As the largest generation in North America, millennials are a critical demographic for insurance carriers. Not only because this is a group with significant purchasing power, but also because their expectations around customer service and customer experience are changing the way many carriers operate.
Millennial policyholders expect exemplary customer experiences and want digital ways to interact and pay bills. Many digital native insurance carriers are making it easier than ever to select and purchase a policy directly from a mobile device. But, for carriers that have been slower to innovate, gaining and retaining customers in this age group is becoming a challenge.
It's important for insurance carriers to realize, though, that technology can be an opportunity rather than a threat. Technology lets organizations personalize policyholder experiences, improve engagement levels and elevate the customer experience.
To help insurance organizations better understand how to leverage millennial policyholder preferences, Invoice Cloud recently conducted an online survey asking this age group questions about the types of policies they own, how they prefer to make payments and more. You can download the full report here, but here are three major takeaways from our research.
1) The needs of millennial policyholders are evolving
In 2019, millennials surpassed Baby Boomers as the largest living adult generation. Millennials spend trillions of dollars a year on goods and services – and insurance is no exception.
According to the survey results, the most common policy among millennials is personal auto insurance (78%), followed by health insurance (76%).
In total, 85% of survey respondents anticipate buying at least one new policy in the next five years. This means that the money spent on insurance by this already influential demographic will inevitably increase, and rapidly.
The millennial generation spans individuals in their mid-20s to late 30s (with the eldest in this group turning 40 in 2021). This represents a sizeable range when it comes to consumer needs and life experiences. On the one hand, some millennials are starting at their first jobs, are striking out in the renter’s market and are no longer covered by their family’s insurance plans. On the other side of the age bracket, older millennials are buying property, starting families and purchasing more policies as their insurance needs grow.
As the data shows, the gap between single millennials (whose insurance policies only cover themselves) and millennials who are starting families (whose insurance policies cover their partners and dependents) is gradually closing.
What this means for your organization: It’s clear that millennials are increasingly making up a large proportion of policyholders. They represent a group with a vast array of policy needs, and many are going through life transitions: moving from renter’s to homeowner’s insurance, or upgrading policies from covering an individual to covering a family. Carriers have to take millennial purchasing, payment and interaction preferences into consideration when deciding how to leverage technology and improve the overall customer experience.
See also: 4 Firms That Understand Millennials
2) Millennials will switch carriers for a better experience, and have a history of doing so
When it comes to insurer loyalty, the survey results show that millennials will not hesitate to switch carriers if their current insurer isn’t providing a satisfactory customer experience. Forty-one percent of the millennial policyholders surveyed have switched insurance carriers within the last six to 12 months, and 76% have switched in the past five years.
We asked respondents to pinpoint why they left their former insurance provider.
While 48% of respondents cited price as a primary driver, what’s more informative for insurers is that 22% switched for a better customer experience or expanded digital offerings and payment methods.
What this means for your organization: Competitive pricing will always exist in the insurance space, and no carrier can accommodate the changing needs of every insured – it’s much more attainable for your organization to improve the policyholder experience and expand digital payment options. Try auditing your policyholder experience and payment offerings, taking time to evaluate what it’s like to pay premiums with your organization. This will give your organization the opportunity to address these issues and avoid spikes in customer churn.
3) Digital experiences affect the purchase decision
When asked how they purchased their latest insurance policy, 41% of millennial respondents said they bought the policy on their mobile device, directly from the insurer.
Purchasing policies and paying premiums aren’t where mobile preferences stop, either: 64% of respondents would rather communicate with an insurance carrier through a digital or mobile channel.
Even payment method preferences are evolving as millennials take up more of the insurance space. While credit cards and ACH are still common methods for making premium payments, 25% of millennials who said online or mobile payment options were “very” or “somewhat important” would rather pay their premiums via PayPal/Venmo or Apple Pay/Google Pay. This is another huge shift that’s unique to this rising demographic.
What this means for your organization: Insurance organizations can no longer afford to ignore mobile payment channels and methods. Insurers must provide mobile channels for purchasing policies, communicating with insurers, paying premiums and more. Insurers must also ensure that these mobile channels are fully optimized by offering digital wallet options, pay-by-text functionality and a well-designed mobile interface for an outstanding user experience.
See also: Six Things Newsletter | April 6, 2021
Start leveraging this data today
Clearly, millennial policyholders are an important market for every insurance organization, particularly as the needs of this generation continue to grow and evolve.
To learn more about important millennial insurance preferences, including how they choose insurance carriers, payment preferences and the most important factor when it comes to a great customer experience, download your free copy of Invoice Cloud’s research report, Keeping up with Millennial Policyholders.