Overcoming Concerns

According to a recent article by Policy Genius, “The cost of college has skyrocketed over the last decade, resulting in $1.4 trillion of outstanding student loan debt. The burden of educational debt weighs greatest on millennials --- those born between 1981 and 1996. Not surprisingly, college debt is influencing their behavior and spending habits. Research shows millennials are holding back on buying homes and making other big-ticket purchases because they are afraid of taking on more debt. Millennial families are also postponing other financial outlays, such as life insurance, because of debt concerns, according to a recent survey by SE2. Marriage and kids continue to be the life-changing events that trigger purchases of life insurance. As millennials buck the trend, insurers have to be versatile to adapt to their consumer tastes and lifestyles to capture this vastly untapped market segment. Start with technology Speed and convenience are increasingly critical to a good brand experience. Those raised as digital natives do not want to wait for several weeks for underwriting to size up an applicant’s risk. To be sure, a number of insurers have leveraged technology to accelerate the cycle time, but there is still far more we have to do. According to a recent report from Celent, cycle times for modest face amount carriers has dropped from 33 to 26 days, which is a solid improvement but still almost four weeks. See also: The Great Millennial Shift   Insurers rely on a mountain of public information --- from motor-vehicle records to credit information to property records --- to properly assess risk and price premiums. One late monthly payment on college debt can cause a credit score to drop, which could drive up premiums. What if price-sensitive millennials could offset the negative of a low credit score by sharing data from their Fitbit exercise app? New York’s top financial regulator is taking a step in this direction by allowing life insurers to use data from social media and other nontraditional sources when setting premium rates. Through leveraging data available through electronic medical records and health claims data, more and more carriers are able to provide a fluidless underwriting experience without an APS (Attending Physician's Statement). In the digital era, many of these digital natives are tracking everything from the food they eat to the number of steps they take every day. Our research shows that millennials might be more willing to buy insurance if their real-time health data could reduce premiums. Create an authentic experience Millennials are increasingly more discriminating about the firms they choose to do business with, showing a preference for companies that are authentic, ethical and committed to social good. This partiality stems in part from the 2008 financial crisis when a shortage of jobs affected the employment opportunities for older millennials. Younger millennials witnessed the pain of parents losing their jobs or their homes, or both. The scary economic news sowed a pessimism about the future and increased their desire for transparency. See also: Why Financial Wellness Is Elusive   Big companies have had to scramble to adjust to shifting attitudes. Mass marketing through TV advertising is proving less effective. Companies that target millennials with creative experiential campaigns are finding greater success. The engagement can be online, too, through gamification, loyalty programs and reporting on daily activities and life events. Some of the more innovative insurance carriers have seem immense success partnering with financial technology startup such as Life.io and Vitality to create customer engagement programs that has led to reduction in lapse rates and opened up new cross-sell and up-sell opportunities. Despite their financial concerns, we found that millennials value insurance and the peace of mind it provides. It falls upon the insurance industry to meet this generation where they are by creating tailored products, tools and processes that connect with how they live and consume today.