Bridging the Customer Protection Gap: How Insurers Can Respond to Generational Shifts in Risk and Readiness

Speaker A: Hi everyone, I'm Denise Garth, Chief strategy officer at Majesco, and you're listening to the Future of Insurance Industry Leaders podcast series. Follow along as I interview the best and brightest leaders in the insurance industry and insuretech landscape to bring you the latest in digital transformation, innovation, industry trends, challenges and opportunities, as well as next gen technologies. We use our experience to anticipate what's next without losing sight of what's now. Stay tuned to find out your next now. Hi everyone, I'm Denise Garth, Chief strategy officer at Majesco and you're listening to the Future of Insurance Industry Leaders podcast series. Follow along as I interview the best and brightest leaders in the insurance industry and insuretech landscape to bring you the latest in, um, digital transformation, innovation, industry trends, challenges and opportunities, as well as next gen technologies. We use our experience to anticipate what's next without losing sight of what's now. Stay tuned to find out your next now. So this month's webinar is closing the insurance customer protection gap. It's really based on the recent uh, research that we just uh, published and it is primary research out into the marketplace that does look at customer, um, um, generational differences in terms of their risk, the readiness and the coverages that they really kind of view from a protection gap standpoint. Um, so we encourage you to also um, download the copy of the full report. Um, it'll be myself, Denise Garth, chief strategy officer at Majesco, and then Glenn Westick, um, vice president at Majesco. So let's go ahead and get started. All right, let's talk about the big picture in terms of the kind of three key protection gaps that we uncovered as a part of this research. Um, first off, um, as many of you know, um, you know, we do have a growing protection gap, um, globally, you know, and that protection gap is actually estimated at $9 trillion with 30% of it associated, uh, to property and casualty types of, uh, protection and 70% associated to life, annuity and health, uh, types of protection. And what's really driving this protection gap are really four key factors. One is the rising risk, obviously that drives additional claims that then ultimately drives increased insurance costs, uh, the affordability strain. Uh, people are really struggling with being able to pay for the increased cost of some of their insurance due to increased, um, prices, increased inflation and interest rates. As a result, we still have a lot of people that are uninsured and underinsured and are not prepared for catastrophic losses uh, that are happening. And we all know, at least I do personally um from Sunday and Monday we have convective storms which are now the number one cat loss. Um uh, from a property and casualty standpoint in the US um and we had them again on Monday and Tuesday, um with a lot of um, severe convective storms with wind, hail and uh tornadoes. Um and that's really driving a lot of catastrophic losses. And then finally we've got price pressure on the generations. You know millennials and Gen Z are just kind of getting their lives established and uh, Gen X and boomers are m, uh entering or moving into the later phases of their life and and in some cases are on a, on a very structured type of um income stream um if they are retired. What that's doing is that it is impacting overall the ability of trust, loyalty and growth for insurance companies because customers um are becoming disillusioned with uh traditional insurance that the costs are increasing but maybe the value of it they just don't see as much uh anymore. They also have changing behaviors from um a buying perspective, particularly on the um life annuity and health side from individuals uh that might be uh buying group benefits. They might be getting group benefits as part of um being part of an employer but they are moving jobs multiple times and in many cases unable to take some of that coverage with them or can afford to take some of that coverage uh with them. And so increased interest in more products that are more individual based that are um, much more uh directly uh from an underwriting perspective tied to them and that they can more easily take. And then there's the pressure on um just um acquisition of new customers, retention, overall profitability of insurers um that have struggled uh in the last few years and that all has an impact on brand trust. So when we looked at this from a financial risk perspective, here are the three key um uh protection gaps that we identified. One is lifestyle, the second is financial and the third is safety and security. And you can see the breakdown by generational group. By far uh financial is the um biggest area of gaps and risk category um uh through the research that we found and it really um reflects all of those uh factors that I just talked about because they all kind of have an impact on financial security in one way or another. But the interesting thing about the safety and security gap is that um that may have been thought to have been covered by traditional insurance um but they are actually identifying ways that they may need other types of products to be able to cover some of the areas that are merging there. And we'll talk a little bit More about that. So when we look at the core protection gap crisis, um, you can see here um, in the dark blue is that um, based on these different types of products or these different types of um, um areas that they feel that they need to have protection.

