Insurers face significant challenges these days, not the least of which is getting up to speed with digital technology. But there are other, less obvious challenges facing insurers; one double-edged challenge that, if not properly considered, will result in a talent shortage in hiring, and a dent in their future books of business. That challenge: Understanding the Millennial generation.
It’s important to know this special group (born between 1980 and the end of 1995 and raised in a digital, media-suffused world) both from an employer perspective and a prospect or customer perspective. Why? Because Millennials, aka digital natives, are set to change the way our industry operates.
Insurers will benefit from paying attention to this unique, powerful demographic group, set to change the way the industry operates in the decades to come.
From a risk management perspective, leading insurers across all lines of business are studying Millennials’ behavior—on the road, at work, home, and during recreation—for more than just behavioral science and actuarial purposes: they are studying the nuances of Millennials’ buying patterns, which, in and of themselves, are fueling the industry forward into an “innovation or bust” economy.
These “digital natives” play a larger role than ever in our economic livelihood, as well as in our business culture. In 2015 Millennials, which count 75.4M, became the largest generation in history, surpassing Baby Boomers at 74.9M, according to Pew Research. Now representing more than 33% of the U.S. population and, according to Forbes, up to $200B in direct spending power, Millennials know this, and are looking to support new business models and eco-systems willing to provide them what they want when they need it.
Smart insurers are ramping up their technology front and back ends to meet these needs and wants, such as personalized self-service and interaction that is quick, user-friendly, easy, always connected, and, of course, provides instant responses. Because they were raised in a digital environment, Millennials are 2.5 times more likely to be early adopters of technology than older generations. They trust technology, and as a result, demand exemplary quality customer experience from the products and services they use. Good news for emerging models of distribution.
Millennials are savers, avoid excessive debt, and don’t necessarily want to own “stuff” the way their parents did; a challenge for insurers that must now respond with non-traditional types of products to sell. Insurtech startups, such as Trov and Lemonade, have already recognized and acted on this, as are dozens of other start-ups that are looking to serve Millennials over the next 60 years.
Traditional insurers of all sizes are also studying the talent these individuals represent, largely because they are facing growing numbers of knowledge workers about to retire. In fact, say experts, Millennials will comprise 75% of the workforce by 2025. “In the overall economy, Millennials are already the largest generation, but many are not choosing to work in insurance,” notes Carly Burnham, co-founder and chief editor at InsNerds.com. With nearly 50% of the insurance industry’s workforce retiring within the next 15 years, insurers are in a scramble to recruit, educate and retain Millennials, so they are studying how this unique group behaves at work, how they feel about work, how they might adapt to transformational technology efforts already underway, or how they can contribute to the innovation required to get started.
Unfortunately for insurance industry employers, Millennials do not have the same employer loyalty that our parents did, which puts pressure on these companies to recognize what makes them tick and keep them engaged and motivated.
For example, in our organization, Millennials comprise the majority of all employees, so their work day is vastly different than that of an older technology and services company. In particular, they seek work/life balance, and demand workplace and workhour flexibility–a low-stress, high-innovation work environment that offers technology that is highly usable, intuitive, and responsive. Because our employees develop insurance software products and services that our customers rely upon to effectively and efficiently administer to their customers, it behooves us to create and maintain a culture of digital innovation that challenges and motivates this “new standard” group of employees.
So, will Millennials save the insurance industry from itself? One thing is for sure, they will be the catalyst for extraordinary change over the next 10 years. And whether you are you are thinking about your technology strategy from an underwriting, CRM, distribution, or employer perspective, remember that Millennials grew up with technology that facilitates instant access to digital information and instant feedback as the norm. As a result, their demands are a stimulus for innovation, and insurers that pay attention to this wake-up call will see greater success than those that choose to ignore it.
Jim Leftwich has more than 30 years of leadership experience in risk management and insurance. In 2010, Jim founded CHSI Technologies, which offers affordable SaaS enterprise management software for small insurance operations & government risk pools and is in use at more than 45 insurance operations in 25+ states. For more information visit www.chsitech.com.