Insurance Models That Appeal to Millennials

August 11, 2015| By Joanne Tan | L/H General Industry | English | Français

Millennials have shown a clear shift in interests and priorities from other generations. They are willing to pay more for a product so long as they perceive its added value.

To appeal to millennials, insurers need to deviate from the traditional approach of product design and marketing and step into their shoes. We have seen two models that address the young generation’s distinct needs and interests.

The peer-to-peer insurance model allows individuals to form their own insurance networks. Peer-to-peer insurance combines social networking and insurance. A good example is Friendsurance, which was founded in 2010 in Germany. Members form connections in which they agree to support each other with a small amount in the event of a claim. The more connections a user has, the more support he/she receives for a claim. The insurer only needs to pay the part of the claim that exceeds the network support and the policyholder receives a premium payback: the larger the network, the higher the premium payback.

However, this model is neither easy to set up nor to manage.

A simpler variation would be a voluntary group health insurance scheme in which friends and family members can form their own group. They agree to split the deductible in the event of a claim. That means having a higher number of members results in fewer costs for each person in the event of a claim. The insurer pays out the amount of the claim that exceeds the deductible.

In spite of its seemingly complex structure, the benefits of such a product are straightforward and easy to identify:

  • Customers are likely to invite others to form a group if they know they are generally in good health, thereby shutting out bad risk profiles.
  • Costs of sales are greatly reduced as a strong incentive to motivates customers to invite friends and family members to join the group: The deductible can be split among more people, giving rise to viral growth and reducing customer acquisition costs.
  • Fewer resources are spent on administering small claims because they are settled with the shared deductible.

We expect to see changes in insurance distribution too - online and mobile sales channels will play a critical role in attracting millennials, who tend to keep up with the latest trends and access a vast pool of information via online search engines and social media. A high number of millennials believe they can always find a better deal by comparing prices and features on the Internet.

Unsurprisingly, online distribution platforms for insurance products are becoming a huge trend in key insurance markets across the world. Agent-less sales models can translate into significant savings for the customer, thanks to reduced distribution costs. Singapore launched a regulated online portal in April 2015, which customers can use to compare product prices and features from various companies.

Meanwhile, many other insurance providers have rolled out mobile apps through which customers can browse products, apply for cover and make premium, making the sales process more convenient and efficient.

The possibilities are endless with millennials who are receptive to change and welcome the unconventional. There is still plenty of room to explore product innovation and the use of alternative distribution channels. If insurers are able to design suitable strategies to target millennials, this will surely help to boost sales and expand their customer base.

You can learn more about marketing to this age group at


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