Given the unprecedented nature of the technological and cultural forces sweeping across the marketplace, the next generation of insurance-buying will inevitably look different from the models used by baby boomers in the past.
Millennials are looking for insurers who can understand and support the nontraditional ways they are living, buying and working. And since these habits and preferences are still evolving quickly over time, the only way that insurance agents and companies can keep up and speak in a language that millennials understand is to first reach out, listen and begin the conversation.
Fuel Cycle, a customer insights and market research platform that helps brands like AIG gather real-time customer insights, suggests a few steps that insurance agents and companies can take to motivate millennials:
Engaging millennials is a tricky balancing act. This younger generation has higher expectations and less patience; they are thrifty by default, but willing to spend more on products that are delivered through a seamless experience. (Photo: Shutterstock)
1. Engage millennials sooner rather than later.
Insurance agents shouldn’t underestimate the importance of engaging millennials as early as possible, even if those efforts won’t provide significant returns in the near-term.
Renter’s insurance may be a relatively small revenue opportunity, for example, but it can also be a highly cost-effective way to recruit potential customers for higher-margin products down the line.
Although teenagers and twenty-somethings may be notoriously averse to parental advice, when it finally comes time to purchase a coverage plan, millennials are disproportionately buying from the same insurer as their parents, according to Fuel Cycle. This creates an opportunity for companies who have pre-existing relationships with family members, as long as they act sooner rather than later, tapping into those valuable connections before a competitor can enter the picture.
Millennials must inevitably purchase insurance at some point, but the customer journey and makeup of the products they buy will almost certainly look different in the future. (Photo: Shutterstock)
2. Prioritize direct channels.
In order to win over millennials, insurance companies will inevitably have to invest in several nontraditional areas like customer intelligence, as the process of buying insurance shifts onto new screens, channels and platforms over the next decade.
This doesn’t necessarily mean that agents will be irrelevant; in fact, insurers should think about strategic ways to strengthen and repurpose their human capital, turning agents or field reps into higher-level consultants who can provide new kinds of value to the end-customer.
Burdened with greater student debt and stagnant wage growth, millennials are more likely to be debt-averse than their parents, which further jeopardizes future potential clients of traditional insurers. (Photo: Shutterstock)
3. Invest in customer service.
As consumers enjoy greater speed and transparency when shopping for insurance, the industry will inevitably face greater competition and a downward pressure on prices. The best way that companies can both insulate and differentiate themselves is to provide value in other ways beyond price.
When it comes to buying insurance, industry surveys show that nearly three-quarters of millennials believe that both 24/7 service — such as live chat — and mobile apps are essential services that should be offered by any provider.
The vast majority of U.S. consumers — roughly nine in 10 — would voluntarily pay more to ensure a superior experience, including millennials, who aren’t always as stereotypically “thrifty” as popular press coverage often implies, according to Fuel Cycle.
Simplicity & convenience
The recent success of direct-to-consumer startups have revealed that millennials are willing to pay a premium for services that provide significant value through simplicity and convenience. Applying greater focus and resources to your consumer experience initiatives can lead to greater brand loyalty, and more profitable relationships over the longterm.
Recognize your customers as individuals with ever-evolving needs and preferences and find new ways to provide value in their lives accordingly.
Millennials are looking for insurance agents who can understand and support the nontraditional ways they are living, buying and working. (Photo: Shutterstock)
4. Create new products for untraditional lifestyles.
Millennials are making different life choices than boomers, with nearly two-thirds renting many of the big-ticket items — such as houses or cars — that boomers have typically purchased and covered via owner’s insurance. This disconnect has created a gap in the market, where millennials are still awaiting products that actually cater to the ways they live and work.
For example, in the two short years since launching in 2015, insurance startup Jetty has quickly carved out a sizable niche as the first provider of renter’s insurance tailored towards city-dwelling millennials. Jetty’s plan addresses a host of unique risks and challenges unique to urban life, that are often overlooked by traditional plans.
With each passing year, the old model of one-size-fits-all coverage plans only seems to grow more untenable, and the future of insurance-buying — like so many consumer verticals — appears like it will splinter across a broader range of plans and features customized for different audiences and communities.