Speaker B: Um,

Speaker A: the dark blue is how prepared do they feel and the light blue is that um, an importance. So the difference between importance and preparation is the gap. So, so you can see there's a significant number of areas that there is a large area of gap that um uh, in the light blue or the gray, uh, it is um, you know, raising. Um, entering into the uh, important stage of being prepared to very important. And uh, yet that many of the blues they're in a neutral position. Um, you know it's kind of like um, neutral, uh pretty much across the board. A few of them are kind of up and down. The only ones that really are um. The gap is nearly um, uh identical to importance. And uh, protection is down in planning and saving for college and then um, lawsuits from injury caused by uh, something on your property typically covered by umbrella insurance. Most people feel that they're fairly well protected there. Everything else is up for grabs. And uh, that gap is really what is driving some of the sense of a lack of financial protection. Secondly, from a lifestyle standpoint, not as many gaps. There seems to be more of an alignment between preparation and importance. But there are some key areas here that offer I think some um, standing back and kind of um, um preparing or offering some products that could help close that. Most important one is um, the caring for aging or disabled parents and relatives and then maintaining good personal health. Um, and then obviously the pet, uh, uh, caring for a pet. Those are the three areas that really represent some really great opportunities to offer some products that can kind of close that gap. And this really um reflects I think a demographic and lifestyle change. Um for many people. Pets are kind of the big thing for um, younger generation. But it's also for an older generation is companionship. Um and everybody wants to be able to live longer and have a healthy life and less of uh, a medical perspective, having medical procedures. And that has increased uh, substantially from an expectation standpoint. And then now we're getting into this squeezing of the generations where we're trying to you know, raise the younger generation and take care of the elderly parents and finding um, places and ways that we can actually take care of them in a cost effective financial way. Um, I know I personally experienced that with my parents, um, you know, and their fear of having to sell their homes or in the case of my dad m. The farm, to be able to kind of protect them. Um, there's a real sense of needing to make sure that there is uh, financially and from a lifestyle standpoint, the ability to really take care of them. The last one that I mentioned was the safety and security risks. Um, um, and it's been a traditional strength, but there are emerging uh, vulnerabilities here. Um, and you can see that um, from a preparation to an importance perspective. You know, CyberSecurity, um, and ID theft are the two top areas. Um, and we all know about the scams that are out there from a cyber perspective. But increasingly the ID theft one is one that is really hitting particularly the elderly. Uh, they get caught up in getting a phone call or a text or an email and they don't realize that it is really kind of a scam that they're going to be able to take their assets or whatever it may be. Um, and that's becoming a really um, um, big area of concern and focus. And so those two areas in ah, particular are areas that people are really looking for some kind of a protection from a safety and security standpoint. On the opposite, on the far end, um, they're much more prepared, um, and um, in relation to the importance, uh, they're over prepared in some cases, um, you know, as it relates to home security and property damage from wildfires and earthquakes, um, so people feel more prepared on that and it might be because it's much more centralized. Many homes now do have home security systems, uh, with things out there that they uh, can leverage. And um, while wildfires have been a topic in the news, um, it seems to be somewhat concentrated in some areas. So the level of preparedness seems to um, be there. So Glenn, uh, over to you. I know that um, you wanted me to leave it here. Right.

Speaker B: No, I think we're ready to go to the next one. So I'll just take it over here. Too far. Sorry. Okay, so. Thanks Denise. So, yeah, we just got an overview of some of the key gaps on an overall basis. So financial risks create the biggest gaps and then you saw when you broke it down to the specific things, there's a lot of things that make up that financial, financial risk and there's a lot of areas for um, uh, improvement in making more preparedness and protection. But to dig in a little deeper about, you know, why, why do people feel, why do the people rate uh, their preparedness and protection? We wanted to see first, uh, what, what do they already have in terms of insurance Products or what types of planning do they do? What type of things uh, do they have in place that they could use to um, manage some of these risks. So we asked um, early on in the survey the types of products that they had from a whole list of different products. And so we'll go through these first and kind of give you a baseline to understand what they have and what they don't have. And then we'll talk about how those impact or have um, a, um, uh, relevance to their ratings of protection. So on this slide first we're going to look at the um, lifestyle related products and services and just going to set up the chart for the next three slides here. Just so you know they're constructed. You can see that there's um, two rows of labels on the x axis and the horizontal axis. So the first row are the products and services that we asked about. You know, we asked do you or anybody in your family have or use these particular products or services? And it's just a simple yes, no checkbox thing. And then the bottom row is the, represents the lifestyle activities that we also asked about that kind of correlate or are related to those particular products and services. So in this chart you can see there's interesting, uh, one of the interesting patterns that we see here is that the two generations are prioritizing very different types of production products which kind of reflects where they are in their life and how they think about risk. So Gen X and Boomers could be more engaged with traditional health and protection oriented solutions. Um, they're also more likely to use things like fitness trackers now tractors, uh, critical illness insurance, regular medical, dental and vision checkups. So that kind of indicates they're really taking a more proactive approach to both preventive care and financial protection around health risks. But on the other hand Gen Z and Millennials, they seem to lean more heavily into more lifestyle and experience driven things, um, things like again like Denise pet insurance, um, wedding and event insurance, second home, uh, insurance coverage, um, and smart home monitoring solutions for aging relatives. So these products seem to tend to be tied to more major life moments or personal experiences in um, convenience oriented living. When we take all these things, all these different products together and on a cumulative basis across all the products and services, we just add up the percentages that they say they have. These Gen Z millennials come out with a 54 percentage point usage advantage across all these, but it's probably strongly driven by their much higher usage of pet insurance, um, higher use of wedding and event insurance and smart Home monitoring devices. But um, another interesting takeaway that we'll talk about more is parametric um, insurance products for things like travel disruptions and event cancellations. So adoption here is pretty even across the generation. So it's not really, doesn't come across as a niche product that's targeted any specific generation. Um, but in overall the penetration seems pretty decent. It's about 50% for both segments. Um, but again uh, could just be that it's maybe just catching on and that usage could grow.

