Along with the usual challenges U.S. insurers have faced in recent years—intense competition, potentially flatter profit margins, investing in technology—companies now face an important question in the coming years: how to handle the millennial generation.
The “millennial question” was one area of consensus among six chief executive officers at a panel discussion at the Property/Casualty Joint Industry Forum, held here.
The CEOs—drawn from a wide range of insurers, including large and small carriers, writers of personal and commercial lines, insurers and reinsurers as well as companies headquartered both in the United States and abroad—discussed a diverse set of issues. But they largely agreed that learning how to attract millennials, both as employees and as customer, presents an important challenge in the coming years.
As employees, millennials—those born between 1980 and the turn of the century—work best in an atmosphere of openness and inclusion, said panelist Paula Downey, president and CEO of CSAA Insurance Group, an AAA insurer. “It’s really a war for talent and we have to attract and retain that talent,” she noted.
Steven D. Linkous, president and CEO, The Harford Mutual Insurance Companies, said millennials were attracted to the mutual insurance structure of companies like his, where they can engage the community to “make a difference.”
And it’s important to acknowledge that the millennial approach to work-life balance often differs from that of older generations, said Christopher J. Swift, chairman and CEO of The Hartford. Each generation is different as to what motivates them, he added. Millennials “have a tremendous thirst for information and knowledge and want to know how things work.”
Millennials are also more likely to embrace corporate efforts in social responsibility, Swift said. “They are interested in time off and in working in urban areas with mass transit and reasonable commutes,” he said, “and companies that hire them need to be aware of those things.”
The efforts are worthwhile, said Thomas A. Lawson, president and CEO, FM Global, because properly motivated millennials can be valuable employees. “It is important to make sure they know when a boss approves of their work, he said, because it brings out their best. “They’re overachievers with an inferiority complex,” he added.
The panel addressed other issues as well, in a discussion led by Bradley L. Kading, president and executive director, Association of Bermuda Insurers and Reinsurers. One challenge they all face is how to effectively earn an appropriate return on capital when industry capital levels are at record highs but macroeconomic trends seem to forecast meager growth.
For personal lines insurers like Downey’s CSAA, the solution can include investing in technology so they can compete in a data-driven digital world. The Hartford’s Swift also recognizes value in becoming “an easier company to do business with.” Part of that is linking insurance to mobile technology, with an eye on the millennial as customer, both in commercial and personal lines.
Commercial lines CEOs like Linkous and Lawson emphasized the need for underwriting with discipline in order to pick the right client and stressing loss control to help clients minimize risk.
Investing in technology is important, a fact that presents a particular challenge for Linkous’ Harford Mutual, which is smaller than many of its competitors, so the cost of technology can take a bigger budgetary bite. “We’re making that investment to make sure we have the same tools [as larger companies],” he said, “to deliver the product to our customer.”
Reinsurers will have to be “much smarter in how we choose our risks,” said Henry Klecan Jr., president and CEO of SCOR U.S. Corp., a reinsurer with worldwide headquarters in France. “Reinsurers will have to choose cedents with the knowledge and technical savvy to understand their own customers.”
Panelists agreed that U.S. growth prospects were generally better than in recent years, but not robust. One important change, several noted, is the re-emergence of America’s manufacturing sector, which has been growing more strongly in the past few years, particularly in the Midwest and Southeast.
The challenges could create a separation among industry players, said Jaime Tamayo, president and CEO of MAPFRE USA, a Spanish insurer with significant U.S. operations. “The nation is saturated in terms of insurance,” he said, so organic growth will have to take place outside the country. Within the United States, companies will have to compete hard to gain market share. The successful companies will be the ones that can target new customers—in particular the millennials, whose need for mobile technology and fast transactions create a new demand on the insurance industry.
“These new customers are demanding more and more from us,” added Tamayo. “They want us to do business the way they want to do business.”
Was this article valuable?
Here are more articles you may enjoy.