When millennials were in their teens and early twenties, they left their mark on a number of industries, from entertainment to cosmetics, each of which responded by adjusting its marketing approach to an online generation that displayed a strong brand loyalty. Now, as the oldest millennials enter their late 30s, they’ve reached an age segment that’s long been heavily targeted by insurance companies. And insurers will need to adjust their approach for this new generation of consumers.
Historically, young adulthood has been the time during which people start families and begin to accumulate assets. With millennials representing the largest living generation, having now surpassed baby boomers in total population, new patterns of purchasing and social behavior are emerging that seem likely to challenge insurers that try to hold to tried-and-true marketing practices.
There have been early signs of adjustment in the insurance industry, such as top carriers launching mobile and Alexa apps to appeal to millennials’ attachment to smartphones and tablets. However, an even greater disruption may be needed in order for the industry to maintain its current policyholder numbers. Specifically, here are some moves insurers may need to make, including undoing once consistently utilized marketing tactics, as millennials become a larger proportion of their target customer base.
Tone Down Traditional Home And Family Portrayals
Everyone has seen the insurance ads that star a married couple and their child standing in front of a white two-story house while their golden retriever runs across the yard. This type of visual is commonly used when marketing both property and casualty insurance policies (message: “protect your assets”) as well as life insurance (“protect your loved ones”). But with the rise in the millennial demographic, this picture of American home life applies to an ever-decreasing number of families.
To start, 20- and 30-year olds are getting married at a lower rate than we’ve seen before. A study from Olin College found that only 25% of women born in the 1940s were unmarried at 23 years old. By contrast, 81% of women born in the 1990s remained single at that age. This trend is projected to continue. While just 9% of women born in the 1940s were single at age 33, 47% of women born in the 1990s are projected to be unmarried at that same age.
In addition to a changing family structure, millennials have come of age during a period of when homeownership is on the decline, a trend that’s attributable, at least in part, to the rise in student debt for this generation. The Federal Reserve Bank of New York looked at millennials between the ages of 28 and 30 and found that between 11% and 35% of the recent drop in homeownership was attributable to higher levels of student debt. As fewer millennials buy homes and more “boomerang” children spend years of their adulthood again living with their parents, insurers are challenged not only in how best to connect with this generation but in finding products they should best attempt to sell them.
For example, a decline in homeownership needn’t necessarily mean a decline in insurance for the contents of homes. Between 2004 and 2014, the National Association of Insurance Commissioners found the number of renters’ insurance policies had increased from 6.6 million to 13.2 million. And over the past two years several startups, including Lemonade, Jetty and Sure have gained quick traction by targeting renters with user-first digital solutions to their insurance needs.
Don’t Assume The Family Car Is Ubiquitous
An APTA study of transportation habits of millennials found that, as a group, they’re more likely than any other generation to utilize a combination of travel methods on a regular basis, alternating between driving, walking, biking and public transportation. This trend coincides with a significant decline in the number of drivers’ licenses issued to teens and young adults. Over the last three decades, there’s been a 47% drop in the proportion of 16-year-olds who have drivers’ licenses. The trend continues into adulthood, with 10% fewer 30- to 34-year-olds being licensed now than 30 years ago.
Though new cars have been fairly consistent in their affordability in recent decades, the cost to store, maintain and insure a car, particularly in large cities, has made vehicle ownership challenging for millennials. Since the cost of auto insurance alone is 105% greater, on average, for 20-year-olds compared with their 40-year-old counterparts, many young adults have been delaying purchasing cars or simply deciding not to do so.
In response, some insurers have begun to offer rideshare insurance, providing coverage for those who choose to offset the cost of car ownership by using their vehicle to drive passengers. In contrast, a number of alternatives have gained popularity among those who want to spend less time behind the wheel. From bike insurance to pay-as-you-go car coverage, disruptors within the industry have looked for ways to monetize the fewer hours millennials are spending on the road, as well as seeking to insure them as they utilize alternative modes of transportation.
Adjust To The Decline In Military Households
Though USAA (with which we have an affiliate relationship) is most commonly associated with providing insurance to military families, nearly every major insurer is in some way invested in serving Americans on active duty as well as veterans. However, service members now represent a smaller proportion of the U.S. population than at any point since before the Second World War. In addition, millennials have fewer direct connections to the military than any previous generation, with just a third having a direct family member that has served in the armed forces. This is in stark contrast to those over 50, more than three-quarters of whom have had an immediate family member who has served.
Many companies have exerted considerable effort in building brand trust and loyalty among members of the armed forces, through everything from hiring initiatives to programs that assist veterans. Still, the shrinking group of those to which these efforts are applicable indicates that the industry may instead need to better target other affiliate groups in the years to come.