Speaker A: I do think the point here Glenn, um, that's really important is that if you're targeting um, you know, particularly say we target the younger generation and you're trying to establish them as a customer to be able to cross sell to them over a longer period of time. Some of these uh, what I call non traditional types of products that are really um, tied to what their needs are, allows you to more uh, efficiently and in many ways inexpensively establish a relationship with them that you can over time, as their lifestyle changes, uh, their incomes increase, you can actually begin to actually offer them other types of products. So looking at these as both just a gap, um, is one way, but also looking at them as a way to kind of um, um, reach that market in a different way. Rather than thinking you have to go through the traditional life insurance, term life insurance or um, you know, um, homeowners insurance, it might be renters insurance. So thinking about it in terms of them and their needs allows you to kind of establish that relationship.

Speaker B: All right, so now in the financial risk protection category, products and services, Gen X and Boomers actually hold this advantage Now. The net 56 percentage point usage advantage over Gen Z millennials. So it's kind of flipping the script from what we just saw in the lifestyle categories. So Gen X and Boomers, they're showing consistently higher adoption of kind of more longer term asset retirement full focused products like retirement annuities, their investment accounts, 401ks, IRAs, health insurance and umbrella insurance and all, you know, to protect their accumulated assets. So we think this, you know, this, these patterns, this pattern of Gen X, uh, and boomers reflects that there are consumers who are either approaching retirement or they're already in it. And they're very focused on preserving the wealth and maintaining financial stability after they leave the workforce. Um, but on the other hand, um, less than half of Gen Z and Millennials report using uh, many of these different products and services. They're only meaningful leads over Gen X and Boomers um, are the savings and usage based solutions. So college um, savings, which maybe makes more sense. Um, but they're also more interested in the direct cost control of things like pay as you drive auto insurance. So Denise, any other color commentary?

Speaker A: I heard that one pretty well, Glenn.

Speaker B: All right, so now we'll go into the final category, the safety and security. Um, so when it comes to the products and services for this category, both of the generation segments are just about dead even on almost all of these. Um, there's just a 5 percentage point net difference between the two. So again, this is kind of an indication that these are the types of risks and uh, are pretty much equally familiar to both of the generations. The most, the most familiar, the most tangible. Um, so there's not a whole lot of difference between the generations and how they approach them. Um, but that said, again, the penetration of most of these products still is just hovering around 50%, except of course for the really traditional stuff, you know, the auto insurance and homeowner renter insurance. So those most common types, we also saw earlier that cybersecurity and ID theft were really the only categories that had a big safety and um, security protection gap. And here we're seeing that the generations, they trade kind of slightly with each other in terms of having insurance for these risks, yet it's still just hovering around 50%. So there's definitely more opportunity there, I think, for closing that gap. Um, and then again, parametric finally. I thought it was, you know, pretty interesting that the penetration of parametric insurance is pretty similar for both the generation segments. Again, just like we saw in the lifestyle chart. A couple slides back. So this type of insurance, you know, it's been around a while, um, but it seems to be gaining ground as we are experiencing more and more of this extreme weather events and climate events. Um, so, but again, you know, penetration is pretty decent, but um, still relatively low compared to traditional insurance. But again I think more opportunity for, for that category to grow.

