Millennials are rapidly becoming an economic driving force, currently outnumbering the baby boomers. Considering they already account for more than 25% of the nation’s population, the time is now to develop an effective strategy to cultivate trust with these future purchasing giants. Ignore this growing opportunity, and the biggest generational group in the US will ignore you. 1
While many boomers are entering the retirement phase of their careers, millennials are on the threshold of their peak earning years. With a healthy appetite for entrepreneurship, a preference for car sharing, and a tendency to delay home ownership (see Figure 1), the specific needs of this generation are going to be remarkably different. Do you know how to reach them? And when they come looking for coverage, are you prepared to help them?
Figure 1: Source: "Millennials Coming of Age" Goldman Sachs.2
If You Want to Go Millennial, Go Mobile
Having a mobile strategy, whether it’s a mobile-friendly website or a mobile app, is essential if you want to reach younger consumers. Marketing expert Simon Sinek, in a video that went viral in late 2016, explains how a dopamine-induced chemical reaction has created a dependency on technology among millennials. This generation, with access to devices that instantaneously text, purchase and socialize throughout their malleable teenage years, are now wedded to their smartphones. How many times have you seen a table full of young adults out to dinner staring down at their phones? That behavior is likely to continue into their adult years, and is precisely why having a mobile strategy is so critical.3
A Generation Shaped by the Great Recession
As much as the tech boom influenced the way millennials engage with the world, the Great Recession shaped the way they purchase. When millennials graduated from college, finding good, secure employment was difficult. With their spending power delayed, they became frugal and savvy shoppers doing lots of research to make informed buying decisions. As Claire Suddath points out in Bloomberg, millennials “watched their parents work, work, work, buy the big house, and then lose their pension and have it taken away from them. They’re looking at that model and thinking, ‘I want to do this differently’.”4
With a high comfort level around technology, and the recession fresh in their minds, millennials will have done their homework when making major purchases, like insurance. The products and services offered will need to be accessible and transparent, and the pre- and post-purchase processes simple. Laying out clear coverage guidelines, and enabling claims to be filled from a mobile app are just two examples.
InsureTechs Are Making the Millennial Connection
Many InsureTech entrants are already getting inside the heads of millennials to understand what they need, like Lemonade and their CEO Dan Schreiber. In a recent interview with Digital Insurance, Schreiber touches on some of the strategies they employ.
The company was built on the two pillars of artificial intelligence (AI) and behavioral economics. Using a millennial-friendly, low-touch approach, AI bots can sell policies instantly, at any hour of the day. The bots also handle claims and expedite customer service, with options to talk to a real person if needed. Additionally, the company presents itself as transparent and socially conscious, laying out in simple terms how the service works (see Figure 2). This new approach to insurance is positioning Lemonade as a millennial platform of choice for homeowners and renters insurance.5
Figure 2: From Lemonade’s website.
The Age of the Millennipreneur
While Lemonade attacks the homeowner market, there is still a need for commercial coverage aimed at millennials. As a generation, they are launching businesses earlier than their predecessors, at an average age of 27 compared to 35 for baby boomers. And with an increased appetite for failure, they aren’t afraid to start again if they hit a snag, or find a new idea to pursue. In fact, the millennial entrepreneur will launch an average of 7.7 companies in their lifetime. This increased activity has them emerging as a new source of growth for property and casualty insurers looking to be the go-to option for small business insurance.6
As millennials continue to cement their status as the largest generation in the United States, they are moving ever closer to their peak earning years. They will find themselves founding more new businesses, accumulating wealth, and buying their own homes – and their need for insurance will only grow. Companies that have a strong mobile presence, transparent offerings, and an affinity with social causes will be best positioned to capture the trust of this generation. The fundamental need for insurance isn’t going to change, but the demographic profiles of your customer will. The clock is ticking.
1 Bureau, US Census. "Millennials Outnumber Baby Boomers and Are Far More Diverse." The United States Census Bureau. N.p., 25 June 2015.
2 "Millennials Coming of Age." Goldman Sachs.
3 Soat, Molly. "Social Media Triggers a Dopamine High." AMA. 28 Feb. 2017
4 Suddath, Claire. "The Millennial Way of Shopping: More Careful, Durable, and Frugal Than You Think." Bloomberg.com. 25 Apr. 2014.
5 Santana, Danni. “Lemonade CEO details carrier’s plans to ‘Uberize’ insurance”. Dig-in.com. 17 Feb, 2017.
6 Petrilla, Molly. “’Millenipreneuers’ Are Starting More Businesses, Targeting Higher Profits”. Fortune.com. 20 Feb, 2016.
Chris Mason is, by his own admission, a millennial as well as a Marketing Coordinator for Instec. He has 5+ years of marketing experience, and a unique view of the insurance marketplace as a recent graduate of Marquette University in 2012. He volunteers with the IASA, working as a Lead Producer for webinars put on by their eLearning Committee.