Population growth tends to be swift in emerging economies, stabilising as nation states mature and develop.
Analysed in such terms, the so-called ‘millennials’ generation, arbitrarily delineated as those born around 1980 – 1995, makes up the second largest population group, and together with the subsequent ‘Generation Z’ constitutes much of the population, especially in countries like SA.
Now aged around 24 – 40 they are arguably the most influential generation in the modern workforce. As they come of age and rise to positions of leadership, they are poised to gain decision-making power. Research from Deloitte estimates that this grouping will comprise 75% of the global work force by 2025.
Well educated and self-aware, millennials are tech-savvy, highly attuned to their own personal needs, and not easily scammed. To attract this market a business must navigate the many paradoxes that characterise the generation.
Millennials are very comfortable with purchasing almost everything online from their mobile devices, but are more vigilant with cyber-security and more wary of sharing their personal data than any previous generation. Although largely suspicious of the impacts of social-media proliferation, millennials are also the biggest consumers of it.
Herman Lombard, African Unity’s founder and Executive Director believes that when it comes to insurance, millennials can be viewed as the disruptors and adds that insurance companies have already started working towards full digitisation and automation in order to appeal to a market segment that has “knowledge at their fingertips”.
“Whereas their parents endured lengthy in-person meetings with brokers, millennials expect to buy insurance efficiently, within minutes, from their ubiquitous smartphones. This allows for a hitherto unprecedented scope of data collection and predictive analysis, but insurers need to be cautious about what data they request, as millennials tend to be guarded with personal information”
The global recession of the late 2000’s, and the ensuing economic downturn have caused millennials to have a rougher time economically than other generations, with lower levels of consumer spend in SA, fewer assets, lower incomes, and more debt globally.
Lombard explains that in SA, the transition from Apartheid to Democracy, and the resulting rise of the black middle class, adds another layer of complexity to this trajectory as South African millennials may be the first generation in many families to purchase insurance. “This puts the onus on insurers to develop products that will help build a financially inclusive society“, he says.
In spite of this, consumer trend studies indicate somewhat nihilistic spending habits which tend to emphasise travel, self-care, fashion and recreation. “Would-be insurers must therefore find ways to hone in on these values. Life-cover, funeral plans, health insurance and travel insurance are the kinds of products that are more likely to appeal to a grouping that regards experiences more highly than material assets”, says Lombard.
Millennials, having lived through the intensification of climate change over the previous decade, are deeply concerned with environmental issues. Their concerns about inequality and unemployment are also very highly ranked. As such, millennials hold ethical business practice in high regard, and tend to support – and desire to work for – corporations which operate transparently and have proven their commitment to social and environmental accountability.
Despite the economic hardships facing them, millennials are less loyal to employers than their forebears, and less reluctant to leave positions where they are underpaid or where they perceive a lack of opportunity for skills development.
Lombard believes that these traits provide an opportunity for forward thinking insurers to not only develop products which evolve with the needs of millennials but also to build smart organisations which can attract and retain this generation as a workforce.
“Millennials are both our new customers and the individuals that are able to take our organisastions into the fourth industrial revolution, in which digitisation and automation are integrated into the everyday work life.” concludes Lombard.