Soon to be the largest generation in the United States according to Pew Research Center, millennials continue to move into the workplace and make up a considerable portion of the consumer base and economy, and Gen Z is following quickly behind. In addition to having different banking and investment behavior than Generation X and baby boomers, millennials are changing the insurance industry and the way insurance products are marketed. According to a recent Gallup poll, millennials are the least engaged with insurance compared with preceding generations and represent a critical challenge to insurance marketers.
What drives this lack of engagement and shift in priorities?
Families and family structure
The same Gallup poll showed that not only are millennials more likely to have coverage under a family member, but they also tend to remain loyal to the providers that their family members chose. This is important to remember: building strong relationships with baby boomers and Generation X can have lasting effects on this often elusive generation for insurance companies.
Another factor to keep in mind is that millennials typically marry later, and show an overall decline in marriage rates compared to previous generations.
How do insurance companies stay relevant in the face of this new reality? The most fundamental marketing change needs to happen at the messaging level. Instead of centering marketing and campaigns around traditional family structures and so-called “norms”, insurance providers must focus on important life moments and individual needs that we all share.
Homeowners insurance versus renters insurance
In addition to changing family structures and relationship behaviors, the choices millennials make about how and where they live differ from prior generations. Millennials are renting longer and are generally slower to purchase homes. Don’t forget the stereotypical college graduate living in the parents’ basement either. With mounting student loan debt, less job security, and later marriages, millennials aren’t as eager to enter the real estate market as young as their Gen X and Baby Boomer predecessors.
The opportunity here, however, is that millennials still want to protect their belongings. Between 2004 and 2014, the number of renter’s insurance policies more than doubled to over 13 million, according to the National Association of Insurance Commissioners.
And there are signs that millennial home purchases are picking up and will soon be in line with other generations’. While this generation has been slower to move into home ownership, they will soon be a major force in the market.
Despite what you might have heard, millennials are quite interested in buying cars, and Gen Z’s behaviors don’t seem to be too different. As these generations move into the workplace and start families, they buy cars to accommodate their changing lifestyles (a large number being SUVs) at an increasing rate. Auto sales have increased annually for the last 7 years and don’t seem to be stopping. In fact, 25% of Gen Z already have auto insurance.
Auto insurance providers will do well when they embrace that this generation is device agnostic and actively eads customer reviews to make purchase decisions. These generations also highly value customized options and real-time or near-real-time quotes.
According to the Life Happens survey, only 52% of millennials have life insurance, and a 2015 study by Limra reported that less than 20 percent of adults aged 18 to 34 said they were likely to buy life insurance.
Why? According to the Limra study, 80% of millennials say they have bigger financial priorities than insurance, including living expenses, student loan debt, and their focus on experience over investing in permanent residences.Because millennials are getting married, buying homes and having children later than previous generations, they are also postponing purchasing several types of insurance products, including life insurance.”
What this means for marketers
As the most diverse generation in history, millennials present the same challenge for insurance marketers as they do for other financial services. Changes in behavior, social dynamics, and concerns driven by debt and recent economic downturns give this generation a unique perspective on financial and risk-based decisions.
Many marketers have embraced a shift away from generational marketing towards a problem-solving approach, after Google coined the term “micro moments” several years ago. This means that members of different generations share the same wants and needs when they are going through similar transitions or life changes.
Education about millennials’ debt and what it might mean for family members is also important. Most student loan debt, for instance, will not go away in the event of an untimely death. It’s important that millennials know and understand that simply avoiding another expense is not the right choice in the long term. Content marketing that educates about these risks and implications can be important for a generation that values doing the right thing.
Finally, keep in mind that millennials are the generation most likely to purchase insurance online. According to the Gallup poll referenced earlier, they are more than twice as likely to do so than other generations. Being the first digital-native generation means they are comfortable making financial services purchases without the personal touch previous generations desired. It also means they expect that quotes, results, policies, and all things associated with insurance services must be served up quickly and online.