Generations X and Y want simple, transparent pricing and quick delivery of life insurance products, according to economist Michael Naylor.

These consumers want to deal with insurers in their own time, rather than through traditional distribution channels, the lecturer at New Zealand’s Massey University says in a new book.

“Insurers have been slower than other product suppliers in recognising this change in consumer expectations and argue this has led to three interconnected, downward vicious cycles,” he says.

“The first is that the need for advisers leads to slower service, to decrease in transparency, to increased product complexity and the need for advisers.

“The second is increased distribution costs lead to decreased insurer profitability, which leads to lower sales, slower service and increased distribution costs.

“The third is increased distribution costs lead to customer reluctance, which leads to insurance ‘to be sold, not bought’, leading to the need for advisers.”

Dr Naylor argues life insurance products must be reinvented – made simpler and more relevant to the lives of young couple. He suggests this can be achieved by allowing customers to self-create cover from a block of products.

Administration costs should be reduced to near zero.

“The focus has to be on engaging more deeply with customers so purchases are made with greater understanding,” he said.

The book, A Perfect Storm in Insurance: How to Survive the Looming Waves of Disruptive Technology, can be downloaded here.