To understand what type of insurance products millennials are buying today and how are they buying, insurers will need to take a closer look at their lifestyle to understand what is shaping their buying behavior. For example, millennials usually delay their decision to get married compared to their previous generation. As a consequence, they’re delaying their decision to buy a life coverage.
According to a Forrester study, less than a quarter of millennials have term or whole life insurance compared with over half of baby boomers. So, insurers would find it difficult to sell life insurance to a millennial unless they reach out to them to communicate the value life insurance and advantage of purchasing life coverage at the early stage of life.
Millennials prefer experience over cost and want to engage with brands
In the webinar Are P/C insurers willing to be left behind in the era of Digital Natives, Martina Conlon, SVP, Novarica shared “Historically, insurers have been focused on price and coverage. What we are seeing today is the experience of feeling covered is really the differentiator and the product for millennials, digital natives and current customers. It is the buying experience that they go through (matters most to them).”
Millennials value convenience of buying insurance more than the price and coverage. They prefer personalized online shopping experience with the ability to purchase at a time and place of their convenience using their channel of choice. They want effortless and contextual transition from one channel to another in their buying journey.
Millennials would not like to engage with a local agent for buying insurance. As millennials are a very time-sensitive generation, to cater to this generation of customers, insurers’ traditional channels of agents and brokers won’t be sufficient. They look for the ability to do things by themselves. They want to explore and find what works best for them, prefer to learn about brands & product in detail prior to a decision. For that matter, every aspect of a product needs to be transparent.
Products insurance customers are buying today
Researches show that millennials are the most under insured generation. They know the value of insurance, but they don’t like the way insurance is sold traditionally. Insurtechs are building their businesses using this to their advantages. They are coming up with innovative business models, designing and distributing their products in ways that appeal to millennials.
Millennials care about quality of life and experience more than owning assets. This results in millennials inclination toward renter’s insurance. Goldman Sachs reports that 60% of millennials would prefer to rent things like homes and cars instead of owning them.
Insurance startup Lemonade is disrupting the insurance marketplace by selling low cost homeowners and renter’s insurance leveraging digital technology. The unique selling proposition of Lemonade is their business model, which enables customers to get insured and paid instantly using the Lemonade app. The best part of Lemonade is its self-serviced instant claims settlement feature. This is made possible with a simple chat base experience powered by artificial intelligence, so no brokers or paper works are involved.
Usage-based insurance is an emerging trend. For example, ‘pay as you drive’ or ‘pay how you drive’ usage based auto insurance is catching on with the new generation of customers. Both insurers and insureds get benefits from this business model. Cost of insurance is determined by the type of vehicles, time & distance travelled, behavior of driving and place of driving. Data sharing devices like telematics transmitting data from insureds’ car to insurers’ systems. As actual data is considered, the risk assessment is most accurate.
Here are a few emerging insurance providers with their unique product offerings and business model to understand what today’s customers are buying.
Insureon: Insureon is an online agency and insurtech leader that provides affordable, hassle-free business insurance for America's smallest businesses. Insureon offers a 15-minute quote for small businesses online.
Oscar: Oscar insurance provides health insurance services that connects customers with the healthcare providers to get on-demand free virtual visits through mobile and skype using their app and get prescription fast.
Haven Life: Haven Life provides life insurance coverage under 20 minutes through a simple online application process.
Keeping in mind the millennial and current customers’ evolving expectations, insurers will need to focus on developing unique product offerings and scale up their IT infrastructure to distribute product through multiple channels. The battle of future insurance will be fought among companies to provide better and better customer experiences.
View On-Demand Webinar
Click below to view the webinar Are P/C insurers willing to be left behind in the era of Digital Natives? on-demand, which features Novarica, NSM Insurance and ValueMomentum to understand the rationale of why P/C insurers must adopt digital technologies today and the key factors to consider when building a digital strategy.