How insurers are responding to shifting world demographics

The future holds many challenges and opportunities. As insurers tackle technology and regulatory changes, demographic shifts and changing customer expectations will shape our industry. Insurers who anticipate and develop strategies to respond to these changes will be positioned for success. In this webinar, Lorie Graham, Chief Risk Officer of American Agricultural Insurance Company, explores a variety of current demographic changes and how insurers are evolving products and services to build their own future.


  • Lorie Graham, Chief Risk Officer and Vice-President of Product Development, American Agricultural Insurance Company (USA)

Mike Ashurst: 

Hello, everyone. I hope you’re all well. I’m Mike Ashurst from ICMIF. We’re delighted to be joined by so many of you on today’s webinar: “How insurers are responding to shifting world demographics. In this webinar, we’ll explore a variety of current demographic changes and how insurers are evolving products and services to build their own future. Without further delay, we’re pleased to be joined by Lorie Graham, chief risk officer and vice president of product development at American Agricultural Insurance Company, USA. Over to you, Lorie. 

Lorie Graham: 

Morning, or afternoon, depending on where you’re at. As I present on this topic, I wanted to point out that we are still in the midst of deadly spread of COVID-19, and this unfolding tragedy is going to have some significant long-term, social, economic and geopolitical impacts. So it’s too early to assess the full spectrum of these impacts on the insurance industry, but my presentation today will explore some of the demographic changes that happen, will continue to impact insurers. 

So when I look at risks in our organization and opportunities, we look at trends. And we track trends that we feel will have significant impact to our industry. We look at social, economic, technological, environment and political trends. The framework that we use is we look at the cause. What’s causing these trends to develop? And then we look at what the event would look like if it did unfold, how it will impact our industry, and what we’re going to do to respond. 

So we kind of use that framework as we look through all of these categories of trends that could impact us. From a social perspective, the balance of power is really shifting towards customers. From a technological, which many of you are I’m sure feeling, there have been advances in hardware and data, big data, to perform some actionable insights on our customers and our processes. From an environmental perspective, the rise of more sophisticated risk models and risk transfer are being used to address increased severity and frequency of catastrophic events. 

From an economic perspective, the rise of economic and political power in emerging markets is impacting how our business is operated and what we can and cannot do. And from a political perspective, there’s a harmonization, standardization, and globalization of the insurance market. Today, we’re going to look at just some of the social demographics. Each of the things that I cover today, we could probably go more in depth. And each of these categories are not in specific silos. They do interact with each other, and so you’re going to see there’s something complexities of how social, maybe technological, economic, environmental, and political categories of trends and risks will work together. 

So in this first slide, we’re showing the age distribution of populations of different world regions as of June 2019. And as you can see, the millennials, the grey area, are a significant part of each of these regions. There are 18 billion millennials, in the world today, which accounts for about a quarter of the world’s population. Nearly nine in every 10 millennials live in emerging economies, and Chinese millennials alone outnumber the entire population of the United States. 

Today, about 41% of the global population is 24 or under. And by 2025, millennials will comprise three quarters of the global workforce. As millennials reach a new stage of life, there’s going to be a clearer picture on how members of this generation are establishing their own families, making decisions about work, and it’s going to impact how our products and services apply to them. The size of the millennial generation now surpasses baby boomers as the largest generation, and this group has significant racial and ethnic diversity and high rates of educational attainment. 

Millennials have been slower than previous generations to establish their own households, and they’ve been deemed somewhat risk averse. But we’re going to show you some data that may make you think a little bit differently about their risk decisions. So millennials as a consumer, has the consumer really fundamentally changed? Is the person that’s a millennials really different than the person in the past, the baby boomer, or pre baby boomer? Or are they changing because the environment’s changing. As I discussed previously, there’s a lot of technological, economic constraints, competitive options, things they experience today that we never experienced as an earlier generation. 

Millennials tend to be more impulsive, they’re less loyal. They have less time, but they’re more conscientious about how they use it. And they focus more on experiences than material things. Some of their financial constraints come from growth and healthcare costs and education expenses. Millennials are probably the largest generation ever in history with the most significant amount of debt after leaving college. And they also experience a lot of competitive options that are made possible by technology. They get instant notifications from brands that they follow, and they understand where they’re at in the process. 

