What Younger Consumers Want from Insurance

New Study from the Society of Actuaries Research Institute Identifies Younger Generations' Perceptions on Insurance

SCHAUMBURG, Ill., April 25, 2023 /PRNewswire/ -- A new study from the Society of Actuaries (SOA) Research Institute analyzes how younger consumers understand, evaluate and purchase insurance plans. The study also investigates younger consumers' perception of risk and the impact of the COVID-19 pandemic on how they value insurance. The report, "Perceptions of Younger Generations on Risk and Insurance," examines the results of an online consumer survey.

Key findings include:

• 41% of young consumers feel it is important to have insurance.
• 63% surveyed consider themselves risk neutral, while 23% consider themselves more risk averse, and 14% consider themselves risk tolerant.
• Between 60% and 80% of younger consumers are somewhat or very concerned about the financial impact of each of 12 financial and insurable risks, such as car accidents, damage to personal property or damage to residence.

Perception of Risk and Its Impact on Trust in Insurance Companies

The report studied the level of risk tolerance of younger consumers, and their willingness to engage in risky behaviors. Those surveyed who are risk averse are more concerned about accidents and health risks. On average, younger consumers rated insurance companies a six out of 10 in terms of trust.

The survey also revealed there is a disconnect between the perceived likelihood of an event and concern over it. For example, when asked about their concern of the financial impact of insurable risks, 79% of younger consumers reported concern about being in a car accident that results in significant repair or medical costs, but only 35% of respondents cited they are likely to be in a car accident within the next 10 years.

"It's clear that young consumers' perception of insurance varies based on their unique level of risk tolerance or aversion, as well as their perception of certain risks," says Ronora Stryker, ASA, MAAA, Senior Practice Research Actuary, SOA Research Institute. "Despite these differences, the general attitude towards insurance companies among younger consumers is positive, with affordability and level of coverage being the most important factors when purchasing insurance."

Insurance Purchasing Habits

According to the survey, 61% of younger consumers intend to purchase one or more types of insurance within the next 12 months. Roughly half will prefer to purchase it online — regardless of type. Additionally, younger consumers are most likely to own automobile and health insurance and least likely to own critical illness, disability and accident insurance.

The survey also reports that younger consumers were motivated to purchase insurance that they felt was needed, even if the type of insurance is required. For example, 47% of respondents cited necessity as their motivation for home insurance, compared to 27% who cited purchasing because of a mortgage lending requirement.

COVID-19 Impact on Consumers' Perceived Value of Insurance

Based on the survey, 28% of respondents reported that either themselves or their spouses lost their jobs or were furloughed due to the pandemic. Key findings include:

• The COVID-19 pandemic has led to greater appreciation of health insurance (78%), home insurance (60%) and auto insurance (51%).
• 60% indicated they are more aware of their life insurance needs because of the pandemic.

For more information on the Society of Actuaries Research Institute, and to read the full report, visit www.soa.org/resources/research-reports/2023/young-gen-private-ins/.

Survey Methodology

Funded by the SOA's Emerging Issues Research Pool, the SOA Marketing and Distribution Section and the SOA Product Development Section, the SOA Research Institute partnered with Greenwald Research to conduct an online survey of 1,000 respondents. Respondents were required to be between the ages of 21-42, have an income of at least $25,000, could share or be the sole decision-maker on financial matters in their household, be employed for pay and not work in the insurance industry. The survey was fielded between Nov. 29–Dec. 23, 2022.

About the Society of Actuaries

With roots dating back to 1889, the Society of Actuaries (SOA) is the world's largest actuarial professional organization with more than 32,000 actuaries as members. Visit soa.org.

About the SOA Research Institute

Serving as the research arm of the SOA, the SOA Research Institute provides objective, data-driven research bringing together tried and true practices and future-focused approaches to address societal challenges and your business needs. It provides trusted knowledge, extensive experience and new technologies to help effectively identify, predict and manage risks. www.soa.org/research/research-institute/

SOURCE Society of Actuaries