August 20, 2018 by Jason Contant
If the insurance industry wishes to sell more products to Millennials, the industry must adapt to what Millennials want, and not the other way around, according to a recent white paper from Cake & Arrow, a New York City-based agency that designs and builds digital products for the insurance industry.
For example, the industry might create “modified” travel insurance products that offer access to in-flight drinks and wi-fi, or change life insurance to offer components such as discounted gym memberships, health monitoring tools and lower premiums or other incentives for healthy behaviour.
“As an industry that will increasingly rely on Millennials to buy its products, it is on the industry to understand, empathize and find innovative way to connect with Millennials, not the other way around,” said the white paper, Insurance & Millennials: A Coming of Age, released earlier this month. “If what the research shows is true, Millennials are not lazy, and they definitely aren’t stupid. It’s the insurance industry that has become opaque, complicated and disconnected from the people it exists to serve.”
In Canada, the P&C industry is now predominantly made up of Millennials, which could potentially translate into a better opportunity to connect with this generation’s insurance needs. Millennials, people who were between 22 and 37 years old in 2017, represent the largest cohort in the industry at 39% of the insurance workforce – a larger share than in the general labour market in Canada, according to recent demographic research conducted by The Insurance Institute of Canada.
But the presence of Millennials in the industry is no guarantee the fundamental processes of insurance will change. Even as “industry after industry have fundamentally transformed to accommodate and adapt to Millennials and their changing mindsets, values, risks and behaviours, the insurance industry and its behemoth (and in many ways archaic) infrastructure has remained rigid,” the white paper states.
Legacy technology has stalled innovation; the industry has therefore become more alienated from Millennials, whom, in increasing numbers, are becoming the industry’s chief customers. Three hundred Millennials were surveyed for the report, which defines the demographic as those born between 1981 and 1996.
The way insurance products are sold and marketed often does not align with how Millennials shop and research; instead, products are sold based on unproven assumptions – for example, the idea that Millennials want to do everything online, or that they are lazy and won’t do their research. “Attitudes in insurance toward Millennials and toward change in general are slowly shifting, but still pervasive within the industry is the perception that it’s not the industry that needs to change, but Millennials themselves.”
The website insurancequotes.com conducted a study of more than 2,000 people aged 18-29 in 2015. It revealed that Millennials are “severely misinformed” about insurance, finding that while 60% are renters, most do not have renters’ insurance. Twenty-nine per cent of those polled believed that renters’ insurance cost more than US$1,000 a year, when the actual average premium is US$187 a year. Cake & Arrow responded that the “common industry response to such findings (and indeed the general tone of this particular study) has been to blame Millennials for their ignorance, relying on the old adages – that Millennials are naïve, selfish and irresponsible – rather than the industry’s own failures.”