Millennials are driving a greater need for a more flexible auto insurance market, while Baby Boomers are proving new opportunities for independent agents, according to a study from a general agency and specialist program underwriting manager headquartered in San Diego, Calif.
A report from Personable General Insurance Agency Inc., titled “Non-Standard Auto: Independent Agency Trends Report,” shows the auto insurance industry is seeing a major shift in customer base demographics, most notably in the average age of the largest customer groups and their driving characteristics.
The report states there are now a high number of drivers who are Millennials, or those born after 1980, and older Baby Boomers who were born before 1964.
The report states: “These will be two important groups of customers to monitor over the next decade for independent agents.”
Millennials will require insurers to be particularly flexible, or possible reduce marketing efforts to that generation, since they often live in cities where they work instead of surrounding suburbs like the generations before them.
“They also tend to use more alternatives to driving, such as public transportation and ridesharing services like Uber, Lyft, Sidecar, etc. These factors, in addition to other existing conditions, have effectively lowered the amount of miles driven by this age group,” the report states.
Vehicle miles driven shrunk by a quarter from 2001 to 2009, according to the report, which also shows adults between the ages of 18 and 34 purchased 30 percent fewer cars than they did in 2007.
While some may see this generation as representing waning opportunity, Ryan O’Connor, senior vice president of sales and marketing for Personable Insurance, believes this demographic calls for more innovative insurance products and more flexibility.
“Millennials are an interesting arena right now,” O’Connor said. “We have a lot of young folks who live in downtown areas, like San Diego for example, and barely drive. But they use Uber, Lyft, Sidecar. We need to ask ourselves: ‘Is there a policy that we need to create for them the flexibility of when say they’re using these services, or driving their friend’s car?’”
However, the report shows the big opportunity for independent agents lies with Baby Boomer customers.
“With the oldest Boomers reaching 68 years of age, there are more experienced drivers on the road than ever before, and that number will continue to grow for at least the next two decades,” the report states.
The report cites statistics from AAA that suggests that nearly 25 percent of drivers on the road by 2025 will be age 65 or older. Those drivers appear to be modifying their driving behavior based on exiting medical conditions and driving ability to be safer on the roads, the report states.
There were 4,079 drivers age 70 and older involved in fatal crashes in 2012, a 31 percent drop from 1997, according to the report.
Despite the opportunities O’Connor pointed to for Millennials, the report advises a targeting shift toward marketing more heavily to Baby Boomers.
“Considering this information, Baby Boomers may be an important customer group that your agency should focus its marketing efforts on, rather than Millennials, who appear to be shrinking in value to the independent agent,” the report states.
Baby Boomers are loyal to their auto insurance providers, are less price-sensitive and are more concerned about being properly insured with a reputable company – they are therefore are more likely to purchase a more expensive policy and continue to renew with in the future, the report notes.
More traditional marketing techniques and a “personal touch” are advisable when marketing to this generation, according to the report.
“You may want to have your agents check in regularly with these customers to see if they have additional insurance needs, to remind them when their policy is coming up for renewal, or even hand deliver their policy documents to them when appropriate,” the report states.
The report delves into Walmart and Overstock.com as examples of new big entries into the insurance marketplace and how that’s impacting independent agents, and what they can do about it.
Walmart has partnered with AutoInsurance.com and the coverages for Overstock.com come from major carriers secured by Insuritas. Both have websites that have been designed for direct integration with carriers, enabling customers to compare numerous options quickly and easily.
O’Connor said that while it’s good for agents to use the latest technology and techniques to battle for market share with the big providers who are increasingly doing through direct channels, the best thing they can do is to reach out to customers in person.
“They can provide that ‘I’m here’ thing,” O’Connor said. “That one-to-one is going to help them stay relevant,” he said. “People still want to talk to someone, to go in and talk to their producer or agent when they have questions. There’s no discount or ease of use that can beat independent agents’ knowledge and personal touch.”
Kristen Nevins, corporate communications specialist for Personable Insurance, advised sharing personal experiences with customers to relate.
“You’re not going to get that when you get a policy quote online,” she said.
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