Generally tech-savvy and data-forward, millennials are shaking up the insurance industry both as consumers and insurance professionals.
Defined as those born between 1981 and 1996 – ranging in ages from 40 to 25 – millennials are the largest living adult generation in the U.S. As of July 2019, the U.S. Census Bureau estimated the millennial population numbered 72.1 million. And, research shows the millennial generation will continue to grow. Immigration is projected to increase the U.S. millennial population size to 74.9 million by 2033. That’s a whole lot of millennials.
It’s no surprise, then, that millennials are making waves in the world of insurance. After all, millennials make up nearly a quarter of the adult population. They’re business owners, they’re parents, they drive cars, they see doctors, and some even work in insurance.
For the insurance industry, millennials’ consumption choices present a massive opportunity to rethink what insurance looks like and how it’s sold.
Millennials as consumers
It’s official; millennials are in the market for insurance, and they’re looking for both personal and commercial policies. Everything from the way they want to buy insurance to the policies they’re buying is different from long-standing industry practices.
New policies for a new consumer
Alright, millennials aren’t really what we’d call “new” consumers. Even the youngest millennials have been in the workforce for a couple of years. But they’re not looking for the same old policies that insurance providers have sold for decades. No, their lifestyle choices and preferences are very different from previous generations.
Millennials tend to have more education but fewer fixed assets. As a result, they’re looking for policies that answer their specific needs.
For example, while 80 percent of millennials own a car, only 45 percent own a house. So, while auto insurance is the most widely held type of insurance among millennials, homeowner insurance purchases are low. Plus, many millennials who do own homes don’t believe they need homeowners insurance.
How millennials choose to live impacts when they need insurance and the types of insurance they need. But studying purchasing preferences also highlights areas where millennials are under-insured and present opportunities to build out education on the importance of policies that millennials generally opt-out of.
Building an online presence
While millennials do consider policy price when making purchasing decisions, it isn’t the only thing they’re considering.
Often endearingly termed “digital natives,” millennials turn to social media and websites to inform their purchases. Research shows that 55 percent of millennials use search engines to learn about products, and they’re twice as likely to buy insurance online than the baby boomer generation.
By building out a robust online presence, insurance companies can own the conversation around which new or existing insurance policies are well aligned to meet millennial needs.
Millennials in the insurance industry
Insurance isn’t what one might call a flashy industry. With over half of U.S. life insurance agents above the age of 45 and nearly 70 percent of claims adjusters also over 45, the industry workforce is aging. As a result, there’s about to be a serious vacuum in the insurance talent pool.
That’s a problem. Millennials have the potential to innovate the insurance industry with fresh ideas about products and policies. So, what can insurance companies do to bring millennials into the fold?
Attracting millennials to insurance professions
When millennials look for new work, they look for meaning and purpose in the jobs that they take. It’s true that insurance isn’t traditionally a glamorous industry, but it’s also true that insurance profoundly impacts people’s lives.
92 percent of the US population had health insurance coverage for all or part of 2019. That isn’t even considering the other lines of business: car insurance, life insurance, homeowners insurance, etc.
Insurance impacts nearly every person in the U.S., and it helps people live life without the fear of how an accident or disaster might financially burden them. That freedom to live is an important concept to millennials, and highlighting this impact could go a long way in attracting them to the insurance industry.
Building a cohesive workforce
Attracting a cohort of millennial insurance professionals is exciting, but it’s still important to ensure existing workers remain engaged. After all, they’re chock-full of industry expertise and experience that new workers just won’t have. While millennials turn to online sources when reaching purchasing decisions, they still rely on insurance agents for knowledge and advice.
49 percent of millennials want to work with experienced insurance professionals, and only 9 percent indicate that they want to work with someone close to their age.
So, while the insurance industry needs to attract millennials to professional opportunities, they should not exclude the existing workforce.
The rise of insurtech
With a focus on tech and innovation, millennials in the insurance industry are re-thinking how insurance is bought and sold to meet the demands of today’s consumers, of which millennials are also a part.
Within that innovation, we find insurtech – insurance technology – which refers to the use of technologies such as data and artificial intelligence to help insurance meet the needs of today’s digital world. This is more than just creating a website or social media presence but truly leveraging technology to eliminate redundant, manual, or outdated processes.
In 2020 alone, global insurtech received $7.2 billion in funding. The insurance industry is changing, and the appetite for that change is huge.
The technologies emerging from this wave of innovation are a response to millennial consumer preferences as well as millennial contributions to the industry as professionals. Re-thinking business processes to drive efficiency, these changes mark an exciting time for the insurance industry.
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