Most research indicates that people who came of age in the 2000s are primarily renters and will not own property until well into their late 30s. Demographic and economic trends support this assertion. Insurers battling with finding creative ways to sell policies to Millennials — those aged 23 to 35 and sometimes called Generation Y — may need to think differently.
Recently I wrote an article about this issue, “House Poor, Contents Rich Millennials,” which concluded that, for the time being, insurers and underwriters may need to re-think or reconfigure renters policies that better fit this new generation of consumers.
Even those graduates who land well-paying jobs find it difficult to buy their first homes. Rather than being able to save for a down payment on a house, Millennials are still paying down substantial college debt, which on a national level has reached one trillion dollars. Indeed, many of them compound their financial problems by carrying heavy credit card debt on top of that.
While most Millennials may be unable to buy a house or apartment for years, they have accumulated a large amount of personal wealth in household contents. Items such as large flat-screen HDTVs, gaming consoles, multiple computers, carbon fiber sports equipment, designer apparel, jewelry and luxury items — while not equating to the value of a new home — are typical of their personal property.
Our internal data set, based on processing $2 billion in property claims data annually, shows that Millennials own approximately $65,000 worth of consumer items within 10 years of graduating.
A typical renter’s insurance policy doesn’t meet the needs of this demographic. This evolving market segment, while challenging, also gives carriers an opportunity to devise innovative products that support these new ownership trends, while building customer loyalty.
It is vital that companies design products that reflect the above changes and build customer retention until renters are ready to become homeowners.
Carriers that grasp this will be well positioned to capture a slice of this booming market.