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Millennials play the field when shopping for insurance

By Autumn Cafiero Giusti

Shopping Insurance OnlineMillennials may have been stereotyped as a generation of people who are glued to their mobile devices. But when it comes to buying insurance, millennials appear to have a lot less attachment – and a lot more complacency.

A recent Gallup poll found that of all the generations, millennials (identified as those born from 1980 to 1996) are the least likely to be fully engaged – and the most likely to be actively engaged – with their primary insurer.

That means that they’re less likely to, for example, go to their auto insurer as their first choice when seeking out a home insurance policy, or to stick with their usual insurer when it’s time to renew.

Because millennials are less engaged than traditional insurance buyers, this means they’re less profitable for the insurance companies.

According to the poll, 31% of millennial customers were classified as “fully engaged” with their primary insurance carrier, compared to 34% for Generation X, 34% for Baby Boomers and 41% for Traditionalists. The survey listed 27% of millennials as “actively disengaged,” compared to 23% of Generation X, 23% of Baby Boomers and 15% of Traditionalists.

So what might these findings mean for industry-wide rates and the driving population as a whole?

Michael Barry, vice president of media relations for the Insurance Information Institute, says that some of these buying habits aren’t necessarily limited to millennials. In fact, more consumers of all generations are going online and shopping around for the best rate.

“I think it’s fair to say that no matter what age you are, this is probably the best time ever to comparison shop,” Barry says. “You have so many ways now to shop for an auto insurance policy because you have a more competitive marketplace.”

Many of these transactions start with a web search and end with a face-to-face meeting with an agent, although Barry says that younger people might not feel as compelled to seek out a face-to-face meeting.

It’s unlikely that the lack of engagement will drive up policy rates industry-wide, though, Barry says, because driver actions are far more likely to drive up premium costs. Those actions include personal driving habits, the make and model of the driver’s vehicle, number of miles driven and driving record. “I don’t think the buying habits drive the rates. The rates are driven by the loss history,” he says.

Insurers instead are looking at what types of drivers are filing claims, and the frequency and severity of those claims.

“The shopping behavior is maybe going to change the auto insurer’s business model. But I don’t think it’s going to have an impact on the rates,” Barry says. That might mean more insurers offer new products, such as policies that allow consumers to moonlight as Uber drivers, for example.

Kit Yarrow, consumer psychologist, author of the book “Decoding the New Consumer Mind” and professor emerita at Golden Gate University, agrees with the notion that some behaviors and attitudes that influence insurance buying are true of all generations – not just millennials – when they’re in their 20s and 30s. “Typically, it isn’t until people are 35 to 40 years old when they lose their bulletproof armor,” she says. “People become more realistic and lose that optimism and sense that nothing is going to happen to them. Until that age, we as human beings tend to be more overly optimistic about the possibility that something could happen to us,” she says. 

For those reasons, it’s always been more difficult to engage younger people with any kind of insurance.

Millennials in particular tend to be an optimistic, self-empowered generation with a sense that they have what it takes to fix any problems that come their way, particularly because they have the power of the Internet at their fingertips.

“It’s not anything anyone wants to spend a lot of time on. So the way to engage with this generation is through the medium they’re most comfortable with, and that’s online,” Yarrow says. “The way to interact with them is to make it visual, intuitively understood and as fast as possible.”

Given their psychological profile, it makes sense that millennials are not interested in insurance and not loyal to one company, says Jean Twenge, author of “Generation Me” and psychology professor at San Diego State University.

First, many are not just confident but overconfident, and they hold an overly rosy view of the future, which may lead them to mistakenly think they don't need insurance, she says. Second, they tend to hold a distrust of institutions; trust in large companies and institutions are at all-time lows. “Millennials are individualists, not joiners,” she says.

Finally, there are economic issues. Many millennials are underemployed and have large amounts of student debt. “They might want to take the chance that they don't need insurance rather than pay for it out of their limited funds,” Twenge says.