the list of common conditions to those who

answered yes would speed up the quote

process and cut down on the number of

questions.

Artificial intelligence can also be used to

create a better quote experience. These

advanced programs can use machine

learning techniques to anticipate the next

questions for a customer and lead to a

quick quote.

At this stage insurers can also better

manage underwriting risk by creating an

automated underwriting program that can

Millennial Access for the Under-insured

EXLservice.com | 4

quickly analyze buyer behavior that may or

may not result in a claim. If an insurer does

not have such a rules engine, then they may

benefit from utilizing a third party tool to

automate such insights. In the example of

Bob, once he inputs his personal profile, an

automated underwriting system can rapidly

rank his insurability, do a price look up and

present an on-line quote.

Robotics and automation also ensure that

the customer experience is preserved when

someone decides to make a purchase.

These tools can automatically validate a

quote to ensure its accuracy, and then

convert it into a policy. This speeds up

the process for both the consumer and

underwriter.

ConclusionThese disruptive technologies mean risk

is shifting, decreasing and becoming

more transparent, which require

insurance companies to change how they

fundamentally assess and manage risk

and how they appeal to new generations of

customers. The take away is those insurers

who are able to leverage technology

to effectively target the underserved

and provide access and speed stand to

benefit from the changing buying habits of

prospects of all ages.

References1. www/kpcb.com 2016 Internet Trends

Report, May Decker

2. http://www.consultparagon.com/blog/

millennials-buy-insurance-2017

3. http://info1.exlservice.com/hubfs/EXL_WP_

Technology_Speed_Loyalty_Millennials.pdf

4. http://www.nielsen.com/us/en/insights/

reports/2015/millennials-in-2015-

insurance-deep-dive

Millennial Access for the Under-insured

EXLservice.com | 5

GLOBAL HEADQUARTERS280 Park Avenue, 38th Floor, New York, NY 10017

T: +1.212.277.7100 • F: +1.212.277.7111

United States • United Kingdom • Czech Republic • Romania • Bulgaria • India • Philippines • Colombia • South Africa

Email us: lookdeeper@exlservice.com On the web: EXLservice.com

© 2017 ExlService Holdings, Inc. All Rights Reserved.

For more information, see www.exlservice.com/legal-disclaimer

EXL (NASDAQ: EXLS) is a leading operations management and analytics company that designs and enables

agile, customer-centric operating models to help clients improve their revenue growth and profitability. Our

delivery model provides market-leading business outcomes using EXL’s proprietary Business EXLerator

Framework®, cutting-edge analytics, digital transformation and domain expertise. At EXL, we look deeper to

help companies improve global operations, enhance data-driven insights, increase customer satisfaction,

and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services,

utilities, travel, transportation and logistics industries. Headquartered in New York, New York, EXL has

more than 26,000 professionals in locations throughout the United States, Europe, Asia (primarily India and

Philippines), South America, Australia and South Africa.