Speaker A: I do think that in some of these cases, if you uh, don't necessarily offer the product yourself and want to, you know, develop it, price it, etc. This is where partnerships can come in. Um, particularly in the parametric, um, area. Um, you know, whether it's flood or it's other types of parametric, um, um, offerings, I think once again that's the type of product that can uh, establish a relationship with customers, help them, um, in a short term, um, need type of perspective, ah, during a loss, but also develop a greater trust and loyalty, uh, to the brand. While you may not necessarily offer these individually, partnerships can help you do that to be able to reach those customers and grow that customer relationship and retention and loyalty.

Speaker B: Right, okay, so next section. So we've just kind of gone through what uh, consumers say they have and what they don't have to protect and prepare themselves for these risks that we've been talking about in these different categories. So our next step was to see um, how much influence these products, if you have these products, um, or you don't have them, M how much influence do they have on kind of like your back of mind, top of mind, subconscious um, confidence about your ability to be um, prepared and protected against these different types of risks. So in other words we were looking for what kind of a lift do you get in perceived preparedness and protection if you have these products and services. So to do this as you probably would guess, we just take, we divided the people into two groups. One group that said they had these products or services and the other group that said uh, they didn't have them. And we compared their perceptions on how prepared they felt to manage the risk. And then we charted in the next few charts we'll see um, the lift that they got from having those products over the people that didn't have the product. So and we'll start with um, in the lifestyle group here we can see that all the products and services that we asked about created a lift in the perceived preparedness across both the generations. Except the only one, the only exception here was the cancer and critical illness insurance for Gen Z Millennials. There was like a no lift at all. There just kind of didn't seem to have an impact. Um, but overall Gen X and Boomers had a higher net lift, um, uh, advantage over Gen z millennials of 34 percentage points. So that that occurred even though they don't didn't lead in all the specific product categories. But the strongest lifts were we saw occurred for products that were tied to things that could be considered probably more high stakes or infrequent or asset intensive. Lifestyle risks like insurance for second homes, um, wedding event insurance and parametric travel insurance, um, especially for international travel is kind of interesting. Um, but these last two again reflect the value of parametric insurance. Really reinforce the value of clear event based coverage where there's a financial exposure, it's focused or it's concentrated in a specific place in time and the outcomes are binary. So in other words apparel either happens or it doesn't happen. If it does happen then there's a payout. Um, so that's um, definitely giving people a lift in Their confidence and preparedness. Denise, anything from you?

Speaker A: No, you can go ahead.

Speaker B: Okay, our next category is the financial protection products and services. And here we saw some of the biggest lifts that were delivered by some of these financial protection products. Um, but again they're highly segmented by life stage and product complexity. But the net result here um, is that Gen X and boomers have a pretty large 92 percentage point net preparedness lift across all of these different products when you add up the lifts. So for them traditional long term financial instruments seem to generate the strongest impact. So investments like their 401ks and IRAs, they drove a 37% lift UM in their retirement preparedness and a 19% lift in confidence around having Social Security, around having it available. Um, and retirement annuities also delivered double digit gains in both of these areas. So another, um, another category, health insurance and Medicare related products were also a standout for the Gen X and boomers. They had 33% left in preparedness for, for pre retirement healthcare costs. Um, college savings plans uh were another item with one of the strongest lifts uh for both segments. Um, on other items the Gen Z millennials were showing different patterns. So for them investments in annuities still had a lift in their uh, preparedness, increased their preparedness but the lifts were smaller. And that probably again reflects that they're further away from retirement and long term financial milestones compared to Gen X and boomers. But they did also show some, their strongest lifts from some of these specific um, financial protections are more clearly bounded. Um, some that were in some that were longer term such as long term care insurance. So m thinking ahead, you know, might need long term care insurance down the road. Um, college savings plan probably more near term but then also funeral and final expense insurance again could be long term for them m or it could be a family member they're thinking about.

Speaker A: So, so I think what this highlights is that the silver economy is real guys um, in that um, there is a um, real strong uh desire to have some coverages as people move into retirement. And it's not just about the health insurance, you know, uh, to supplement, you know, med supp to supplement, you know what you get from um Medicare but also vision and dental that you no longer have if um, you're no longer employed. Um, but even more important is um, how can they help in college savings? It's really the transfer of the assets to be able to kind of put maybe in for their grandchildren, um, that type of a thing. And then from an investment perspective how do they um, take their 401k and how can they put that into a ah, single premium annuity to be able to have a guaranteed revenue stream? How do they actually um, acquire um, um, their assets? And those are the types of things that silver economy is really looking forward to. And it's a great opportunity for insurers to be able to kind of support that um, term insurance is still really important to that, that silver economy. On the contrast for the uh, younger generation, as Glenn said, you know, college savings is a big deal to be able to kind uh, of save um, if they've got children. But I think this long term care one is an interesting one. Why is it so important to this younger generation? I think it's because they see the cost of long term care for their parents or their grandparents and the significant need to be able to have that covered. Somehow or other. I think that um, they're very aware of that and I think that opens up an opportunity for preparedness for a longer period of time, Even if it's 20 years down the road to be able to buy it now where it's going to be less expensive than if you actually bought it um, when you're closer to retirement or at an elderly age. So I think kind of looking at these products at a different way and how you go to market with them and how do you reach these different market segments, it really um, is really important not just to kind of plaster that we have all of these products but how do you really kind of hone in on those segments of customers that really uh, see things differently and have different uh, needs um, identified in the market. Glenn?

