Generation Shift: How insurance is changing as millennials and Generation Z become the dominant buyers

There is a sea change afoot in the insurance market. According to research published earlier this year by cloud insurance software leader Majesco, consumers from the millennial and Generation Z demographics are now the dominant insurance buyers, officially outpacing baby boomers and Generation X.

It’s a big moment, and for insurance sellers, the shift is more significant than just determining the average age of a customer. Indeed, with the passing of the baton from older generations to younger ones, local insurance professionals say they are already observing significant shifts in how customers buy, use, manage and pay for their coverage.

Per the Majesco study, there are a slew of different ways that millennials and Gen Z could change or are already changing the insurance market. Perhaps most crucially, these generational cohorts are increasingly breaking down the life “compartments” that have long dictated how insurance was bought and sold. It used to be that work was here, home was here, and those things were kept largely separate. The way companies sold things to consumers – including insurance – was based around those compartments. Now, lines have blurred and it’s changing insurance.

One result of those changes is a more holistic approach to how consumers buy and manage their insurance policies. From bundled policies to digital interfaces where customers can easily manage all their policies at once, insurance is becoming less siloed. Local insurance providers are observing the changes.

“We have seen a significant shift in the last couple of years in how our insurance carriers are investing in technology to make it easier for the client to access their policies, make claims, pay their bills, etc,” said Mike Jager, VP of sales for The Larkin Group. “I do think younger buyers are the main drivers for this, but the insurance carriers have done a great job making it easier to use for all demographics.”


That push to stay agile and relevant to younger buyers is not necessarily par for the course for insurance industry. Linda Fisher, CEO and owner of Traverse City’s Cardinal Insurance Group, has been in the industry for nearly 35 years and said that, historically, “the insurance industry has been extremely slow to move to keep up in any kind of advances that were made.”

And while insurers are getting on the technology train, Fisher thinks they are still lagging behind in other areas – particularly as changing customer habits necessitate the evolution of existing insurance lines or creations of brand-new ones.

One particular area of challenge for insurers, Fisher said? The sharing economy.

“These days, everyone is sharing everything,” she noted. “Really, it’s everything from renting out your swimming pool to people renting out their E-bikes on an app. And the insurance products that we have were never written for that.”

According to Fisher, the forms were never developed to let “anybody and everybody use your stuff,” making it difficult for the insurance industry to keep up with what people are doing with things that they own … except home-sharing, she says.

“Airbnb, we’ve got. We’ve figured out short-term rentals and we’re okay with that, as long as the client is letting us know what they’re doing,” she said. “But some of these other sharing or rental apps? We’re still figuring it out.”

COVID-19 threw a few extra wrenches into the insurance sector’s evolutionary gears. Suddenly, millions of Americans were working from home every day, not using their vehicles, thinking more critically about their health and well-being, and questioning their jobs. Where younger consumers had already been pushing the boundaries of how and why they used insurance, these and other pandemic factors only accelerated the trend.

For instance, Fisher said Cardinal Insurance got “a tremendous amount of phone calls” from clients asking to discontinue their auto insurance policies – perhaps only outweighed by the number of people calling to purchase life insurance policies for the first time. The gig economy also grew in the midst of COVID, with some studies indicating that it expanded by as much as one-third in 2020 alone.

Jager and Fisher are in agreement that all of the upheaval – both from the coronavirus and the generational shift currently underway in their industry – has actually made the job of the insurance agent more important than it’s been in years.


“With trends pointing toward do it yourself-type insurance carriers, COVID reminded us how important the independent insurance agent really is,” Jager explained. “Being able to have an agent look out for what’s best for the client and search multiple insurance carriers to determine the best fit for them was of tremendous value. The ability to consult with your trusted agent, versus an online chat or 1-800 number, that really sets the independent agent apart in times like COVID.”

Fisher concurs, noting that trends like the sharing economy, the explosion of remote work, and the wave of people pivoting from full-time employed positions to freelance or contractor roles have all underscored the value of an insurance professional who can guide clients across potentially rocky ground.

From helping clients replace employer-provided policies as they embark upon gig economy journeys to advising customers on the activities that policies do or do not cover in terms of the sharing economy, Fisher said she and her team have grown accustomed to answering questions about very specific, labyrinthine aspects of the insurance market.

Getting used to the unusual questions will likely prove essential for insurance providers going forward. Technology, a global pandemic and evolving consumer habits aren’t the only things that are going to transform the market in the years to come.

The next big shift? A barrage of life milestones for younger demographics.

Per the Majesco study, millennials and Gen Z will outpace boomers and Gen X in all key major life stage categories over the next three years, including family changes (such as getting married or having kids), major purchases (such as cars, homes, boats, or vacation properties), and major work shifts (such as job changes or retirements). All those changes have the potential to impact insurance buying significantly, and insurance pros are already keeping an eye out for the new market dynamics that may emerge as a result.

“We are already seeing (the trend of big life changes) in our region with some of our commercial clients,” Jager said. “They are looking to transition their businesses and either hand it down to the next generation or sell to another purchaser. We see this on the personal side as well, especially in the investment property space.”

For her part, Fisher doesn’t see the forthcoming wave of millennial and Gen Z life milestones as being something terribly unprecedented.

“I don’t know what it’s going to look like yet, but I think it will probably not be a lot different than the baby boomers when all that wealth went to them,” she said. “But we are looking ahead to that shift.”

Fisher says that her agency insures many three-generational families, so she and her agents begin reaching out to the younger members when they are about driving age.

“That way, we can build those relationships over time, so that when they’re ready for insurance, they think, ‘Hey, mom always dealt with (Cardinal), grandpa always dealt with them, that’s who I’m going to go to,’” she said.