Insurers are typically focused on key economic indicators to gain some insight into whether their particular lines of business will likely be riding a wave or swimming against the tide in the near term, yet the biggest factors impacting their prospects right now might be more cultural in nature.

This isn't to say that carriers should ignore changes in statistics such as gross domestic product, unemployment or new home construction to give them a hint as to whether their personal and commercial lines will be facing tailwinds or headwinds when trying to achieve organic growth, both in terms of new business written and pricing.

However, some of the most important trends likely to make insurer growth more challenging right now, while perhaps economic in terms of causation, might turn out to be social developments such as the rising age for those leaving home and getting married, and being free of student debt.

Back in my adolescence, whenever my Uncle Jimmy would hear someone lament about something being better back in the “good, old days,” he'd inevitably snap back, “What was so good about them?” Coming from a man who had lived through The Great Depression and fought in World War II, whatever complaints people had about modern times seemed to him trivial by comparison. Yet even my Uncle Jimmy might acknowledge the more problematic demographic environment facing insurers today compared to the “good, old days” of even a decade ago.

What's so tough about modern times for insurers? On the plus side, they have advanced analytics, predictive models and genius data-crunchers at their disposal. They also have web capabilities to increase capacity, efficiency, and productivity, as well as mobile technology to facilitate faster and more effective communication.

However, on a more fundamental level, they also have an incoming generation of consumers hindered by unprecedented circumstances in their struggle to become full-fledged, insurance-buying adults.

Let's start with the most basic social construct—marriage. Fewer than half of Americans were married as of 2012, falling from 64.2% in 1970 to a 40-year low of 48%, according to the National Center for Family and Marriage. In the meantime, the percentage of those who have never married has grown to nearly one in three, up from one in four in 1970. People generally are getting married later in life—if they get married at all. Many are having children later as a result, as well.

Even more basic is the growing number of young adults living at home with their parents after graduating college, often because they are unable to land a good-paying job (or any work at all). This comes on top of the alarming phenomenon of older individuals returning to the nest after a layoff, a default on their mortgage or some other financial catastrophe—sometimes with a spouse and children along for the ride.

Thanks in part to the Great Recession of 2008 and the long, slow recovery that's followed, it's just not economically feasible for many young people to leave home these days, or for many adults hit by hard times to live independently. Meanwhile, many of those who do manage to leave the nest once and for all are often hamstrung by massive debts to finance their education.

So, to recap: Back in the “good, old days,” people were more likely to marry, and they took the plunge at a much younger age than they do now. They also weren't nearly as likely to be paying off tens or even hundreds of thousands of dollars in student loans for years on end.

These societal trends could be a major drag on insurers seeking to sell more homeowners, auto and life insurance to those getting started in life, and later on to those raising a family. If more individuals are stuck in their parents' house, putting off marriage and having children, delaying the purchase of their own home or car, that's bound to put a pretty good dent into new-business development for carriers.

Add on the financial burden of student loans becoming more prevalent, and you can see how disposable income for new home or auto purchases, entrepreneurial business development, and associated insurance purchases might start to worry carriers.

An improving economy should provide some relief—to a still alarmingly high number of unemployed and underemployed individuals, as well as insurers. But economic growth is coming very slowly. We've only recently recovered the number of jobs lost in The Great Recession, leaving us six years behind in terms of creating new jobs for a growing work force. And many of the jobs that have been created in the past six years either offer fewer hours or lower pay than the positions they replaced.

In such an environment, retention becomes paramount as does sound underwriting. Carriers need to profit off the business they write more than ever, and they need to hold on for dear life to those customers who are worthwhile risks.

Better days may yet lie ahead. If this economic recovery ever manages to gain momentum, spurring accelerated job growth and prompting a flood of so-called “boomerangs” to leave their parental nests for good, there likely will be pent up demand for new housing and cars that could spur a substantial growth phase for personal and commercial insurers alike.

Special Reports /

What happened to the 'good old days?' How changing marriage, homeownership trends impact insurers

Related Stories

Recommended For You