There’s also increased diversity amongst consumers, which is one of the biggest demographic shifts underway. We’re experiencing this especially in the United States. But millennials, who now represent 41% of the population are the most diverse generation in US history. Ethnic and racial minorities make up roughly 44% of the group today. And in comparison, only 25% of baby boomers belong to both ethnic and racial minorities. This more heterogeneous base is becoming, is having a much broader and varied set of demands and needs. They have different expectations about products and services, both from a cultural and from an economic background and their social experiences. 

When I mentioned risk awareness earlier, millennials are deemed to be more risk averse, but they really are more risk aware, and less risk averse than older generations. If you think about it, they’re willing to start up, to start-up companies. And they can work for companies that are not yet established. And this isn’t an indication of a risk averse group. If you look behind their behaviourthey’re more risk savvy and more risk aware than risk averse. They may be risk averse when it comes to finance because of the financial constraints that they’ve come through, but they take more risks when considering their careers. They’re methodical and they’re information fueled. And their approach to assessing what they do with their money, free time, and careers may lead them to make decisions that seem risk averse, but have really compelling logic. And their attitudes and actions challenge the way we might think about risk itself. 

Social influence is also a big factor. Social media’s a catalyst for effective communication. It’s fast. It’s timely. And it’s a natural ally for helping insurance companies improve their business contacts and connect with customers. Social media makes it more convenient. It’s faster, simpler for insurance consumers to obtain advice from friends and family, and even strangers about the best products or carriers. Social media has a big influence on millennials customers. 72% of them report buying fashion and beauty products on Instagram posts. I know my daughter makes recommendations to me all the time. She gets them from Instagram posts. 

71% are more likely to purchase online if the product is recommended by someone else. Millennials have kind of this distrust for institutions, and they put their faith in their peers and even strangers. 84% of them are likely to make a purchase based on user generated content that’s created by strangers. They watch videos through YouTube and other social media platforms. Insurers should take social media more seriously, recognizing its value as a relatively inexpensive marketing tool, and it’s a means to engage with a sceptical, digitally savvy consumer. 

A recent report from Adobe surveyed 1,500 US adults regarding their preferences and expectations for digital experience. And this survey included financial institutions, and it found that customers’ expectations are much higher coming from the millennial age group than ever before. About half the people under 35 would engage with a computer rather than a human when doing a brand. Insurance companies have to have multiple platforms because there are other customers, like gen Z, that would rather have face to face contact, or baby boomers. So it’s important to have a multidimensional or multimedia platform available for customers. 

They’re also increasingly demanding simplicity, transparency, and speed in their transactions, including insurance adjusters, agents, and advisors. The pace of online mobile technology is continuing to fuel this, so it’s heading in a direction where customers are even having more and more expectations for instant gratification and digital interaction. 

When we’re faced with the aging workforce and the rise of the millennials, most insurance companies are not well positioned to draw the talent that they need. While automation may remove jobs that handle routine tasks, and new candidates for these positions might be concerned that these jobs may be eliminated, there are new roles emerging for employees who can develop and execute the digital powered business. And it will help us to reshape the future of the insurance industry as we become more analytical and more data focused. 

Young adults today, as I mentioned previously, are better educated than their grandparents, and as the share of young adults with bachelor’s degrees are higher, we’re going to see more and more talent available in this space. The question is: Are they interested in a career in the insurance industry? So more than a third of the workforce today are millennials, and they are better educated than prior generations. They’d be attractive to insurance companies. But do we provide an environment that they would want to work in? 

According to the Hartford study, only 4% of millennials are interested in working in the insurance industry today. And here are the reasons that they found from attracting millennials to the insurance industry. They think that their career in insurance means they’re going to be selling insurance, or they think our industry sounds boring, or maybe we’re too focused on money. Millennials are focused more on societal concerns. The industry also, my education plans wouldn’t apply to insurance. But I think they’re not understanding the ways that insurance companies are evolving and using data today, or they think they’re not qualified, or they want to work in an industry focusing on helping others. Maybe they don’t think it’s a good paying job, or they’d rather work in an industry that’s more high tech, or they’re over qualified. 

There’s a lot of reasons millennials think they don’t want to be in the insurance industry. When the Hartford did their study, this is actually a few infographics that the Hartford did. They basically surveyed these millennials, and they said that 80% of millennials are leaders today, and 69% aspire to be leaders in the next five years. And 77% of them considered themselves to be a leader today, and also aspire to be a leader tomorrow. Their wish list today for work is the arts and entertainment industry, education, technology, and healthcare. And the industries that have lower appeal are construction, insurance, and wholesaling and utilities. 

