The people who came of age at the turn of the millennium are rapidly approaching 40. What does that mean for insurance carriers and brokers?

Plenty. According to Pew Research, millennials have surpassed baby boomers as the largest generation, numbering some 75.4 million members. Defined by Pew as people born between 1981 and 1996, many of them now have homes, families and myriad possessions—making them a ripe and growing market for insurers. They are also “the first generation with a large degree of dual-income households,” says Harley Kaplan, a certified financial planner at Beta Industries in Sherborn, Mass. This means, as a group, millennials might actually have more disposable income than previous generations did.

But how exactly is this population reshaping insurance demand? And how should carriers and brokers alter strategies to address millennials’ needs and lifestyles?

Education

“For millennials, insurance does not have the same meaning it did for prior generations,” says Kaplan. Previous generations, he says, typically planned around cash-value and term life insurance, along with annuities and company pensions. “Most millennials have only a vague concept of what something like whole life is. [They] exercise greater personal control of their financial futures in 401(k)s and individual retirement accounts,” says Kaplan.

Typically, the first step to getting millennials interested in insurance is to educate them. “Millennials need more guidance than their grandparents do,” says Susan Sachatello, a senior vice president at Madison, Wis.-based CUNA Mutual Group. “A wide majority lack a basic understanding of financial services terminology, and many don’t have a solid grasp of how insurance works.”

To help them, Sachatello says it’s “crucial that we incorporate education into the equation, through online channels and by offering interaction with call center representatives who can walk young adults through the process.”

Online channels are important, because millennials tend to do everything online. “We’ve made massive investments to expand the media through which we reach these consumers,” says Sachatello, “amassing billions of digital impressions [and] optimizing the channels by which they interact with us.”

Stress the Advantages

To get millennials interested in permanent life insurance that accumulates cash value, for instance, it’s a good idea to explain what they can do with that liquidity. “With millennials, the best way [is] to talk about how you can use it before retirement, as well as the power of having a non-market-correlated asset in retirement,” suggests Jeff Spencer, an advisor at Penn Mutual’s Concord Wealth Management in Waltham, Mass. “We’re seeing a large number of millennials looking to buy income properties, and having a liquid account such as cash-value life insurance is great because [it provides] guaranteed tax-deferred growth and tax-free access to capital for down payments or collateral.”

Online tech isn’t just useful in making a sales pitch. To reach millennials, it’s become an important part of the entire process. “Our commitment to complete digitization required an overhaul of our products,” says Sachatello.

That overhaul included providing a range of services at unprecedented speeds. “By simplifying the steps a consumer takes to obtain a quote, and automating the underwriting process, we’ve been able to condense the application and approval process from several weeks to just a few minutes,” says Sachatello.

Spencer would agree. “Insurance products have adapted to the online market well,” he says. He cites applications that not only speed up the underwriting process but sometimes go so far as to eliminate the need for a medical exam. “You can complete the application from your mobile device and, if you meet the qualifications, have a policy issued overnight,” he says. “Even if you do go through traditional underwriting, the e-application process cuts down significantly on the time it takes to purchase a policy.”

This speedy online process will become more common in the future, says Spencer. “More companies will adopt completely paperless applications for different types of insurance,” he predicts.

Nothing Beats the Personal Touch

But others warn that the industry shouldn’t rest on its high-tech laurels. “The millennials are clearly more tech-savvy than prior generations, but they still want the face-to-face,” asserts Joseph Ventura, founder of Eden Advisory Services in Loudonville, N.Y.

Millennials like the “tech intro,” he says, but they soon find they need to converse with a human being to “address the nitty-gritty aspects of their planning needs,” says Ventura. “While millennials have grown up with the computer, they still often prefer to see a face rather than a chart.”

When meeting millennials in person, Ventura recommends a degree of informality. “Millennials do not want to see you in a jacket and tie. They’d rather see you in a sweater,” he says. Ventura often meets clients and prospective clients over a cup of coffee.

Building Trust

Meeting clients this way helps build trust, he says. “A thriving relationship is built on trust,” he says. “Comfort builds trust.”

Trust is key with all customers, of course, but perhaps especially so with millennials. “Unless they like and trust the information they’re getting, and the company giving it to them, millennials are less likely to become a loyal customer,” says Maxime Rieman, head of insurance research at ValuePenguin.com, an online financial-services information clearinghouse. “On the other hand, research has shown that millennials can have tremendous brand loyalty once that trust is established.”

To gain that likability and trust, some insurance carriers appeal to millennials’ interest in socially conscious causes. “By donating a portion of their premiums to a charity of [the clients’] choosing,” says Rieman, carriers “not only build trust but also let millennials feel that they are helping a cause they care about.”

Point of Sale

Other carriers and brokers target millennial customers at relevant purchase points—for instance, offering renters’ policies through landlords or homeowners’ coverage through home-appliance stores. “It’s reasonable to assume that one-stop coverage products would perform well with millennials,” says Rieman. “If an insurance company can win a millennial’s trust and provide a single-stop, simple insurance solution, it’s quite likely to win that customer’s business across all needed lines of coverage.”

Convenience is Key

That kind of shopping convenience is especially well suited to the online world. “Millennials have grown up in an era where, after they buy things on Amazon, Amazon immediately suggests four other items they may be interested in buying,” says Mike Pesch, CEO of the U.S. global brokerage division of Arthur J. Gallagher & Co., an international insurance brokerage based in Chicago. “We are giving our buyers similar information in terms of the insurance they buy.”

When a customer looks at one type of insurance, he says, Gallagher presents “additional coverages based off of what other people in a similar situation are buying.”

This is part of the company’s commitment to “communicate with millennials in new ways,” says Pesch, “from the initial purchase of insurance all the way through to the claims process. This includes user-friendly online platforms where our brokers can communicate in a space where millennials are extremely comfortable.”

It’s not just the millennials who benefit from these online interactions. There is an advantage for the companies, too. They can gain valuable data about their demand base. “The information that we have about our buyers is much more robust, which allows us to be more targeted and specific in terms of who we target and how we reach a potential buyer,” says Pesch. “As marketing has adapted to the use of data, it has become more relevant to the ultimate user of the product.”

Growth in Buying Power

Whatever strategies work, one thing is clear: As millennials age, they are expanding their financial footprint. “In their 30s, millennials have additional needs,” says Spencer. “By now they are further into their careers, so they have a higher income. … This creates a higher insurance need because their standard of living has increased greatly since their 20s.” Not to mention the fact that they have started families and are owning homes, he adds.

That’s something all generations can relate to—the way life’s milestones create a need for insurance. “Even as this older group of millennials begins to feel comfortable making these big purchases and life decisions, they are sensitive to the need for financial stability, which insurance can provide,” says Sachatello.

As a group, they may be optimistic about their financial futures, but that doesn’t mean they aren’t searching for greater financial security.

“Young adults are incredibly optimistic about their financial futures, yet at the same time they’re intensely worried about their current financial stability,” she says. “You need to embrace that dichotomy, and give them a road map that demonstrates how they can address their pressing concerns while positioning themselves to achieve long-term success.”