Millennials’ Late Homeownership, Increased Migration Impact Insurance Carriers

Seemingly little things can have big consequences. For the insurance industry, said TransUnion, Chicago, the delay in Millennial homeownership has had ripple effects that insurance providers are feeling now.

TransUnion said 15 years following the onset of the Great Recession, impacts are still being felt on homeownership and insurance usage in the U.S. Its study found Millennials and youngest Gen X experienced significant delays in homeownership due to the Great Recession. In addition, out-of-state migration patterns—partially driven by the COVID-19 pandemic—pose risks to insurance providers’ books of business.

“Millennials and even parts of Gen Z are coming to the housing market for the first time later in life,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business. “They’re taking a different approach to engaging with their insurance providers and expecting services and counsel beyond basic coverage of their homes.” 

Courtesy TransUnion.

TransUnion said those gaps are finally beginning to narrow as Millennials now drive the majority of first-time home purchases, accounting for more than half of purchase originations by the end of 2021. But as these cohorts reach typical adulthood milestones, many think differently than previous generations about how they utilize and engage with insurance providers.

For example, the data analysis found these groups expect digital shopping experiences as they compare policies and prices. However, their primary channel for direct communication at purchase and claims is a phone conversation.

In addition, a TransUnion consumer survey of how and why consumers want to engage with their insurers found responses differed by generation. For example, Baby Boomers indicated they prefer not to hear from their insurer unless they reach out first, while Gen X is interested in upcoming weather events impacting their area. Millennials are looking for auto and home safety tips and maintenance reminders or evolving coverage needs, while Gen Z is looking for data about how they are driving through telematics.

“We’re seeing that consumers have come to expect quite a lot from their insurance carriers beyond the basic coverage for damages and losses,” said Michelle Jackson, senior director of TransUnion’s personal property and casualty insurance business. “Increasingly, people want them to serve as trusted advisors and partners who can help avoid losses in the first place.”

Among other generational differences were changes to migration patterns. Gen Z and Millennials are currently moving at higher rates than members of Gen X and Baby Boomers. However, comparing the migration behaviors of Millennials with those of Gen Xers when they were the same age, revealed significant differences. Specifically, nearly 4% of Millennials aged 25-40 are moving out of state, whereas only 1% of Gen X did so at the same age.

This trend was driven partially by people leaving large cities during the pandemic but also, more broadly, by a desire for a more affordable cost of living. Regardless of the reasons, this has implications for insurers who may be at risk losing customers who move out of state. Conversely, it may also present challenges to consumers, as many of them are moving to southern regions that are more prone to severe weather, making it difficult to attain new policies that offer sufficient coverage at an affordable price.

“While more Gen Zers and Millennials might move out of state, they are also actively seeking counsel about these kinds of decisions,” Jackson said. “Insurance providers can leverage data to identify those most likely to leave and offer guidance about some of the unexpected impacts of those changes. Those who view themselves as less of a commodity and more of a consultant will be better positioned to win and retain business.”