The Hartford also looked at ways to attract millennials, and they asked them some questions about what it would take to get millennials to be interested in the insurance industry. 46% said that they needed a variety of career opportunities. 44% want competitive salaries. 43% want a flexible work schedule. 40% want competitive benefits, health, life and disability. And 33% want education opportunities.  

I had talked about before how millennials don’t trust institutions. They are the most educated and productive American generation ever. And yet, they can’t seem to get ahead financially. They earn on average the same as their parents did in 1984, yet rents have skyrocketed. And at least 70% of them depending on an average of about $250 a month on parental support. Most of the jobs available, even to graduate level millennials, are low wage, unskilled positions, and are probably contributing to their view on the insurance industry and why they think that it wouldn’t be a well-paid position. 

If you have a great brand identity and watertight marketing strategy, don’t be surprised if they don’t care because what matters most to them are social justice and quality of life. And insurers in order to reach millennials, today’s brands are starting to understand they need market, they need to market with the people as opposed to marketing at them. So understanding what millennials think and understanding what millennials want is so important. Here’s just some statistics about how they think organization believe ethically, or behave ethically, and whether they think business leaders are committed to improving society. 75% think that leaders in the business today focus on their own agendas. And 62% think business leaders have no ambition beyond making money. 

They’re worried about the state of the world, and they feel personally responsible to make a difference. They’re very connected with society, our environment. And for companies to appeal to them either with products or with jobs, we need to understand what’s important to them. 

In this next slide, changes in family composition is another demographic that is causing an impact to insurers. Couples today marry later, no matter what generation they’re from, but particularly millennials and gen Zs. They’re less likely to have children than previous generations. And households are headed by unmarried parents, so sometimes they’re either single parents, or they can be cohabitants parenting, but they’re not married. There’s an increasing number of stay at home fathers for this generation. 

That leads to a change also in the women’s role and the labour force. Next slide. In the United States, women account for 46.8% of the labour force, and that is projected to fall slightly in the decades ahead. But although the female workers in the US is higher than the median across 114 countries examined by Pugh, 39 other countries outrank the US. So there are 39 other countries that outrank the US in their share of female workers. If you look at the slide here, the co-breadwinner is when the spouse has, a female spouse has a job, the mother has a job in the household that contributes to the income. And the dark green is where the mother is the primary breadwinner. 

Women’s role in the labour force, women make up at least 40% of the workforce in more than 80 countries. 114 nations with data from 2010 to 2016 from the Pugh Research Center, the median female share of the workforce is 45.4%. You can see other countries here have a higher percentage. 

I also wanted to talk about the global middle class. The middle class is experiencing significant growth in emerging countries. Nearly half the world’s population is already part of the middle class. But in emerging countries, it’s growing. The middle class makes a big impact on the financials, on consumers, and on insurance companies because they have purchasing power. The end of 2018 marked a significant milestone. Half the world’s population now live in middle class or wealthy households. 

In the next slide, there have been gloomy forecasts for global growth. Middle class expansion seems to continue. In the next decade, we could see faster expansion of the middle class than any other time in history. Within a few years, based on local forecasts, the majority of the world’s population could have middle class or rich lifestyles for the first time ever, seeing people grow out of the lower class segments and into the middle class and upper middle class. Next slide. 

So while global numbers are driven by developments in the largest economies in the world, countries like China and India, the middle class’s expansion is expected to be broadly based, but heavily concentrated in Asia. The vast majority, or 88% of the next billion people in the middle class will be Asian. Next slide. 

In the US, the middle class is getting squeezed particularly hard by the rising cost of education, healthcare, and housing. We are seeing a slight decline, so even though worldwide and in emerging economies, the middle class is growing, in the US, we’re seeing a little shrinkage. It deceased from 61% to 51% from 1971 to 2019. It’s proceeded slowly, and it’s not expected to stay that way. But we are seeing a bit of crunch in the United States for middle class. 

