Millennials Pose Greater Insurance Risk than Previous Generations at Same Age, But May Be Worth It in the Long Run
May 24 2017 - 6:00AM
Millennials in their early 20s tend to be even riskier drivers than
previous generations such as Gen X at the same point in their
lives. The new TransUnion (NYSE:TRU) insurance study also
found that as millennials reach their early 30s they perform as
well, if not better than Gen X drivers of the same age. The
findings were released today during TransUnion’s annual Insurance
Summit, attended by more than 150 U.S. insurance executives.
An infographic accompanying this announcement is available
at
http://www.globenewswire.com/NewsRoom/AttachmentNg/89d4249d-84ae-4395-a234-735a8a62a2a5
In another sign that millennials may not pose as big of a risk
as is often assumed of younger insurance policyholders, the study
found that fewer millennials have collections as a percentage of
credit active consumers compared to Gen X.
“Younger consumers are generally viewed as being the riskiest in
the insurance market – oftentimes for good reason. On a percentage
basis, they tend to get into more accidents and receive a higher
propensity of vehicle citations,” said Mark McElroy, executive vice
president of TransUnion’s insurance business unit. “Our study data
clearly proves this, but we also derived new findings that paint a
better picture of them. As millennials grow older, many consumers
in this generation become good risks for insurance carriers who can
benefit from long-lasting relationships with this influential
group.”
Today millennials represent approximately 80 million consumers,
which is about 25% of the population and nearly double that of Gen
X, according to U.S. Census Data, making them the largest
generational market for insurers. Winning their loyalty, though,
may not be so easy.
According to the study, millennials tend to be less loyal to
existing insurance carriers. Over the last five years, the average
number of auto insurance quotes a millennial shopper obtains per
year – 2.25 quotes – has been higher than the overall population
average. TransUnion’s study also found retention rates in this same
timeframe show that millennials remain with carriers far less often
than prior generations. Their retention rates are 7 percentage
points lower than Gen X and 16 percentage points lower than Baby
Boomers.
“The more we examine the driving and insurance shopping behavior
of millennials, it becomes apparent that the engagement model must
change for insurers to attract millennials and write them
profitably. That said, carriers will have to adjust process and
metrics appropriately to better meet their needs,” said Jeff
Reynolds, vice president for product development of TransUnion’s
insurance business unit. “For insurers looking to better engage
with millennials, comprehensive underwriting, and alternative
pricing and products that target millennials’ specific needs will
be more important than in the past.”
To help insurance carriers build better relationships with
potential policyholders, TransUnion introduced Quote Exchange, a
marketplace for both carriers who are seeking new policyholders,
and for those whom cannot provide policies for consumers but would
like to provide them with other options. “Quote Exchange is an
insurance marketplace where carriers buy and sell real-time online
quotes using enriched TransUnion data for precise segmentation and
decisioning. It’s especially valuable to carriers who may want to
form a positive relationship with millennials even without offering
them a policy, as millennials quote more often and prefer online,
easy experiences. The Quote Exchange addresses all of these needs,”
said Reynolds.
TransUnion’s study found that there may be good reason for some
carriers not to offer policies to millennials, especially those who
cannot identify and price the risk appropriately. The study
examined TransUnion’s proprietary driving history records,
distracted driving information and vehicle history information that
found:
- The frequency of violations is highest for Millennials and has
been increasing over time.
- Millennials receive the most distracted driving violations of
any generation and the rate of increase is 1.8 times higher than
Gen X and 2.4 times higher than Boomers.
- Millennials average more driving miles than any other
generation (13,725 miles annually), which is 3% higher than Gen X
and 8% higher than Boomers.
- Millennials have the highest percentage of higher risk
vehicles.
- Millennials have the highest percentage of only having
liability coverage (37 percent).
“I don’t think you will ever see a time when the youngest
consumer group poses a lesser risk than older ones, but our study
clearly shows that despite the risk, it’s in an insurers’ best
interests to develop relationships with them – even at the
beginning of their insurance journey,” concluded McElroy.
For more information about the study, please click here.
About TransUnion (NYSE:TRU) Information is
a powerful thing. At TransUnion, we realize that. We are dedicated
to finding innovative ways information can be used to help
individuals make better and smarter decisions. We help uncover
unique stories, trends and insights behind each data point, using
historical information as well as alternative data sources. This
allows a variety of markets and businesses to better manage risk
and consumers to better manage their credit, personal information
and identity. Today, TransUnion has a global presence in more than
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markets across North America, Africa, Latin America and Asia.
Through the power of information, TransUnion is working to build
stronger economies and families and safer communities worldwide. We
call this Information for Good.
http://www.transunion.com/business
Contact Dave Blumberg
TransUnion
E-mail dblumberg@transunion.com
Telephone 312-972-6646
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