Generation Rent will force insurers to modernise offerings
Insurers need to be prepared for Generation Rent as they will have to combat the lower penetration rates and inability to sell buildings or combined policies to this group. GlobalData’s UK Insurance Consumer Survey shows that the overall penetration rate for any form of household insurance is 77.2%, while it is only 48.1% for those who rent.
Furthermore, our survey also shows that many younger people have been renting for several years and plan to continue doing so. Only 19.4% of renters from Generation Z and 19.0% of millennials expect to stop renting within the next one to two years. This shows that Generation Rent is a long-term issue for insurers, who will need to re-evaluate how they offer household insurance to successfully access this group.
According to our survey, two leading reasons why much of Generation Z does not have a home insurance policy are because they do not think they need it (22%) and the policies are too expensive (17%). Results for millennials are similar.
Therefore, the challenge for insurers is to create simple and cheap policies and educate people on the benefits of home insurance.
Start-ups in the sector such as Lemonade and Urban Jungle are offering specific renters insurance, which is usually cheaper and can be purchased very quickly online. Similarly, landlord insurance will be an increasingly important product as the landscape continues to shift towards renters.
Currently, landlords regularly purchase combined policies, a standard buildings one, or no insurance at all, as our 2019 Consumer Survey found that only 57.5% purchased specific landlords insurance. This means there will be a significant opportunity for insurers as younger generations increasingly rent.
Generation Rent is a long-term trend, and insurers are slowly adapting to the consumer side, with start-ups and some incumbents offering flexible renters’ cover. It will create a harder environment for insurers, who will likely see combined policies decline and a rise in cheaper landlords’ and renters’ policies.