Let’s focus on middle class. We need to take a look at the middle class consumer behaviour. They’re a focus on the family. So when we appeal our insurance products or design our insurance products, are we focused on the family? They are planning ahead for the future, and their image is super important to them. They want to command respect at this stage in their lives. And increasingly, they’re health aware and eco-friendly. So when we think about our products and how we advertise them and the services that we provide with those products, we need to think about what the middle class consumer is looking for. 

Another demographic that’s impacting the insurance industry is a new family structure. Two parent households are on the decline. Single parent households, especially single female parent households, mother only, have increased slightly. But you’ll see the green line at the top of here, where these a two parent line trend that started in 2007, where two parents that aren’t married that are co-habitating and raising a child. 

In this next slide, I also want to talk a little bit about the family structure with regard to boomerang children. And this is kind of an interaction between millennials and the economy and what’s happening with housing and those types of things. So in the United States, and I have some statistics for the US, and then I have a little bit of global information, in 1997, around 25% of 34 year olds were living under their parent’s home. Today, the figure is 32%. For men, it’s even higher. 37% of men age 18 to 34 lived with their parents in 2017. Fewer people, again, were starting families younger. The cost of housing is creating an issue for these people, and college debt. 

When these millennials are getting out of school, there’s really no motivation to go out and get on their own because they’re still paying off student loans, and they aren’t starting families, and so there’s no reason for them to be independent. There are further studies that kind of examine the relationships between parents and their children when the children go to live back at home. But from an insurance perspective, I wanted to look at this from: How do we define a household? And who’s an insured under a homeowner’s policy? And at what point do we make someone not an insured? And thinking about how these housing is changing, and even with aging people, older people will be coming back to life with their children as well. 

So even though US millennials are more likely to live at home than previous generations, that’s not the case in all other areas of the world. US specific factors, such as high student debt, are driving some of the trend. And the average age of leaving home in the European Union is 28, and that’s barely changed since … I’m sorry. It’s 26, and it’s barely changed since 2002.  

There’s also been a decline in young adult drivers. There was a study that I looked at that talked about what was driving the decrease in young drivers getting their license. My daughter actually has a college roommate, who’s 22 years old, who still doesn’t have driver’s license. 71% of high school seniors in 2017 had a driver’s license, and that’s been the lowest percentage in decades. 15% of those teens cited that they can communicate online. So why, I mean, I can get to my friends and talk to my friends online, so why get a license? 

36% said the main reason they’re not driving is it’s costly. They can’t afford driver’s ed. They can’t afford a car. They can’t afford insurance. They can’t afford gas. And 25% of teens with incomes below 20,000 get their license before the age of 18. That number increases to 52% in households with an income between 40,000 and 60,000, and 79% of households with an income of over 100,000. So this just kind of supports the fact that cost is driving whether or not they get a license. 

With regard to how teens drive when they do drive, or ride, 84% of teens today have spent money on taxi services. They’re using Uber and Lyft to get places. And 68% admit to checking apps while driving. 80% of teens consider using an app while driving not distracting. And 12% of crashes in 2015 were caused by cell phone use. So we’ve got a difference in the way teens view safety and driving. Distracted driving is one of the largest problems in the insurance industry. And yet, we have less teen drivers than we’ve had in the past.

Vehicle ownership is also down. These are US statistics. I could not find international statistics. But projections for all car ownership will decrease. We had issues that grew after 2016 with the financial crisis. But by 2017, some of those changes have been wiped out. There was a study that says, by Tony Seba, a Stanford economist, that said that private car ownership is going to drop 80% by 2030 in the US. And the number of passengers on American roads will go from 247 million to 44 million from 2020 to 2030. Using electric ride shares will four to 10 times be cheaper per mile than buying a new car in 2021. And each family could save up to $5600 a year compared to purchasing and maintaining a traditional vehicle. 

Whave to think about how autonomous vehicles will impact this as well. Households will have less cars per household because they can send a vehicle out to take dad to work, come back home, pick up the child, take the child to school. They don’t need to have all of these multiple vehicles that they’ve had in the past. So you’ll have fewer vehicles owned by people that do own them, and less ownership in the future as people are seeing the significant cost, the maintenance, investing their money in depreciating asset. So we will probably see shrinkage in the vehicle market. So how do we appeal to this mobility change that’s happening? 

As insurers, we need to figure out. They’re still going to have exposure. When you’re riding, you’re still going to have exposure in someone else’s car. And how can we tailor our coverages to appeal to this rider, or for the person who’s providing those riding services?

