Updated: Feb 18, 2020
By coming of age during a time of technological change, globalization and economic disruption, Millennials have a much different set of behaviors and experiences than their parents. What Might the Future of Insurance Look Like for Them?
Millennials are one of the largest and most unique generations in history, and they’re about to enter their prime spending years. They are an entirely new breed of consumer with access to more technology than ever. This gives them priorities and expectations that are wildly different from those who came before. Just about every business is struggling with the question of how to capture millennials into their marketplace, and the insurance industry is no different.
The current insurance products can hardly keep up with changing technologies and innovations, making it difficult to meet millennials’ growing demand for simpler and faster insurance. Here we’ll present some new products, companies, and ideas that aim to adjust the old insurance products’ approach to millennials. These are some new innovative insurance trends that are changing the way young people buy insurance:
Shifting from Brokers to Self-Management
"The rules, religion to religion that man set forth, made me shy away from religion and have my own one on one with God and cut out the middleman." Ja Rule
In the good old days, a broker would manage a customer’s insurance portfolio and make adjustments that reflect cost-saving opportunities and changing risk profiles. Nowadays, however, the growth of policy aggregators and comparison websites has made insurance customers more financially savvy. It’s not necessarily the idea of brokers that doesn’t fit with millennials, but the style. Factors like the need to pay down student loan debt and the desire for greater access are pushing millennials toward self-management.
Because 92% of millennials own a smartphone, it’s that much easier to take charge and cut brokers out of the picture. Newcomers in the insurance industry, such as Lemonade Insurance, Next Insurance and Hippo Insurance, aim to bring a customer’s insurance policies back into one place. But instead of using a broker, portfolios can be managed from a smartphone.
Seller’s Market vs. Buyer’s Market
The way that Generation X and Generation Y purchase insurance is wildly different. For baby boomers, the insurance-buying process involves a sales agent calling them and offering them something to buy. Generation Y are not like that—nobody sells them anything. They want to search, find, compare, and select what they buy.
Thanks to millennials’ affinity for technology, the way they want to consume services is reshaping. With product information, reviews and price comparisons at their fingertips, supply is starting to exceed demand. Millennials have greater choice, and they’re turning to brands that pair maximum convenience with the lowest cost.
Quick and Seamless Onboarding
"Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves." Steve Jobs
You need more than just a strong brand to market to a millennial. Insurers who wish to remain competitive in the millennial market know they have to provide a policy in real time, as well as providing ratings based on the prospective customer’s cover. Younger generations act on the expectation that they’ll be able to interact digitally with their service providers, and those providers who can’t keep up with this won’t be competitive for long.
Apps are streamlining the insurance-buying process for millennials. People who live their lives through their smartphones are more likely to purchase cover through an app than anywhere else. An insurance company needs to be accessible from a mobile phone, especially since 66% of e-commerce time is spent on a smartphone. Insurance buying for Generation Y should be as easy as signing up for an online service like Amazon Prime or Ebay. The more complex the process, the less likely you are to sell to them.
Rent, Don't Buy!
Millennials typically rent for much longer than Baby Boomers, earning them the nickname “Generation Rent”. In fact, 1 in 8 millennial renters expects to rent forever. This is because millennials prefer access over possession. They desire dynamic flexibility as opposed to constant certainty, and insurance products can give them access to that.
In order to rent a property, the landlord usually requires a tenancy deposit be paid before moving in to cover damage to the property or anything the landlords own in it. This deposit is usually equivalent to one month’s rent, but there’s no limit to how much a landlord can charge if the property is private. However, a number of deposit alternatives exist, including Flatfair, Hippo Technologies, Zero Deposit and Reposit. By tapping into this large section of the millennial market, insurance companies are meeting millennials where they’re at and taking advantage of this trend.
Gig Economy Insurance
"You know, the real problem, I think, is the guy in the front seat, we got to get rid of him" Travis Kalanich, Co-Founder of Uber
Younger people are not only one of the biggest fuelers of the gig economy, but also one of the biggest workers. Generation Y chooses more gigs over steady corporate jobs because of the flexibility these jobs provide. Along that same line, the flexibility of freelancer insurance is also a huge appeal to millennials. According to a 2014 survey by the UK government, 92% of Generation Y identify flexibility as a top priority when selecting a workplace.
A number of insurance carriers provide a smartphone-optimised website for freelance workers to purchase insurance. They can choose from coverage for areas such as professional indemnity, public liability, cyber liability and business equipment. Gig economy insurance will also include a freelancers pension. Rather than charging a monthly premium, some offer a pay-as-you-go based premium, giving users the option of turning off their cover when they aren’t working.
Wellness vs. Health Insurance
For millennials, wellness is a way of life. Compared to Baby Boomers, millennials exercise more, eat healthier and smoke less. They track training data on apps and find the healthiest foods online. Insurance is one more space where they’re willing to spend money on compelling brands. By portraying wellness as a way of life rather than health services or health insurance policy, insurance companies will be able to capture this portion of the millennial market within the next few years.
Millennials are by and large dissatisfied with their health insurance, believing that most plans don’t meet their needs. Due to their need for access and flexibility, millennials are not protected with the current plans. Insurance products can meet these needs with individualized plans that give millennials greater access and transparency.
Entirely New Breed
Because millennials are an entirely new breed with a different approach on life, they’ll have an enormous impact on the economy when they enter their prime working and spending years. By coming of age during a time of technological change, globalization and economic disruption, they have a much different set of behaviors and experiences than their parents. By taking advantage of these millennial trends, insurance companies will be able to capture the millennial market and remain competitive in this new economy.