Sorry, Insurers: Millennials Just Aren't That Into You

Young man driving car
Getty Images

Kids today! Say what you like about them, there's one thing everyone must agree on about the current crop of "millennials": They'll grow up to become the adult consumers of tomorrow. And for some companies, that's proving to be a problem.

Take the insurance companies (please). According to a recent poll conducted by Gallup, millennial customers (loosely defined as kids born between 1980 and 1996) are the least "engaged" purchasers of any age group signing insurance contracts. By this, Gallup basically means that millennials don't identify themselves closely with the brand of insurance that they carry. And as a result, they're less likely to, for example, make their current car insurance provider their first choice when shopping for a home insurance policy, or when buying life insurance. They're less likely, also, to stick with their usual insurer when a contract comes up for renewal.

In short, when Gallup says millennials aren't engaged, it means they're fickle.

All Together Now: How Fickle Are They?

More fickle than you might think. According to Gallup data, only 31 percent of millennials appear "fully engaged" to a primary insurer. That's a full 10 percentage points fewer than the age group Gallup calls "traditionalists" -- the born-pre-WWII generation.

More worrisome still (for insurers, who like repeat customers), 27 percent of millennials appear to be actively disengaged. That's nearly twice the 15 percent level of "disengagement" ascribed to traditionalists. And it might mean, for example, that by the time an insurance contract expires, millennials are champing at the bit, and looking for an excuse to switch insurers. It's at this point that millennial fickleness morphs into outright disloyalty -- and that worries insurers quite a lot indeed.

(In case you're curious, between these two generations lie Generation X and the baby boomers, both of which groups are somewhat more actively engaged than millennials -- 34 percent for both Gen X and the boomers -- and somewhat less actively disengaged -- 23 percent for each group.)

So What? Why Should We Care?

Putting its poll numbers in context, Gallup notes that there are real dollars and cents behind these findings. In particular, actively engaged insurance customers are said to both "buy a wider variety of products" from their insurers and to be "less sensitive about pricing."

Translation: They generate more revenues, and more profitable revenues, for the companies that cater to them. As a result, insurance companies have a vested interest in trying to engage as many millennials, Gen X-ers, boomers and oldsters as they possibly can.

But especially the millennials -- because they'll be living longer, and producing revenues and profits longer, natch.

What Millennials Want

So how do insurers attract and retain millennials' business -- and what does that mean to you, whether you're a millennial or not?

Gallup points out that "building and maintaining customer engagement" among millennials is "challenging." One key, though, is that as the most wired generation, millennials are more than twice as likely as other generations to buy their insurance policies online than to use a human insurance agent. Gallup notes that by making improvements in such online-specific areas as better securing "account and personal information," simplifying the process of tweaking insurance coverage online, and improving a website's search function to make it easier to find "answers to their insurance questions," insurers can go a long way toward improving customer loyalty among millennials. (And one imagines, not just millennials.)

Another quirk: Millennials are also "significantly" more likely to favor the same insurers their family members buy from. Initially, this may be because they started out as insureds on their parents' policy. But Gallup data seem to suggest that even after venturing out on their own, millennials value input from family members on which insurers to patronize. This suggests that in attempting to engage their most lucrative demographic, insurance companies will likely place a premium (so to speak) on winning and keeping the business of family groups. If this effort translates into their offering more attractive rates to family members, this could be an opportunity many consumers can take advantage of.

A quick Web search for insurers actively advertising such plans, however, suggests that these improvements are yet to come. Insurers such as Nationwide, for example, may offer a "Family Plan" giving discounts to "anyone who lives under your roof." But it seems few insurers have taken the next logical step, and offered discounts specifically targeted at family members who live under other "roofs."

If they want to win more business from the coveted millennial demographic -- and from the rest of us, too -- maybe they should start doing that.

Motley Fool contributor Rich Smith buys insurance policies typical for someone from Generation X, but the way he buys them is more like someone from Generation "Traditionalist." He has no position in any stocks mentioned. Neither does The Motley Fool. Check out ourfree reporton one great stock to buy for 2015 and beyond.