Even as the housing market roared back to life after are crisis, and it’s bounced back ever so slightly, it still remains at a near 50 year low. I am surprised during this COVID even that we’re seeing a lot of houses actually being moved in the marketplace. But there’s some concern in the long run about, and especially with millennials and how they view property and debt, and how they’ve been financially constrained, about home ownership. So will we need to be changing our policies to appeal to more renters and maybe some co-living type situations, where you have millennials who aren’t starting families, and they’re living with other people? And how can we tailor our products to appeal to them and provide additional coverages and services that might be appealing? 

Again, comparing millennials, millennials and boomers, in the general, boomers were way more likely to purchase a home and get started with a family earlier. Home ownership among baby boomers at age 30, you can see that 48.3% baby boomers owned a home. And 51.7% didn’t. And if you look at millennials on the left, only 35.8% of them owned a home, and 64.2% didn’t. As the census population estimates show, the migration … So I’m going to talk a little bit, I switched topics here, and I didn’t lead into that. I apologize. 

Some regional population trends too, people moving from different areas of the country. There’s a growth towards urbanization. And census population estimates show that the migration of people from the Northeast and Midwest of the United States to the Southeast and West continues. There’s differences that emerge based on baby boomers and different types of age groups. But there are a lot of people in retirement, baby boomers moving to Florida and Arizona, where the weather’s warmer. And gen Xers are relocating to Texas, where they have five of their top metro destinations, so moving towards bigger cities because millennials like to be in bigger cities. And some of them are migrating to Colorado and Florida, which have their top 10 metro destinations as well. 

In this slide, you can see the net domestic migration for the North-eastern states, so I talked about how people were moving west and moving south. And you can see the negative migration by specific states, New York, heavy population there, New Jersey, Connecticut. You can see that some of these specific states have had some significant decreases in population. So here’s a population change in the United States, and I’m sure that you could probably access maps anywhere in the world that would give you information about population shifts in your countries. The population changes, the shifts from the left to the right, you can see that these populated areas are concentrating in the South and in the West. 

Extensive areas of population decline have also happened in North Carolina, Virginia border, Ohio, Northern Kentucky and New England. It slowed considerably in the mountain West for the first time in decades. There was a lot of growth happening in the mountain and West area after numerous counties in Utah and Nevada and Idaho, everywhere, had substantial growth. Nearly 80% of the US population resides in urban areas today. And those urban areas are increasing population concentration in coastal communities and flood prone areas. 

I’m going to take you to this next slide that’s going to show you an example of California, where there’s been a tremendous amount of population growth in coastal areas. This is the US population density in 2017. And then I have a pop out of a map where the wild fires were. And we can see how this growth towards urban areas is impacting our risk. It’s creating areas that are densely populated with a lot of fire load, and have also some additional exposures for flood, where we’ve got a lot of construction and a lot of concrete and things that don’t allow water to flow the way it had naturally in the past. And so these migration shifts are causing differences and perils in the way they’re impacting insurers. 

On this next slide, rural areas covered 97% of the US nation’s land, but contained 19.3% of the population. So you can see that our population is concentrated into the very small areas. Only 19% of our population is in the rural areas. These next two slides, I’m going to ask you after you change the slide, to go back or me. But I want to describe this slide first. This is Las Vegas. It’s one of the fastest expanding areas in the US. It grew from 345,000 people in 1976 to 2.27 billion people in 2015. And I want you to take a look at Lake Mead off to the right. It’s that dark impression. That is a lake that provides water for Las Vegas. 

Then look at the footprint of Las Vegas on the left. Now go to the next slide, and you can see how Lake Mead has decreased and the population footprint has increased. And this is going to have significant impacts on our environment, and the perils that we pay for in this area. We need to think about how people, when we have migration into certain areas, and a lot of urbanization going on, how that impacts the way perils interact with our property. Might want to go back one more time to that slide before so you can see the differences, just shift back and forth quickly. 

I did a little research into some of the things that that industry’s doing to respond to demographic changes. And a lot of this is innovative change from start-ups and other innovative changes from existing companies. In this next slide, I looked at some usage based insurance. Insurance and automotive companies are actively deploying insurance telematics solutions. These solutions monitor driver behaviour. Do you want to go to the next slide, please? Simplifying roadside assistance, effectively manage claims, improve their security of insurance data, and help companies achieve competitive advantage. 