Speaker B: Yep, good points. Especially with that long term care. Okay, um, so the final category again is the uh, safety and security. So here we saw that Gen X and boomers had their strongest net preparedness lift advantage over Gen Z Millennials. Again when you add up all of their lifts, um, safety and security products and services, it's pretty strong, pretty amazing. 117 uh, percentage point advantage. So every product or service in this category is creating more confidence in this older segment which again could be just a reflection that they've been around longer, they got more experience with risks and insurance, um, and just, it creates a stronger level of confidence in them. And again, talking about parametric, again it's really, I think it's interesting that the parametric products tied to uh, severe weather, flooding, wildfires, earthquakes, et cetera, they're consistently higher lifts for the Gen X and boomers and they peak at 40% lift for parametric earthquake Insurance, which was the really one of the largest lifts we saw in the whole, in the whole study we did. So again, I think this indicates perhaps that older consumers are just more aware of, and they're more concerned about some of the greater exposures to property loss and the affordability of coverage. They've got a clear understanding of the financial consequences of catastrophic events and they, they see value in these parametric products. Um, and again, Gen Z Millennials, they're also, they also get lifts, um, in their preparedness from having these products, but in general they're a lot smaller compared to, uh, Gen X and Boomers. Um, cyber insurance and ID theft insurance generated the strongest increases in their perceived preparedness for them, a 24% lift and a 21% lift. Um, and it's also interesting too, I think, um, when you look at the baseline or standard products like auto insurance and homeowner renter insurance, these delivered the smallest lifts for Gen z millennials, just 2% and 7%, which again, maybe it could suggest that these products are just viewed as table stakes, um, to this segment rather than it's just kind of valuable, vital, fundamental safeguards for the property.

Speaker A: And so I think that really highlights, Glenn, the point that we all recognize that we've got to have some base types of insurance, but that isn't necessarily going to cover all of the, um, uh, concerns from a risk perspective. And how do you either offer other products, uh, that will help kind of address some of the needs, attach it to an existing product, um, as an example, or, and, or partner with other insurers that are actually, um, um, building and pricing and offering these products to the market. I think the more that we can actually address their baseline needs as well as the additional areas of gaps in a way that allows them to kind of choose products that they can afford and have them, um, to some extent, um, you know, attached or bundled or um, um, you know, offered. It really kind of, uh, establishes a different level of trust and loyalty, uh, to insurers over the long term. So traditional products are still there and still needed, but it's not meeting the entire needs of a customer base that is really changing their lifestyles. Risk has changed and uh, what their concerns are. Len,

Speaker B: Good points. Okay, so this is the final section with the products we asked about. So in this section, um, we went back to the consumers who said they didn't have these products or services, and then we just explicitly asked them, well, what if you did have these? Would they make you feel more prepared and protected? So we had them Rate how much they agreed or felt that it would make them feel more protected. Um, and just you know overall we did find that uh, among the people that don't see, said they don't have these products, many do believe that it actually would improve their sense of protection um, especially in the financial and health related areas. So again indicating there's definitely opportunity for closing these gaps. So we'll start with again the lifestyle category. So among the consumers that didn't own any of these products in this lifestyle grouping the products that were tied to ongoing well being and life events got the strongest ratings across both generations. So the biggest one is you know the annual medical, dental and vision checkups that stands out as the most compelling item. In fact we all should be getting those anyway so um, but they had pretty high likelihood scores of um, you know of 3.9, 3.6 on the five point scale. Um, long term care insurance for aging or disabled relatives and smart home enabled protection for elderly occupants also scored highly. So again another opportunity here that we know this, this is definitely an area there's concern about aging parents and these are things that would definitely help ease that burden. Um we also saw uh, there were generational differences um, uh that were suggesting that Gen Z millennials are consistently more open to adopting these lifestyle protection products. Across almost every category here it gave them a net lift advantage of 13% uh over um Gen X and Boomers. Not huge but uh, they, they were leading in all these categories um and they, they gave the younger segment, gave higher likelihood ratings on all the products that we asked about including fitness trackers, cancer, critical illness insurance, pet insurance, event cancellation, wedding insurance. Um this, this could indicate uh, that they have stronger interest for products that address again experiential, family related uh preventive risks. Um Gen X and Boomers again also see value in these offerings but their enthusiasm is much more tempered and some of them are dropping to just barely over the probably would not category. So um, they may be a harder sell if they don't have these products already. So Denise, what do you think?

