Millennial Impact: Still a Puzzle in the Insurance Industry?

By Insurance CIO Outlook | Tuesday, August 27, 2019

The insurance sector is evolving and to stay relevant, and ahead of the competition, millennials are bringing more ethnic and radical diversity in the businesses and society.

FREMONT, CA: The emergence of a new customer cohort comes just at the appropriate time for insurers. The unrestricted flow of capital and technology has created a shift in the economy and landscape, depending on an insurer’s capacity to adapt. Insurers have been considering the squeeze as deal volume declines, and renewals shrink. Administrative barriers and the potential to modernize the consumer experience only add to the stress. In this fierce battle for market share, millennials present a unique source of growth. Millennial homes, businesses, and families need insurance.

According to a report, millennials already account for 16 percent of vehicle insurance spending, 12 percent of health insurance spending, and 6.9% of personal and life insurance. To understand millennials better, considering the economic climate in which they were raised is the best option. Millennials were amassed colossal student loan debts. When they graduated, gaining suitable secure employment was challenging. While millennials may appear to be a weak target for insurers today, their fortunes will change over the next ten years.

Millennials have a more reliable work ethic than they are given credit for and are more financially conscious than preceding generations. As children of the tech boom and the great recession, they appreciate entrepreneurship and the necessity to prepare for disaster. In the small business world, millennials may be the typical insurance-needy generation ever. Millennials are now the second-largest generation after Baby Boomers that recapitulates to shape the country’s politics given their democratic leanings when associated with older generations.

Today’s millennial entrepreneurs are more likely to manage business transactions while browsing headlines on a tablet. They can already buy personal insurance and get a quote within minutes using a smartphone. The influence of customer experience in personal lines impacts consumer expectations in commercial lines. Real-time, instantaneous gratification is also necessary for this generation. The evolving contentious landscape is also compelling commercial insurance carriers to provide more sound digital tools.

The millennial generational shift has brought into the commercial market more non-traditional players who are far more adept at catering to millennial sensibilities. Insurtech and other modern competitors are going to market with digital-first solutions specific to millennial consumer demands. Many aim to simplify the quote and application method, while others provide an immediate distribution channel between carrier and business owner.

Today’s insurance labor business is colored by the accelerated graying of the workforce. The industry’s growing retirement time and proliferating skills and knowledge gap are building a candidate-driven market. As many positions held by long-tenured specialists continue to go unfilled, insurance firms have increasingly turned to Millenials as a workforce game-changer. While retaining them will recapitulate to be a hurdle, need to set the focus towards drawing the succeeding generation is a must. This emerging generation is very millennial-like when it comes to technology. They have access to smartphones and other cutting-edge technology since teenage years are more attached to them than their older counterparts.

Millennials are the generation of immediate purchase, chat, and socialize. From research to communicating, millennials are radically different than their generational antecedents. Texting and smartphones are the following nature. For insurers, this means conventional channels may not be sufficient to engage millennials. They are online users and are more likely than any preceding generation to purchase through a connected device. A recent study found that 85 percent of millennials have a smartphone, and 53 percent favor to use it to shop online. Millennials are the first tech-native age growing up accustomed to online transactions and instantaneous response.

While the future has always been both complementing and dubious, it seems unique so for millennials. They have come of age in a resilient economy and political situation characterized by excessive bipartisan, ballooning health care costs, erosion of the social safety net, and a diminishing possibility of ever receiving the social security advantages that have been a promise of past generations. But indeed, uncertainty is the very currency in which insurance trades. The fact of a dubious future is why insurance subsists. It’s the unique essence of this uncertainty and how it plays out in the everyday lives, psyches, and practices of millennials that the insurance industry has yet to grasp.            

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