These companies have engaged in telematics, and there are a lot of companies who’ve done it. These are just examples. And car manufacturers are installing devices that capture data that go beyond speed and location that insurers can use to really carve out a very specifically priced and a very specifically serviced product for these clients. There’s a ton of information on telematics and how you can use telematics to engage your customer. And those kind of connections keep your customer connected to the company. Think about the millennials who are more concerned about our environment, and what information you could capture about how they drive and what they could do to impact that environment. You can have meaningful relationships with your customers based on what you think it’s important to them. 

On this next slide, we talked about how there’s fewer car owners and fewer drivers getting licensed at younger ages. These ride share companies are offering opportunities for people to use their unused assets and provide rides. But there’s also insurance companies that are providing some great ride sharing coverages. Inshur, Slice, and Option are all three on demand coverages. So rather than going out and getting an endorsement with your company and being limited to a certain number of miles, or paying for it over an entire policy period, these people can turn the coverage on when they use it, turn it off when they don’t. Inshur, they had a new product, their new product attracted 2000 ride share drivers, and then had a conversion rate of over 40%. 

actually saw a sign here in the Chicago area, where they were advertising their coverage. They’re very specific to certain areas. But these customers can get on demand quotes for commercial exposure and get coverage in minutes, and it’s all fully digital. They don’t have to talk to an agent or apply online, or even online. They can do it on their phone. 

On the next slide, I wanted to talk about what some companies were doing for car sharing. There are some peer to peer options. These list Turo, Relay Rides, et cetera, are offering peer to peer type coverages, where you can belong into a group and share the responsibility. And then there’s some business to consumer, so these are ride shares, Turo, Relay Rides, these aren’t insurance, WhipcarWheelzGetaround. The business to consumer model, you’ve got auto manufacturers now offering sell car subscriptions. So here’s just three examples, but there’s many, many car subscriptions out there. 

Ford has an option called Canvas, BMW, Cadillac, where you can pay an annual or monthly fee, and you get access to cars of a certain class. And when you get tired of the one you have, you can go trade it in for another one. And rental brands, Hertz, Avis and WeCar are making their rentals that aren’t being rented available for short-term rental, or use as a kind of as you need it kind of thing. And then car sharing brands as well, like Zipcar, StatAuto, and GoGet. 

As insurers, are we understanding that the transition to this peer to peer type car ride and the business to consumer type opportunities, are we tailoring our products to fit these situations and insuring them the way they need to be insured? Business to consumer is of particular concern for insurance companies because they could potentially be bundling insurance products with their services. So Ford with Canvas could potentially be offering insurance coverage on the Ford when you pay the lease. 

On the next slide, home sharing. I thought it was really interesting. I went out, and every time I look at these applications, I see new ones. This Shareagenarians and this Silver Nest, so as we have baby boomers, and they’re aging, and they’re living on their own, and they don’t want to go into living facilities, these two apps actually create an opportunity for them to screen and choose roommates to live with in their older age to care for each other. And we’ve got the traditional ones of Airbnb, HomeAway, and VRBO, and then Slice, which is a more on demand type coverage for home sharing. 

Again, there are hundreds of these opportunities out there. And we can tailor products and tailor perils. I mean, slice has come up with 18 new perils that the industry didn’t have in a standard insurance policy that are just for home sharing, things like, you get bed bugs in your house, you have to get rid of those. Or you have a surge in your utility bill because of a tenant. So they have all of these new perils that are unique to the type of activities that their clients are experiencing. Next slide. 

And then rental insurance, rental coverage represents almost one fifth of the personal property exposures on a unit basis. So growth in rentals and the share of total housing choices was driven by the housing crisis and the demographic trends that I just mentioned. And we’re seeing a slowdown in growth of rental units. But many traditional carriers have recognized this marketplace, and they’re saying, “We need to have products and marketing that responds for these renters.” They’re doing target marketing for this. These non-traditional providers have easy to use apps. These renters have very simplistic needs, and they should be able to apply online and get insurance easily. These are some examples of companies who offer those types of services and insurance products. 

Insurers of the future, preparing yourself for some of these changes. Insurance is bought by customers, not sold by agents in this day. With the demographic changes, they’re going to shop online. They’re going to look for something that fits what they value. And so there’ll be less and less agents prospecting clients, and more consumers coming directly to the insurer for coverage. And so insurers and agents need to re-examine their roles in the insurance value chain and say, “How do we become more relevant to the end consumer?” 

