The millennial market isn't especially receptive to insurance products, despite Generation Y presenting a high risk across many sectors. Peter Littlejohns speaks to five start-ups aiming to change the way insurance is bought and how young people are captured in the market
Just about every business is grappling with the question of how to capture millennials into their marketplace – and the insurance industry is no different.
A 2014 PwC report claimed that 2017 would bring to the market a new breed of consumer – the “digital natives,” otherwise known as Generation Y or more generally speaking, those born roughly between 1981 and 2000.
The insurance industry has a reputation for being slow to adapt to changing technologies and the customer expectations they bring – but with a growing demand among the millennial market for simpler and faster insurance, a number of start-ups are seeking to change this.
They’re targeting the millennial insurance market through inventive business models and speedy digital processes.
Companies targeting millennial insurance market
The process of buying insurance has changed over time – it used to be the case that a broker would manage a customer’s insurance portfolio and make adjustments that reflect cost-saving opportunities and changing risk profiles.
The growth of policy aggregators and comparison websites has made insurance customers more financially savvy, which has driven a change toward self-management of insurance.
Phoebe Hugh, founder and CEO of Brolly, aims to bring a customer’s insurance policies back into one place – but instead of using a broker, portfolios can be managed from a smartphone.
In her pitch to talent investor Entrepreneur First, Ms Hugh – who featured in this year’s Forbes 30 Under 30 list for Europe – said: “Everyone knows two things about insurance – it’s a multi-trillion pound market, and it’s a complete hassle.”
“That’s where we come in – Brolly is an intelligent robo-adviser and our mobile app helps you to manage, understand and buy insurance in one place.”
The Brolly smartphone app allows users to upload all their current policy documents by connecting their email account, as well as giving users the ability to purchase policies from a range of providers.
An in-built AI process finds each document within the account and stores it in what Brolly calls the “Locker”.
Brolly’s growth marketing lead Andre Moses, responsible for the start-up’s market segmentation and targeting strategy, says the millennial generation is a key demographic for Brolly.
“Previous generations would rely on insurance brokers who – in person – would guide them through this,” he says.
“Younger generations simply don’t have access to this type of support. This is very much where the insurance sector is failing people.
“Brolly is a young brand that aims to bring trust and transparency back to the industry, becoming the de facto way for the millennial generation to do everything insurance.”
Car insurance is the bane of every young driver’s life.
They face the necessity of a black box policy unless they can afford to pay a sky-high premium – one start-up wants to change that.
Honcho Markets is an insurtech company that claims to put power back in the hands of consumers by allowing them to “play hard to get” with insurers.
The Durham start-up created smartphone app honcho, which serves as a virtual marketplace for insurers and policy seekers, with the goal of driving down prices through competition.
Users scan their driving licence using the smartphone’s camera and, when verified, they’re able to enter details about their vehicle and the type of cover they need.
The next step is what Honcho Markets calls the “reverse auction,” in which insurers compete to provide a policy in real time, while honcho’s rating tool, the “honchometer”, gives each policy a rating gleaned from the cover specified by users.
Honcho Markets CEO Gavin Sewell believes the expectations of millennials are driving the change toward more digital products and services within motor insurance.
“Motor insurance hasn’t changed radically in the last 10 or 15 years,” he says.
“It’s quite heavyweight in terms of the questions you get and there hasn’t been much focus on making the user journey better.
“But there’s an expectation from younger generations to interact digitally with their service providers – and an app can streamline this process for buying insurance.
“Those who are well engaged with their phones and using apps are more likely to purchase cover this way – there’s a natural affinity between making the experience better and the younger demographics.”
Millennials typically rent for longer periods of time than the generations that came before them – it’s for this reason Generation Y has also been nicknamed “generation rent”.
The process of renting a property will usually involve paying the landlord a tenancy deposit before moving in – which covers any damage to the property or anything in it owned by landlords.
The deposit is usually the equivalent of at least a month’s rent, but if the property is private, there’s no limit on the amount that a landlord can charge.
A number of deposit alternatives exist, including Flatfair, housing hand and zero deposit, but Reposit was an early entrant into the market.
Reposit is an insurtech start-up founded to make renting more affordable by proposing an alternative form of deposit, in which renters pay the equivalent of a week’s rent to the online platform.
By paying this and accepting an online agreement, each renter gives permission for Reposit and its partner Canopius – a top ten Lloyd’s of London syndicate insurer – to reimburse their landlord in the event of any damages.
CEO Jude Greer believes Reposit provides a solution to the problem of affordability for renters, who tend to be millennials.
He says: “We have highlighted a real problem of affordability in the rental market and used insurance innovation to provide a solution.
“It is true to say that renting is more prolific among the younger generations, and the affordability issue is more acute within that group.
“The majority of our users are between the ages of 18 to 35 age bracket and the product is clearly most attractive within this age group.”
The gig economy is often thought to be fuelled by younger people, whether this is out of necessity or choice.
But it can be difficult to determine exactly which age group is predominantly working in these types of jobs, which can include Uber drivers and Deliveroo riders.
While this creates a relatively unclear picture of demographic involvement in the freelance worker or gig economy, insurtech start-up Dinghy – which was recently acquired by Kingsbridge Group – believes the flexibility of freelancer insurance appeals especially to millennials.
Co-founder Rob Hartley believes millennials prefer to have flexible work patterns, citing a 2014 UK government survey that found 92% of Generation Y identify flexibility as a top priority when selecting a workplace.
He says: “The flexible nature of Dinghy’s on-demand insurance for freelancers, combined with the online self-service area that allows customers to make changes on the move and when they want, has a particular appeal to generations Y and Z.”
Dinghy provides a smartphone-optimised website for freelance workers to purchase insurance for professional indemnity, public liability, cyber liability and business equipment.
Rather than charging a monthly premium, Dinghy insurance is bought on a pay-as-you-go basis, giving users the option of turning off their cover when they aren’t working.
Mr Hartley believes that optimising Dinghy’s website for mobile has played a key role in targeting a millennial audience.
He says: “Dinghy was designed to look great on a mobile screen – to be intuitively easy to use and be super-fast.
“These are key demands of a generation that have grown up with smartphones and the internet, and who now expect to have the same user experience when buying insurance as they get when using consumer-focused sites such as Amazon or Facebook.
“By being several steps ahead of the competition, Dinghy has definitely been able to reach a younger and more demanding audience.”
At the start of this year, the Association of British Insurers reported that one in four UK households have no home contents insurance – this is despite the fact that the cost of home contents insurance now stands at a record annual low of £127 a year.
Generation rent faces a similar insurance gap, as a report from the Financial Inclusion Commission shows tenants aged 24 to 38 are uninsured on a sliding scale starting at 65% and dropping to 40% as people get older.
Insurtech start-up Buzzvault is trying to make creating an inventory for covered items easier by moving the process to a smartphone app.
The app allows users to list the products they want covered themselves, or they can organise a 15-minute video call with a Buzzvault surveyor, who will conduct the process for them free of charge.
Buzzvault’s policies are underwritten by Great Lakes Insurance SE, a subsidiary of reinsurance giant Munich Re.
Buzzvault’s initial focus has been the house-movers market, hoping its tool will be useful for movers to keep track of their insured possessions.
But the managing director for the company’s insurance product, Charlotte Halkett, believes that targeting millennials will be an easy move for the company because of the app’s capabilities.
She says: “In the future, we will appeal very much to generations Y and Z because these generations want products personalised to their needs.
“They won’t necessarily own their own homes, but they will want their possessions protected.
“They will want to manage that protection in the way they manage most aspects of their lives – via apps on their smartphones or tablets.”