Insuring the future: A millennial mindset
Johannesburg, 2 October 2023 – The millennial mindset of instant gratification can negatively impact the decision to purchase insurance for possessions or things. This is reinforced when a person goes for months or even years without experiencing a loss, resulting in the assumption that there are no perceived benefits of insurance.
“However, when the loss of a personal possession is experienced, that loss is tangible, and the millennial learns from the process,” says Peter Olyott, CEO of financial services provider, Indwe Risk Services (Indwe). “Then proposing insurance on the back of this newfound experience is somewhat easier.”
So, why the resistance to insurance? Social media is not much help, given that a large majority of posts usually relate to complaints around insurance claims, such as clients regularly paying premiums but when it comes to insurers paying out, they always have an excuse or limitation which was not clear at the time of the sale.
“Consumer education is vital so that millennials are correctly informed about what insurance is and what it’s not. There should also be a focus on showing how insurance costs are determined,” says Olyott.
The idea is that millennials learn how to correctly and efficiently structure their insurance so that they do not attempt to fund predictable type losses via an insurance policy but rather that they look to insure pure catastrophe losses instead. Obviously, the term catastrophe means different things to different people, depending on their means.
Establishing priorities
It is also essential to understand the way millennials view life, as this has a strong influence on the things they consider to be important. There may be views which are contradictory to some of their strongly held opinions, which is why it’s necessary to have conversations with millennial customers, so they are able to determine for themselves what is truly important.
Assuming that the discussions have been held, how do insurers get millennials and even younger generations to start transacting?
“If you can’t do it quickly and easily on an app or via a website, I think you’ll be at a disadvantage. As soon as they need to fill in proposal forms and have conversations on the telephone, there’s a strong likelihood that they’ll go somewhere else to buy their insurance,” says Olyott.
Flexibility is key
Thinking like a millennial, they may be looking for more flexibility in terms of when they elect to insure something and when they perceive the risk to be remote. The outcome is that they likely do not want a fixed monthly premium deduction but rather favour flexible premiums, depending on the time they wish to be insured for, or they only want the comprehensive cover when they perceive the risk to be higher. For the rest, they would be happy to have third-party fire and theft.
“So, we’ve managed to convince them to part with their hard-earned money and to spend it on something which may or may not happen to one of their most valued possessions or things. Now, what happens when it’s time to claim? Are they going to get the runaround, have to fill in forms and report to a police station when they believe no action is likely to be taken? The millennial viewpoint may well be that they expect the insurers to reimburse them as quickly as the insurers receive their premiums,” says Olyott.
Looking into South Africa’s future, millennials and younger generations may have to work in an environment where formal employment is replaced with contracting. In this evolving landscape, the industry will need to look at its current offerings to ensure that they suit the requirements of the next generation.
Is car ownership going to be important? Will the younger generation be able to afford their own accommodation? Will their ability to earn a living become their most important asset? Will life experiences trump material things? The list goes on.
“Not only will we need to bring about digitalisation, but we will need to bring about New Age products which serve the needs of these new generations,” says Olyott.
Indwe is an authorised Financial Services Provider FSP 3425.