CHICAGO, May 24, 2017 (GLOBE NEWSWIRE) — 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 30 countries and a leading presence in several international 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
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