Millennials vs. Insurance: How Millennials are Changing the Insurance Industry

The importance of insurance was emphasized to the older generations, but millennials are entering the workforce and insurance is being considered a luxury.  According to a recent study conducted by pewresearch.org, by 2030 millennials are expected to make up 75% of the workforce. As this generation continuous to evolve, they will continue to influence purchasing decisions as well as how companies conduct business. The insurance industry is worth over $1.2 trillion dollars, making it one of the most profitable industries in the world. Despite this financial success, the industry has faced significant challenges when targeting their services towards millennials. Some insurance companies are still using the same marketing tactics such as telemarketing and direct mail to target potential consumers. However, these tactics have not been very effective with the newer generation. Insurance companies need to jump on the millennial bandwagon and implement marketing tactics geared towards the digital natives.

Millennials have shown that they have the purchasing power to dictate new marketing tactics. We have seen the evolution of several companies that have changed their marketing strategies to reach a larger pool of millennial consumers. These companies are not selling products or services- they are selling lifestyles. The millennial generation values experience over tangible assets. They want to travel, see the world, and have access to products without the burden of ownership. Millennials have come of age during a time of innovation, globalization, and economic hardships.  These factors have given millennials a different set of behaviors and experiences than their parents. Millennials are accustomed to inter-connectivity and the immediacy of technological devices. Therefore, millennials do not want the same insurance offerings as their parents. Fewer millennials are purchasing life, auto, travel, and homeowner’s insurance. Insurance companies need to adjust their strategies to enter the millennial mindset. They need to provide personalize products, technology friendly services, and a stellar customer experience.

Insurance companies need to improve on the personalization of their core offerings, since millennials want products that support their lifestyles. For example, when receiving a quote regarding auto insurance, millennials do not want something targeted towards a family of five. They want to feel like an individual and the service offering to be directly targeted towards them. Millennials also expect the pricing to reflect the demands of their lifestyle. Factors such as frequency of driving and mileage could be emphasized more in the pricing than the number of drivers in a household. Insurance companies such as Metromile have built their company on a pay-per-mile pricing system, which allows customers flexibility on pricing depending on how much they drive. This can be a profitable business opportunity for other insurance companies to introduce new services and target a demographic that rewards personalization.

Insurances companies will need to allocate resources to study millennials’ habits and employ effective marketing strategies to sell multiple strands of insurance. According to the Gallup’s panel web study, “Insurance Companies Have a Big Problem With Millennials,” about 69% percent of millennials are either actively disengaged or indifferent with their insurance carriers. Insurance companies will need to increase product awareness to engage this tech-savvy generation. In order to build engagement, insurance companies need to have continuous conversations with millennials on social media platforms. Engagement is key to maintaining loyal customers and attracting new ones. Millennials value companies’ interactions through social media posts asking for feedback on their services. The most successful business are the ones that value customers’ feedback in order to provide a stellar customer experience. However, millennials can be brutally honest on these platforms so companies will have to be prepared to manage criticism as well.

Undoubtedly, millennials have different purchasing behaviors than non-millennials. Consequently, insurance companies have been slow to adapt marketing tactics tailored towards millennial consumers. As the largest generation of Americans enters the workforce, insurance companies have a gold mine in their hands; to succeed, they need to understand how to target their products to the digital natives. Millennials are looking for companies that offer innovation and inter-connectivity within their products. If insurance companies are able to create a story, adapt their online platforms, and keep engaging with the millennial consumers, these companies will continue to succeed in today’s globalized market.

 

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