Many drivers are struggling to afford their auto insurance premiums and looking for ways to cut spending or decrease coverage.
Recent CFA study investigated premium quotes from five of the largest insurers for 10 cities and found that socio-economic factors increase auto insurance premiums disproportionately among drivers with clean driving records but lower income levels.
Millennials
Millennials’ attitudes and approaches to insurance are creating major shifts within the industry. These younger consumers remember their parents wrangling over policies and costs and want a simpler experience for themselves; therefore, they have limited interest in meeting directly with agents as part of a traditional process.
Pandemic has led many millennials to opt for working from home and forgoing driving their personal vehicles, which may have serious repercussions for auto insurers as premium rates, bases for risk calculation and data collection technologies all may change as a result.
2024 recently conducted a poll that indicated embedded car insurance options are of top concern among young consumers, especially Millennials and Gen Zers. Gen Z and millennials were open to sharing data sources with insurers to manage risks more efficiently and possibly lower premium rates.
Gen X
Gen X spans an age range between 44 to 59, making them an essential target market for the insurance industry. They represent a group with multiple coverage needs who prioritize saving money with reduced rates on auto, home and renters policies.
They quickly adopt insurtech solutions that provide convenience and transparency during policy purchases, such as telematics, usage-based pricing and driving behavior-based discounts.
Many Gen Xers have delayed traditional life milestones such as marriage, homeownership and parenthood, which alters their insurance needs. Since Gen Xers tend to value experiences over possessions, travel insurance may take priority while high-value item coverage in other policies receive consideration. They also show high interest in purchasing coverage through dealerships, affinity partners or car-shopping websites – which may impact how they access coverage for themselves or purchase coverage through other policies.
Gen Y
Gen Y is often portrayed as the archenemy of the insurance industry for driving down overall satisfaction levels, but Valerie Monet from J.D. Power’s insurance practice suggests otherwise; according to this generation often called digital natives they’ve responded well to improvements made by insurers to meet their expectations and their satisfaction has only grown since 2010.
Gen Y consumers value companies that prioritize transparency and steer clear of insurance jargon that could turn off younger buyers. In addition, Gen Y customers seek companies that support sustainable practices through green initiatives or community involvement.
Gen Y respondents who compare auto insurance prices annually display particular preference for usage-based pricing options such as pay-per-mile and telematics that align with their financial priorities, such as pay-per-mile pricing options and telematics, which support these goals. They’re also open to sharing data sources with insurers with an eye toward potentially lowering their rates; moreover, three quarters of Gen Y respondents compare auto insurance prices annually, the highest percentage among all generations.
Baby Boomers
Baby boomers were traditionally the go-to buyers for insurance policies, but they are slowly being eclipsed by Gen Z and Millennials who possess different buying preferences and are forcing insurers to adjust their business models to stay relevant with this demographic.
Generation Z is highly tech savvy and prefers digital channels for communicating with their insurer. They require timely responses to inquiries, clear policy terms and transparent pricing structures from providers.
They have also invested heavily in property and wealth, creating the potential for The Great Wealth Transfer. This could increase pressure for them to protect their assets and pass down their legacy. Insurance agents, agencies, and agents should recognize this generational shift so as to provide better services – this may include modernizing systems or adding tools that improve customer experience such as online self-service options; adding usage-based car insurance technologies or policies may be other solutions; however these must satisfy the needs of all generations for them to work successfully.