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Generation uninsured: what are the challenges and opportunities for the insurance industry?

The UK is becoming a country of renters rather than home-owners according to a recent government whitepaper. The proportion of people living in the private rented sector has doubled since 2000 and just 26% of those aged 20-39 will own their own home by 2025.  According to the Resolution Foundation, twenty five years ago fewer than one in ten families rented their home from a private landlord – but now it is almost one in five. These are turbulent times for the housing market and especially this young generation.

What does this mean for the insurance industry?  

With more people expecting to live longer in rented accommodation, how is this changing the insurance industry, and how should the market respond to a new generation of customers? These were  the questions I wanted to explore when I recently organised a survey of young British adults from Generation Rent.

The results are disconcerting for the industry.  Generation Rent typically does not have any contents insurance at all. 60% of young renters aged 20-30 have no insurance, despite a majority saying they had suffered a loss while uninsured (55%). Notably, in countries where renting is more common, the reverse is true; in a parallel survey I commissioned, 66% of Germans of the same age group do have contents insurance.

So why is Generation Rent UK so reluctant to insure?

To start with, there is a high level of confusion. 65% were not sure who is responsible for insuring their rental property – the landlord or them.  Many did not feel that their needs are being adequately met by insurers.  28% said insurers do not understand their needs or offer the right products for renters and 42% simply did not know much about their insurance options at all.

This is also a financially stretched generation; according to Aviva 37% of ex-students say that university is a costly regret. Our research found that cost was the number one factor in not buying contents insurance. Yet there is hope for the industry - more respondents (48%) disagreed than agreed (22%) with the statement that, "Buying insurance is throwing your money away."

Younger renters evidently do not have an insurance habit yet, and this presents a challenge for insurers; but this is also an opportunity. Generation Rent offers a large untapped market in the UK that is going to grow considerably over the next few years. What can insurers do about this?

A changing market

As digital natives, Generation Rent do not necessarily follow the same consumer choices as their parents, which is something that traditional insurers sometimes neglect to address. There are four key steps insurers should employ to connect with young renters, to change their non-insurance habit, and convert them to committed customers. 

Engage with them on their terms

Using digital channels is a sensible strategy, but it is also critical that the industry understands that Generation Rent do not discriminate between communication channels. They value both human interaction as well as being able to self-service their insurance needs online. This is a digital generation who use multiple channels to manage all aspects of their lives. Insurers need to accommodate this.

Challenge misperceptions

Education has a part to play too, and a perception of contents insurance costing too much, or being inappropriate or irrelevant, needs to be challenged. The industry must highlight effectively the practical value and benefits of contents insurance.

Adapt and develop

New business models that allow Generation Rent to tailor the scope and cost of their insurance may help communicate the real value for money which insurance provides. Choice is important, so services that allow customers to personalise their cover, like digital photo inventories are popular with most of the young adults surveyed; technologies like this could help hold and retain the loyalty of this growing group. 

Some insurers are already offering new, flexible digital models. BackMeUp is a good example where the carrier, Ageas, provides insurance products on a monthly basis for a small number of specified items; no annual contract, all-in-one cover by simple photo upload, and no cancellation fees. Recently AXA announced its partnership with Trov, providing on-demand insurance for any items that are important to people for the timeframe they want, and with easy access and maintenance, through their digital devices. 

Embrace data

Predictive analytics technology will also assist insurers to understand and respond better to Generation Rent needs.

Listen, adapt and succeed

It is estimated that more than five million 18-34 year olds in the UK do not have home contents insurance. While phones are one of the most valued belongings for this group, more than seven million young adults do not insure them; this means an uninsured replacement value exceeding £3 billion. Insurers who do not adapt their business models and their products to support the needs of this significant part of the population are missing out on a crucial revenue stream.

Research appears to show that the value of property and contents insurance is not well understood by this age group. For many reasons, they do not prioritise insurance in the same way their parents do. Some say they cannot afford it, but the reality is they cannot afford not to have it. Agreed, there is no Generation Rent insurance habit. Insurers certainly have their work cut out, but those who listen well and respond, flexibly and appropriately, will succeed in attracting and holding a significant, new customer base now, and in the future.



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Keith Stonell

Keith Stonell

Managing Director, EMEA


Member since

19 Aug 2015



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