Speaker A: Yeah, I think once again um, it highlights some areas of product opportunity to bring some products to market either as an attachment to a writer, to an existing product or as a separate product itself and a way to kind of engage customers in terms of how they're thinking and what they're wanting. I m think that um, being kind of um, um innovative in this way can actually extend um, you know the relationship with the customer. It can drive some additional revenue. But in the longer term I think it drives additional profitability via customer retention because you're able to actually support those customers in a broader way rather than just through the traditional products. And I think this is where some innovation can really come into play and some partnerships as well. Glenn?

Speaker B: Yeah, totally agree. Okay, um, so here again for um, financial products we saw that Gen Z Millennials had consistently higher openness to adopting additional financial production, especially for products that were tied to proactive planning and cost control. And that gave them an overall 10% net lift in expected preparedness across again cumulatively across um, the gamut of these financial production products. Again not a huge lift and a little bit smaller than that last month, but again just overall showing a little more interest um, in these, these products that if they purchase them or use them they feel more protected. So Gen X and Bourbons still viewed most of these products as helpful, but they also reflected again a more measured, a little more tepid response. Compared to Gen Z and Millennials, they did have stronger alignment around Medicare related coverage, long term care insurance and federal or final expansion insurance.

Speaker A: So, so yeah, once again I would just highlight Glenn. Um, traditional products obviously are still there like the home and auto and um, some of the um, health insurance related stuff. The difference is that not everybody has access to all of those products. And secondly once again it's a variation of those products. So the pay as you drive auto insurance. What's interesting to me is as all of these are at or um, above, uh, most of them are at or above the neutral care um, um territory. Meaning that there's increased interest in these products. And I think it's time for us to kind of think about these products in a different way. And once again, um, how do we bring those to market to meet those needs?

Speaker B: Right, okay, final category, safety and security. So you know, how um, how would safety and security preparedness improve if consumers who don't have these products and services would actually decide to get them? Well across both the generations we saw that auto insurance and homeowner renter insurance received some of the highest likelihood scores, um, which again reinforces the roles as essential foundational safeguards really rather than just these new discretionary add ons. It's the core product everybody should have. Right? Gen Z Millennials rated auto insurance has especially impactful 3.8 on that 5 point scale versus 2.9 for Gen X and boomers, um, which could suggest they've got this heightened sensitivity to the financial exposure related to auto, um, you know, increased cost of vehicles and repairs. Um, but again it's kind of ironic if why don't they should have auto insurance right there. People that know they need it probably would feel better if they have it. Um, so this is kind of reflected in that, in that particular rating. But beyond these core products we can see that both segments expressed pretty decent interest in preventative and event driven solutions. Although there's still some variation. Um, but overall they're pretty, pretty close to each other. And um, Gen Z Millennials gave higher likelihood scores um, across all the products and services but they're lead over the Gen X improvements wasn't very big and when you added it all up it was just a 9% net um, lift and expected preparedness and protection. They have um, slightly higher interest in flood insurance, parametric insurance, M parametric flood coverage, severe storm protection, wildfire insurance, earthquake insurance. So again it suggests that they could be a good target market for these parametric solutions that are positioned as you know, enhancers to being prepared, preparedness enhancers. Gen X and Boomers also view these products as helpful with more, again little, little less enthusiasm but again I think still positions them as potentially good targets for them as well and it could just be a reflection of you know, their more traditional approach for incremental coverage. Denise?

Speaker A: Yeah, I think what's interesting about this is a topic that as an industry we've been talking about and that is about risk resilience. How do we drive risk resilience um, in our lives and uh, in the assets that we have? I think when you look at many of these areas um, once again they're over the neutral area and moving into the probably would and would definitely would with the increased risk whether it's, it's um, weather related risk, whether it's health related risk, other types of risks out there. I think people are looking for ways to actually reduce risk in their lives. And while the insurance products can offer ah, ah, a solution to be able to um, when a claim comes in, pay out the claim, et cetera. I think a bigger opportunity here is not only to offer the risk product, um, to be able to address it when a claim happens, but more importantly help eliminate that claim. How do you drive risk resilience? Not just in property that we often think about in terms of climate, weather and all of that, but it's more in their lives overall. Things like um, video surveillance for their property or cyber ID theft. Are there things that we can be doing not just to offer the risk product but helping to educate and provide them information that they can actually reduce their risk as well as I think That's a big factor in many of these um, areas of latent demand. It's not just about the risk product itself. It's how we actually engage with those customers to help them understand the risk and reduce it as well.

