In the first part of this series, we talked about the sheer size of the millennial generation and some of the challenges millennials present to businesses in general and insurers in particular.
Millennials are pioneers of the so-called “sharing economy” and have been quick to adapt ride-sharing and apartment-sharing services. They have been blocked to some extent from the homeowners’ market by a combination of high home prices and low incomes. Nevertheless, there are still strategic opportunities for insurers to identify and address within the millennial market.
- New approaches to car insurance. Although millennials may express a preference for living in urban environments and not owning cars, most will still end up owning and driving cars. Insurers can experiment with ways to lower the cost of car insurance, including usage-based pricing (charging by miles driven) as well as more established approaches — such as telematics –to reward good driving behavior. For example, the insurance startup Metromile bills a base fee, plus a per-mile rate.
- Renter’s insurance. Only a third of renters have renter’s insurance, but more and more landlords are requiring such coverage. In addition, this type of insurance appeals to millennials’ concerns about financial security.
- “Plain vanilla” life insurance. Insurers are looking at quote comparison sites and other ways to introduce millennials – who tend to be under-insured in this area — to term life insurance. For insurers, this represents an opportunity to establish a relationship which may grow over time.
- Wealth management. Several large life insurance firms have purchased or entered into partnerships with “robo-advisors,” automated wealth management services designed and priced for people with relatively small nest eggs. Robo-advice may be particularly well-suited for insurers seeking to expand their presence in the wealth management business.
- Concierge, security and other services. As we have discussed in our analysis of opportunities presented to insurers by the connected home, millennials are tech-friendly and also place a high value on services that help them make better use of their time. Services linked to renter’s or homeowners’ insurance through security providers, cable networks and electric utilities can schedule appointments, warn about possible security breaches or even purchase tickets to entertainment events.
Millennials represent more than a large potential market for insurers: They are an inescapable reality. Time spent thinking about how to communicate and engage with millennials is time well spent, but so is time spent developing the products and services this huge market will need as it comes to maturity.