Consumer expectations are simplicity and transparency. Insurers are going to need to innovate products and services and how they’re delivered. And they’re going to need to get better at targeting customers and customizing products and services to meet those customers’ specific needs. There’s no more going to be this off the shelf product that one size fits all. Consumers are expecting that they can get as much of what they want and not have to purchase the rest. 

Mobility and speed of service demanded by customers, insurers are going to invest in technology and develop transaction capabilities across multiple digital platforms. You need to be there and providing what your customer wants, the way they want to consumer it. Next slide. I think insurers will continue to innovate. We’ve got a lot of innovation out there currently. Products for older generations and the way that they might live, as we see baby boomers moving into the retirement era, and non-traditional products for changing demographics. All the things that we discussed today change the way our products should be structured and should be delivered. 

Take in consideration, multi-generational households and what kinds of insurance products they might need, and the future of mobility with less auto ownership and more ride sharing, and potentially autonomous vehicles in our near future. We need to consider how our products will evolve. And then peril changes in urban and suburban areas. Do we need to price things differently? Do we need to structure our policies differently? Do we need to be looking for different things when we’re doing risk management? 

And then renters versus homeowners coverages, as I just mentioned, how those products might be differentiated more. And because we have more diversification than ever before, do we need to consider more multilingual policies? These are just some of the ideas I got from the demographics that I looked at, and some of the solutions that I’ve seen other insurance companies come up with, and that’s it. 

Mike Ashurst: 

Great. Thanks very much, Lorie. We have had some questions, and there’s time for a few of those now. First one, how are these demographic trends interacting with other categories such as technology and environmental? 

Lorie Graham: 

This is a really complex situation. So we’ve got the demographics that we follow, and I told you that we follow demographics categorically. And our emerging trends and emerging risks monitor that we use, we follow each of these, and then we look at their interactions with each other. And you’ll see that technology and people, obviously, there’s going to be a connection there. And we need to understand how one impacts the other. So we look at it from how people impact technology, and then how technology impacts people. And the same thing with environment and all of the other categories that I mentioned at the beginning. 

Mike Ashurst: 

Great. Then we’ll move on. So thinking about the values of millennials and the advent of the insurers in the sharing economy. Do you think this is an opportunity for the mutual sector? 

Lorie Graham: 

Absolutely. I think that we have, first of all, we have the customer base. That’s the advantage we have over any of these start-up companies. We’ve already got relationships with these clients. And so if we meld our products, or evolve our products to fit their needs, they’re having problems scaling. When the start-up gets started in the business, they’ve got to scale in order to succeed, and we’ve got that scale. And we have that historical knowledge. It’s just thinking differently about how we perceive the products in the future. 

Mike Ashurst: 

Great. And a couple more, both actually related to the pandemic. So first one, do you think the size of the middle class will be impacted by the pandemic? 

Lorie Graham: 

Oh, I absolutely think all classes will be impacted by the pandemic. But middle class, just like lower class, have lost jobs. And they have had other social influences on them. They’re probably … Everything that happens to us is going to make us think differently about the future. And a lot of what I’ve been reading about the pandemic is that we’re going to incur some changes, just like we did with 9/11, in the way we perceive things going forward. And so our economy and how conservative we are, and how we act going into the future is definitely going to be impacted by COVID. 

Mike Ashurst: 

The third one is related to that, so you don’t need answer it. But it was just about how the pandemic leading to more people working from home, how that could impact on the migration to urban. I guess it’s a similar kind of answer. 

Lorie Graham: 

That’s a great point. And it definitely could impact that. And it’s another opportunity for us to tailor some coverages for people. I know I went out and bought a bunch of equipment when I started working from home because I needed to set my office up in a way that was comfortable, and it’s an opportunity for us. But I agree, that probably will. We’ve had a lot of conference calls with companies that work with us that say that they never really supported the work from home, not in a big way. And now employees have gone home and shown that it works. It’s viable and it’s working well, and so they’re going to come back and demand that they have these opportunities. And it definitely could have a long-term demographic change. 

Mike Ashurst: 

Great. Thanks a lot, Lorie. I think that’s all we’ve got time for, so thanks again, Lorie, for taking the time to present to us today.  


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