Millennials have different priorities and lifestyles compared to previous generations, which means their insurance needs do not fit the standard packaged products currently on the market, according to research and consulting firm GlobalData.
The company’s latest report states that there are 14.7 million millennials, or people aged 18 to 34, in the UK, which amounts to 28.6% of the adult population according to the Office for National Statistics.
Danielle Cripps, Financial Analyst at GlobalData, explains: “These individuals have different insurance needs and preferences compared to the mass market. Ownership of insurable assets among millennials is low due to the economic landscape they have grown up in, making it hard to save. They are interested in car sharing and telematics-based policies to save cash, and prioritize holidays and short-term experiences as opposed to longer-term goals. In other words, they are not traditional customers – meaning that in some product lines standard insurance packages do not fit their requirements.
“When it comes to car insurance, for example, younger drivers are higher risk and consequently pay higher premiums. Telematics use among under-25s is also very high, which is characteristic of car insurance for millennials and is seen as non-standard cover. For home insurance, millennials are more likely to rent than own their home, meaning they only require contents insurance or cover for their gadgets rather than a combined or buildings policy. Meanwhile, millennials taking a gap year or those at university may need longer-term travel insurance and a greater need to cover gadgets and hazardous activities compared to mass market consumers.”
GlobalData believes that it is not only product features that need to be tailored to millennials, but also the ways in which younger customers access and engage with their policies. Millennials are digital natives, and at the very least providers targeting this generation should ensure policies are available to purchase through online channels. Providers should take advantage of millennials’ high ownership of smartphone devices, which are taken wherever they go.
Cripps continues: “Apps and social media platforms provide insurers with more opportunities to engage with millennials as customers and to enhance policy and brand engagement. A superior digital offering will stand insurers in good stead, but any product or service that targets millennials needs to acknowledge the unique circumstances of these consumers to truly succeed.”
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