Speaker B: Yeah, good point. The whole idea of prevention versus um payout. Right, so that's definitely positive area. All right, so I'm going to, we're going to switch to uh, our last topic, using artificial intelligence to help close the protection gap. So I'm going to hand it over to Denise to cover this. Denise?

Speaker A: All right, so part of what we asked um, um uh customers is um, their views about artificial intelligence and how that could help them um, close this protection gap. Um, and we found some interesting um, you know, interesting points here. So the first um, the first area is we asked them um, how do they feel about companies, um, uh, you know, the different types of companies that um, they have um, they use and how they are using AI in their operations. M. You know there's not a big change between the two generational um, uh groups, um, you know as it relates to um, year on year kind of kind of perspective. Um, but what's interesting here is that if you really look at this there's a significant number of these once again in that neutral, moving into the positive area that they actually look at, um, the uh, ability of AI to actually help them um, from a digital experience and a seamless experience particularly for the younger generation that is probably much more adapt to uh, technology and not necessarily as um, afraid of it. I do think that um, what's really interesting is that what's happening at the top is the exact same effect that we had back when mobile was introduced and digital uh, was introduced into the marketplace. Um, you know the whole Amazon effect, um, um began to happen. I think we're going to begin to see that as well. Particularly as, as the day to day lives are impacted by their mobile phones and their Amazon accounts and all of those that are really embedding AI into it. And even in investments, look at that, the investments in bank accounts, you know, the things that are happening in the financial services side. So at some point we are going to have to as an industry understand that there is a whole different level of potential expectation that's going to arise. No different than the same expectation we had when digital um, came to light and we had to have that Amazon effect so to speak. But do it in terms of insurance and what we could do. Um, um that was the right thing to do and also a compliant thing to do so. I think when um, we also asked them do they think an insurance company's use of AI um in their operations would improve some things? Um, pretty interesting here. It was pretty strong uh, feedback here, um, and an increase pretty much across the board. Um, although it was slight increase that it would actually help in helping to um, provide input on the digital, you know, self service area or the digital self service area for submitting for insurance. Um, it could actually help, you know, in maybe better pricing and all of those types of things. I think there's an expectation here people are becoming much more educated around AI and um, there's a pretty uniform enthusiasm about it that if used right and used appropriately it can really help them. And in some of those ways, back to what I said earlier, it's not just about um, doing the process. It's about how could we leverage it to actually help engage them and educate them and help them um, reduce that risk. There are things that we can be doing that aren't necessarily going to be about the, you know, the pricing and the quoting and you know, all of that type of thing. But we can make lives easier. How can it help them, um, do the first notice of loss much more effectively? How can it help help them get the information that they need that they can actually take action on their part to be able to reduce risk? I think those are really um, great opportunity areas for insurers to really begin to think about. And I think we're seeing now in the marketplace, you know, based on um, some of the insurer earnings calls and some of the information coming out at different uh, industry events, insurers are beginning to experiment with this and how it can actually help enhance and improve the value and the trust that you have, um, with the customers. So when we kind of look at that, um, between how can AI be um, um, a bridge between concern and action? Um, it really has an opportunity when done right, when done transparently, um, when done with m, you can actually have auditability to make sure that we're uh, meeting compliance requirements from the regulators. It can really help insurers help their customers or potential customers move from awareness to adoption. So um, you know, many of the products that we talked about, there's a real latent need out there, there's a gap in protection, um, but many times they don't necessarily understand that. So how can customers um, actually find out about more of that information? So on your websites, on your digital um, experiences moving beyond just being able to uh, submit, uh, get a quote for a product or to do a claim or whatever. How can you use those sites to better educate and increase that awareness, help them understand that risk and in many cases make that even more personalized that you understand their specific risks. And what types of products can you actually begin to kind of suggest to them or offer to them? Um, and I think that's where they can actually help close the production gap. We can begin to offer services when they really need it or products um, and we begin to kind of um, simplify how we really engage with them over time. I really do believe that it is going to ah, actually help build trust and loyalty uh, to insurers that are able to not just do things um, from a submission and uh, whether it's from a quote to you know, submission of an application to a first notice of loss, but really how you actually engage them in a much broader conversation whether it's around financial risk, it's lifestyle risk or it's security risk. We've got to start having those conversations to actually help educate and engage customers. And then