Corporate Insight recently attended a Millennials & Modern Insurance Event co-hosted by Cake & Arrow and Coverager. The two firms authored a research paper titled Millennials & Modern Insurance: Changing the Way Millennials Think about Insurance and presented their findings at an intimate venue complete with avocado toast.
Millennials Desire a Higher Level of Value from Insurance
Cake & Arrow explained that insurance companies still don’t fully understand the Millennial generation, even though many are pushing their mid-to-late 30s. Gen Y is quickly shifting to the main bulk of the workforce, increasing the importance of understanding their behaviors and attitudes. A common theme among the speakers touched upon increasing the value of insurance for the age group, with reference to Bain & Company’s 30 Elements of Value. The elements are organized into a value pyramid with four tiers: functional, emotional, life-changing and social impact. Cake & Arrow argued that insurance companies operate mostly at the functional level, meaning that they only help customers deal with basic problems; however, most insurance companies don’t make the effort to reach higher levels of value. By increasing the value of insurance to reach the emotional, life-changing and social impact levels, Millennials may be more likely to recognize not just insurance’s relevance but also its value.
Bain & Company’s 30 Elements of Value
Firms Should Address Millennial Values and Challenges
Christina Wallace from Bionic, a business development firm, argued that outside forces shape the Millennial mindset, such as the financial crisis, smartphone adoption, student debt and 9/11. Millennial challenges are different than those of their predecessors, therefore, and affect their desire for stability and transparency. Another common theme was the idea of digital fatigue; i.e., that a stellar digital experience is no longer enough. Companies need to deliver more valuable products and experiences that align with Millennial values. Cake & Arrow defined these values as community, authenticity, interdependency, social good, transparency and autonomy. Insurance companies can create more mutually beneficial relationships by understanding and addressing these values and challenges.
Firms Should Reposition Traditional Insurance Products to Seem Millennial-Friendly
Cake & Arrow presented two demo apps that positioned risk pooling—the fundamental function of insurance—as a way to help others, increasing the apps’ perceived value to Millennials. Created after several surveys and workshops with Millennials, the demo Wellness App covered services that traditional health insurance fails to cover, like mental health counseling and nutrition services. A second demo app covered emergency expenses, such as car and laptop repairs.
Cake & Arrow’s Demo Wellness App
Both demo apps showed how policyholders’ imagined dollars went to both their own financial protection and to the wider community of users. Users could pool funds with groups sharing similar interests—teachers, grad students or people who frequently drop their laptops—and see how their pooled funds were used. Cake & Arrow’s research suggested this method provides more value to the starry-eyed youths, offering a positive experience in the form of money when policyholders use their insurance and in the form of warm fuzzy communal feelings when someone else does too.
Will this added value save the insurance industry from the power of Big Millennial? It can’t hurt, but one wonders whether a dearth of fun apps is the only thing holding back certain insurance industries.
Toggle Repackages Renters Insurance as Stuff Insurance on the Go
Toggle, an offshoot of Farmers Insurance, takes a different approach to attracting the wily Millennial. Michelle Dornfeld, Toggle’s head of business development, said Toggle aims to offer insurance solutions to Millennial problems. She noted that 65% of Millennials rent, and the average Millennial moves every 13 months. Accordingly, the average Millennial renter has an opportunity to comparison shop every 13 months or opt not to purchase renters insurance.
Toggle’s solution is to divorce renters insurance from the rented property to cover policyholders’ possessions wherever they go. Policyholders can adjust their monthly premium amounts on an ongoing basis by customizing their coverages online via (What else?) toggles. The firm also offers pet insurance and “side hustle” insurance, offering coverage for both a wedding photographer’s camera and the income lost if that camera breaks right before a gig. Toggle is betting that Millennials find value in customization and flexibility.
As the financial services industry sometimes struggles to appeal to certain demographics, firms can benefit from restructuring their offerings to better attract new customers. For more CI research about Millennials, see the articles below:
- Understanding Millennial Investors
- The Millennial Opportunity: Marketing Financial Services to the Digital Generation
- Decoding Robo Customers: Key Findings on Millennial Digital Advice Users
- Millennials Value Financial Education, Guidance and Mobile Account Access from Their Financial Services Providers
- New Study Available: Millennials Revisited