H

ave you ever heard of Generation D? A recent report from the consulting firm Accenture suggests that the same relatively unknown generation segment is quietly emerging as a significant new market segment within the financial services ambit.

Cyril Tuohy of Insurance News Net recently suggested that the financial crisis of 2008 combined with a significant rise in social media profiling and usage has given rise to a more information-savvy investor generation that inherently takes a jaundiced view of financial advisors.

Marvin H. Feldman, LIFE Foundation president and CEO, in his article titled Gen X, Gen Y '€¦ Gen D? highlights that Generation D is not defined by traditional demographic or age segmentation but rather by its behavioral inclination. Current data interrogation of this market segment suggests that Generation D may consist of up to 75 million individuals (26 percent Millennials, 48 percent Generation X and 25 percent Baby Boomers).

Alarmingly, the Accenture survey found, for example, a total of 59 percent of generation D individuals actively sought fiscal advice at times, but only 40 percent looked to their financial advisor for guidance.

According to Accenture, individuals within Generation D are often more conservative and risk averse than many insurance advisors give them credit for. Their overriding consumer expectation is that of a digital, online and mobile channel capability '€œseamlessly woven into the overall customer experience.'€

Generation D'€™s skepticism toward financial institutions and aligned advice is most prevalent among the Millennials. This group of 21- to 30-year-olds seeks information across multiple distribution channels to confirm and/or corroborate investment advice.

Although 71 percent of Generation D (Millennials) are currently investing, only 22 percent are doing so through an advisor, the survey found, and as many as 28 percent of the same segment will not take a financial advisor'€™s advice without first consulting another source.

Members of Generation X, meanwhile, are likely to be self-directed investors and are more inclined to use a dedicated financial advisor, with Baby Boomers being more advice and relationship orientated and preferring a relationship with a trusted advisor, the survey found.

Ross Mayne, Munich Re Automation Solutions Ltd CEO, believes that two key trends will be fundamental to insurance houses in their preparation for future consumer behavior: agility and adaptability.

Insurance company will in future require an inherent ability to adapt. This adaptation will have to include new business and underwriting automation, new research, data interrogation tools, new generation products and/or pricing philosophies. New generation insurance companies will at the same time also be required to fully embrace major technological trends such as mobile capability, capacity and aligned social media exposure.

The truth is that social media, when used strategically and over time, is the most powerful form of marketing and market research. Social media is at the same time creating a new paradigm of access to and interaction with its users. Without digital consumer engagement, insurance companies will rapidly lose their market share to more contemporary counterparts.

Rich source of data and analytics

Clean, richly statistical data can help to reduce risk and increase revenue. One example of this type of data application is in the field of predictive and/or individual specific underwriting, allowing for a simpler application process, reduced risk and ultimately individualized pricing capability for the consumer.

Furthermore, predictive analytics uses statistical and analytical techniques to develop predictive models that enable accurate predictions about future outcomes. Incorporating predictive analytics requires an evolution in terms of people, processes and technology.

Insurance companies that fully adopt predictive analytics are more competitive in gaining profitable market share and avoiding adverse selection as more analysis at the back end can result in better customer segmentation.

Mobile technology and devices

The prevalence of mobile digital devices has led to a profound change in how business is now conducted in Asia. Consumers demand products and services instantly. It is vitally important that the insurance industry takes advantage of these opportunities. Mobile is no longer the future -- it is the now!

Over 194 million new internet users will come online in Asia before 2020 -- 91 million in Indonesia alone.

Smartphone sales in Asia are outstripping those of any other region with 70 percent of the population in Malaysia and Singapore owning a smartphone as opposed to 52 percent globally.

Mayne emphasizes, '€œNew technologies are changing how consumers and intermediaries engage with life insurers. Insurance companies need to adapt quicker, provide more convenient entry points and invest in new capabilities to extend their reach and increase market share.

'€œNew business and underwriting automation has a strategic and pivotal role to play in helping insurance companies to reach a broader base of potential clients and to grow their business profitably in the digital world'€.