Most agents have traditionally viewed renters insurance as an ancillary type of coverage. But thanks to millennials, that’s no longer the case.
A 2014 Insurance Information Institute (I.I.I.) poll revealed that 37% of renters had renters insurance in 2014—up significantly from 29% in 2011 and a jump that might be attributable to many property management companies and apartment complexes that require renters insurance as a part of the lease.
“Statistical data has shown that’s actually increasing—about 20% of properties require renters insurance as far as leasing goes,” says Brian Richards, a renters insurance expert at Rent Your Bubble. “But now we’re seeing more of a demand based on the awareness increase in millennials specifically.”
In fact, 72% of householders age 30 or younger live in rental housing, according to The National Multi Housing Council—mirroring I.I.I. data that cites an increase in the number of renters policies from 7 million in 2006 to 10.7 million in 2012.
“15 Economic Facts About Millennials,” an October 2014 White House Report from The Council of Economic Advisers, attributes shifts in labor force participation, increased college enrollment and delayed marriage to Gen Y’s decline in home ownership compared to previous generations. “Because of that, millennials are more likely to look for renters insurance,” Richards says.
“The baby boomers were all about how much stuff can I acquire, and Gen Y is about efficiency,” agrees Kelly McDonald, president of McDonald Marketing and best-selling author of “How to Market to People Not Like You.” “It’s more efficient for them to pay as they go on an ad-hoc basis and get what they need by sharing and renting temporarily.”
But that doesn’t mean millennials don’t have things to protect—and they may be oblivious to the added value renters coverage provides for a relatively low price tag. A January 2015 report from the National Association of Insurance Commissioners used 2012 data to determine a $187 average annual premium for the coverage, most commonly used for fire, theft and general protection for personal property. “For people who feel they don’t need the coverage, a question to ask themselves is ‘How much would it cost to replace everything I own?’ and then insure from there,” Richards says.
At the top end of the 18-35 year-old spectrum, financial needs are changing dramatically as millennials enter life changes. On the younger side, brand preferences and financial needs are in flux—which means they need a guide to help them make decisions. “Millennials are the sweet spot for the insurance industry,” McDonald says. “There is no down side at all to the millennial market across the age spectrum—there’s opportunity.”
How to Sell It
It comes as no surprise that 18-35 year-olds prefer to use a digital platform when it comes to finding a place to live. TransUnion Rental Screenings, a property and leasing solution provider, reports that 67% of millennials prefer to conduct research online when searching for a place to rent—ranking easy (68%) and convenient (63%) as the most valuable aspects of online rental tools. Specifically, 3% are more likely to use smartphone apps and are less reliant on word-of-mouth recommendations. Nearly two in ten (18%) ranked avoiding in-person contact as a priority compared to just 13% for those age 35 and older.
But insuring that place to live is a different story. “They can research all they want, but they still won’t understand it the way an insurance professional would,” McDonald says. “In one focus group we did about insurance with millennials, one of them said ‘an algorithm doesn’t necessarily have my best interests at heart.’” In other words, when millennials are ready to purchase coverage, they want a trusted voice.
And that makes renters insurance an area ripe for independent agents. Richards advises agents to partner with property management companies. “If it’s not purchased online, [renters insurance] is purchased while they’re signing their lease,” he says. “Get the information in front of them while they’re at the desk.”
“That’s low-hanging fruit,” McDonald agrees—adding that state and local apartment associations are bigger and better targets. “They are the professional associations, so why wouldn’t you want to align yourself on a professional level and get exposure there to partner with the different members?”
McDonald is also an advocate for social media—especially Instagram, Facebook and YouTube. Because the two most commonly searched words on YouTube are “how to,” she suggests agents shoot a quick three-minute video about “how to get renters insurance” or “how to protect your assets as a renter.”
Another tactic is direct outreach, what McDonald calls “feet on the street.” “If you’re doing it in the true spirit of ‘let me help educate you,’ you may or may not make a sell today,” she says. “But you’re planting seeds, and people don’t forget that.” Agents can also work with local community colleges to host free seminars—a 45-minute session on insurance basics and how to protect your belongings, for example.
These strategies are effective because millennials have a hard time finding a trusted guide. “I don’t believe a lot of parents today have done a good job preparing their kids to be independent when it comes to financial literacy,” McDonald says. “They don’t know who to call, where to go, what it’s supposed to cost, what kind of coverage they need—they don’t know anything other than this is something that they’re supposed to be doing.”
Renters insurance, then, is a useful opportunity to start an ongoing conversation with millennials about protecting their assets for the rest of their lives. “They’re paralyzed—they don’t know what to do, so they don’t do anything,” McDonald says. “I believe the opportunity is there, but it’s going to require outreach and an agent making an effort to find millennials to not sell, but help them understand what they need. If you help people, you will sell them.”
Morgan Smith is IA assistant editor.