There has been significant research done by the Insurance industry on how the difference between Millennials and those of us who were brought up by the Silent Generation impacts our industry. Most research has focussed on how to market to the generation that ‘want it all and want it now’. They are not used to waiting and they are not used to being denied. They are perceived as the new buyers of insurance, the young graduates and school leavers who will be earning money and buying assets. Distribution channels and products have been developed, often at great cost, to accommodate them.
Now the question is: Are they buying and expanding their portfolios as they earn more?
I am not so sure they are. Why are Millennials not rushing out to buy our products? Why do I hear many Brokers voicing concern about an aging client base?
Us Baby- Boomers love being with our children and keeping them close. We were brought up by parents who endured one if not two world wars. They had suffered through rationing and absentee fathers and, while they loved us, we knew that, just as we had had to eat all the food on our plates because of the millions of less fortunate going hungry out there. (I really could never fathom that one out). It was also our duty once we had been privileged enough to be educated to leave home and find our own way in life so that our parents could down-scale and save to pay for their retirement so that they would not be dependent on their children. Sadly, few of them managed to save enough.
We all want to give our children more than we had. We also had our children rather young, built families that we are at pains to maintain. Our children must want for nothing that we can afford to give them and we rather like having them live at home, holidaying with us and being financially dependent on us to some degree. Couple this with an economy that makes it difficult to buy a first home, where jobs are scarce, and marriage and children are way into the future: the result- you have kids who don’t leave home or simply move back in once studies are completed. Life is comfortable at home and financial dependence on your parents, even if only for luxuries, is quite acceptable. Study for the sake of learning and exploration of various work fields is seen as good and encouraged. “a rolling stone gathers no moss” is yesterday’s dictum.
The result: the composite family
Have we as an industry been barking up the wrong tree in developing products for Millennials to buy with distribution channels to buy from when they don’t want to buy insurance at all? Will this change as they get older and gather more assets? Probably, but we want their business now, not then. How should we be accessing these clients? My suggestion is via their parents. So, instead of fussing over new products, let us develop our existing products to cater for up to three or four generations forming one household. It is not for nothing that Baby-boomers are called the Sandwich Generation.
We need to be showing flexibility in the cover we give and how we rate it. It is pointless to refuse to insure a 30-year-old on his or her parent’s policy or over-penalise them because they only have a car and laptop to insure because the finance house says they must. They probably do have other assets but because they have wanted for little growing up they don’t value them and if they go, they go.
The age of the composite policy is here. Policies must cover grandparents in old age homes, children in res and digs at universities and colleges, and stay at home children or returnees, all in one – with separate debit orders if that is what they want. Assets and ownership are often blurred and so splitting of assets is difficult, even if the family does not live together. My mother’s Tupperware was sacred, mine is not, and I don’t mind that one little bit. Let us learn to move away from the “stand alone motor” problem that is often solved by adding a small amount of contents that the buyer does not want, but that proves to be inadequate if a claim does happen at which point he discovers that he wanted it anyway and is unhappy because he is not paid out in full.
Let us learn to simplify our approach, accept that there will be four or five motor vehicles and laptops and cell phones galore with one home content and simply price accordingly. But let us also make sure that we do not price and underwrite on the stereotype that says that insureds who insure their car only are poor risk, but rather on the claim’s history and profile of the individual.
So, instead of rushing out and trying to find new distribution channels that will suite a new generation, let us give Millennials what they really want. What can be easier than the whole family on one policy that covers everyone’s needs all at once, even once they do not live in the same house or know precisely what is where at any given time.