Millennials - the uninsured generation
As millennials enter and advance in the workplace, they are becoming more and more important as a growing market segment. So why, then, do so many insurers have little or no strategy when it comes to meeting their needs? Millennials are ‘shockingly uninsured’ with only 36% having any kind of life insurance. Although this can be expected to some extent, it goes beyond the fact that young people are usually less insured. Clearly, this rapidly growing group of potential customers needs some attention.
The term millennials, otherwise known as Generation Y, refers to those born roughly between 1980 and 2000. They’re renowned for their individualistic worldview, being tech savvy to a fault, and their need to feel a personal connection to brands and products. These claims may feel like a broken record at this point, but what does this mean for insurers? And can we go beyond “millennials like twitter, so we need a hashtag”? What is truly unique about the idiosyncrasies of millennials, and how will this affect their relationship to life insurance?
Technology is king
Millennials absorb technology into every part of their life. Smart phones, for example, function as a source of entertainment, information and a social gathering for most millennials. This early adoption means they’re generally more optimistic about new technology, and more likely to reject traditional sales methods.
There has also been a rapid growth in touch points used by Generation Y consumers to interact with the outside world, with ¾ of millennials indicating they have a social media page. They're constantly connecting with brands through these social networks, with 52% saying they ‘like’ brands on social media compared to 33% of baby boomers. Millennials are also likely to research their purchase decisions online before they make them, and cross check more sources (average 5 compared to 3 for boomers).
Brands can (and should) have personal relationships
Unsurprisingly, this means brand relationships are more important to Millennials than older generations. Most even admit to using their purchases as a way to express their personalities, and as an extension of their values and status. Millennials feel that their relationship with every brand should be on a personal level. They want to have their purchase decisions recognised and rewarded through loyalty discounts or promotions, and they want their individual needs to be catered for.
Insurers need to proactively respond to this generational difference and establish a customer-centric service. By taking the individual’s personal situation and requirements into account, broadening sales channels, and creating a brand that Generation Y can identify with, insurers can gain more traction.
Families aren’t what they used to be
Another difference among this consumer group is their attitude towards marriage. They still value it, ranking marriage and children as more important than career success, but their attitudes and behaviours have shifted.
The mean age for first marriage in the UK has shifted from 25.4 for men and 23.1 for women in 1981 to 32.2 for men and 30.2 for women in 2011. People are waiting longer to get married, and general attitudes to relationships have changed as well, with many millennials happily supporting cohabitation and casual romances. One factor that may contribute to these views are experiences common to the millennial generation. Only 60% of millennials grew up with two parents. Divorce, never-formed or reformed families were common, and may have given this generation a more cynical outlook on traditional relationships.
Mum and dad can always pick you back up
Another dramatic change in the household makeup of millennials is the large increase in individuals who ‘boomerang’ back to their parents’ houses. A survey undertaken in 2013 in the UK indicated that 32% of men and 19% of women between the ages of 20-34 live at their parents house. This has grown rapidly from 15% of women and 27% of men in the same segment in 1996.
This can create an issue for insurers, not only does this generation have the expected feeling of invincibility that comes with youth, they’ve also grown up with extremely supportive parents, who continue to provide financial support well into adulthood. They have fewer dependants, and less of a traditional family outlook. This means a lot of the forces that spark the desire to insure against risk, especially for health and life, are not as powerful. Insurers need to be more proactive in educating this generation on the need for insurance, and develop products that reflect these changes in lifestyle.
So what should we be doing?
Now more than ever it is important that insurers recognise generational differences, and acknowledge these in the offerings produced. An underlying change needs to come from a shift away from “one and done” consumer relationships using a product-focused sales model, to a customer-centric model which aligns the product and service offerings with the needs of the customer. Instead of presenting pre-packaged offerings, insurers need to take into account the individual’s personal specifics and tailor a product to meet these to ensure the value for the customer drives product development. Only then will the millennial generation start to willingly change their attitudes towards insurance.