Five Trends Impactin
Traditional Auto
Nearly every time you turn on a light switch today, you are witnessing the power of trends upon shifting markets. Though lighting isn’t going away, the types of bulbs we use and their supply chain has been in flux for the past two decades. On May 27, 2020, General Electric stopped making light bulbs entirely (after 130 years), selling its lighting division to smart home company, Savant Systems.[i] All of the other major lighting players have also been negotiating a market and industry in the midst of change. Government mandates for lower energy bulbs have removed most incandescent bulb manufacturing operations from the market. LED bulbs not only use much less energy, but the bulbs last far longer - so the sales of bulbs will drop over time. Philips Lighting, another stalwart industry player (125 years old), decided that instead of leaving the business, it would develop Philips Hue, a connected lighting solution. Smart homes have now given rise to smart lighting, including smart bulbs — digitally-driven bulbs that can adapt themselves to the experience that a customer wants. Many of them can be controlled via home networks and mobile phone apps. Philips also chose to spin off a whole new brand, Signify, that would embrace sustainability and energy-efficient lighting. Auto insurers are going to have choices like this to make. Auto insurance, coincidentally, is also a 120-year-old “established” industry, based around a policy transaction. Will insurers continue to provide traditional insurance in traditional ways until they are forced down a dead-end path or will they embrace new trends, new technologies, new services and perhaps a new mobility ecosystem approach? Will they reinvent themselves to become nextgen mobility customer experience providers? In Majesco’s most recent thought leadership report, “Rethinking Auto Insurance: From a Transactional Relationship to a Mobility Customer Experience,” we use new customer primary research and recent trend data from other sources to answer two pertinent questions: • What are the trends pushing auto insurers to adapt their business models? • Why should auto insurers begin creating mobility ecosystems and customer experiences that will transform their purpose and their profits? 12
insight
We consider five trending points that are driving change, including: • The Auto Insurance Buyer – A Shifting Demographic • Vehicle Technologies • New Data Sources • Ownership vs. On-Demand Mobility • New Auto Insurance Sources and Providers Let’s briefly consider these trends and how they may impact auto insurers.
Trend 1: The Auto Insurance Buyer
For purposes of simplifying analysis within the Mobility Survey, we created two generational “super segments” by combining two different age groups, Gen Z and Millennials and Gen X and Boomers. As expected, the Gen X and Boomer segment is currently more active than their younger peers in buying or influencing purchases of household services, insurance, and financial products. Three exceptions were in individual life insurance and voluntary benefits, where the segments purchased at equal rates, and Amazon account usage, where Gen Z and Millennials have a slight lead. The older super segment has sizable leads in personal lines P&C insurance (auto and home/renters), employee benefit health insurance, investments and annuities. All of these products are good fits for the 30-60 year-old “sweet spot” for insurance and financial products, given they are at a life stage with the greatest insurance and financial planning needs as they establish households and families and accumulate wealth and possessions that need protection. In 2021 – one year away – Millennials, all by themselves, will meet and begin to surpass the older super segment. The young super segment’s dominance will accelerate four years later when the first members of the Gen Z generation also turn 30, vaulting this new generation to buying dominance. Providers of household services, insurance and financial products that have not adjusted their business models, products and customer engagement experiences to meet the needs of this new “sweet spot” buyer market will find themselves challenged and left behind. The insurance industry will need to adapt to this new super segment of new customers. august 2020