that actually drives um, how they kind of look at the products that you have to offer for them in a whole different light because it's based upon their actual day to day needs or their longer term needs. So when we think about guidelines for action um, for everybody, um, first and foremost go back to the very beginning. Financial risks are the epicenter of every protection gap, of the protection gap scenario, um, that we have in the marketplace. We've got to find a way to actually begin to close that gap because it is the overwhelming gap that drives um, concern of customers, the lack of coverage and quite frankly trust and loyalty to insurers, um, the protection risk, um, um, importance is great but without preparedness, um, um, what I mean by that is that there's anxiety out there because people don't feel that they're very prepared. It's that latent gap that's out there. We've got to be able to offer um, some um, options for them, education and actual products because there is an opportunity out there to grow your books of business, to grow your relationship with those customers by offering the types of products that they really want. Um, and you know the products work flat out. Products, you know, the insurance products have worked for a long period of time but adoption has been the problem. And part of that adoption problem is that we're not necessarily understanding maybe some of the nuanced segmentation of some of these, whether it's by um, um, um, demographic, uh, groups or it's by lifestyles. Um, whether it's different types of risks, all of that type of thing, we've got to have a better understanding of those customers on a more personal, uh, level to help drive that adoption. And part of that is going to be how do we engage them differently. I think that's where AI can really help it, by engaging them and educating them and having a different kind of conversation that then can actually drive to actual adoption of some of the products. Um, safety risk is strong, um, but the digital risk is the new vulnerability going back to that cyber risk and the ID theft. We really have an opportunity here as an, as an industry, whether it's a new benefit that's offered in a, as a, as a benefit in a benefit plan, it's an individual product that's offered. You know, it could be part of a, um, uh, you know, a rider attached to like a homeowner's type of a policy, or it could actually be something that is a, is a product that's offered over on the, on the life side. I don't think it necessarily has to fit in any one specific segment. It's a risk, um, and if they have a cyber risk and they have a, um, ID theft risk, that leads to financial risk that could have an impact on their, on their financial assets, whether it's their banking account, it's their annuities, it's their life insurance, all of that type of stuff. Um, and you know, the next one is really around these new products. Um, there is more opportunity in the marketplace for new product and innovation of products than I think that we um, have seen or that we fully appreciate because we're all still focused on much of the same thing. A lot of that is driven quite frankly, because many of us are still living, uh, operating, uh, on legacy systems. And those legacy systems don't necessarily offer the opportunity to be innovative with different types of products. They can't handle some of the products. Parametric is a perfect example. It requires a whole different type of process to be able to really truly, um, um, offer those types of products. So there's an opportunity out there. But you're also going to have to look at, um, can you, how can you actually do it inside your organizations operationally and technically? And then finally AI, um, you know, everybody's hearing about AI. We're all hearing about it at the upcoming InsurTech, um, um, uh, event in New York City. Um, and it is, it is a, it has great potential for us as an industry. Um, and I do believe that it has an opportunity beyond Just doing some things internally for insurance companies to drive better uh, operational efficiencies that can improve pricing which ultimately can have an impact for protection gap. Because if the pricing is improved it makes you more competitive but it also makes the product more affordable. It's more about how we can actually bridge the gap between um, education and understanding and concern and guiding them in the right way to the right products. I don't think there's a time, you know, I think we thought we could do that with digital, but it's pretty complex. I think the opportunity is there with AI to really help accelerate uh, that bridge and really create that bridge that we haven't, haven't seen before. So with that, um, that's the end of the session. Um, we don't have any questions that have come. Um, what I would encourage you all is to please go up to the website, download the full report. It gives more details, um, beyond what we shared today. Um, and I would encourage you all to really um, think about how you're going to um, really kind of refocus the products that you have available today. Um, the products that you might want to look at, um, offering to the market and how do you kind of position them in terms of this protection gap from a financial risk perspective, from a lifestyle perspective and from a security perspective. I think if we talk openly about that risk and we talk openly about how those products can really help um, um, close that gap and meet their needs and expectations, I think there is an opportunity to strengthen the customer loyalty and trust that we have today, um, um, even greater for the future. So with that, um, thanks Glenn, um, for your uh, for the uh, insights and we look forward to seeing everybody next month.

Speaker B: Thanks Denise. Thanks everybody.

Speaker A: That's it for this week's episode of Future of Insurance Industry Leaders Podcast. Subscribe to our market leading podcast series available wherever you get your podcast from. Thank you for listening and be sure to tune in the next time.