Millennials & Gen Z: A Profile Of Auto Insurance Customers

More than a decade ago, a growing population combined with the housing crisis from 2007 to 2009 caused rentership in the U.S. to climb. Since 2010, the rate of rentership in the U.S. has increased almost every year. From 2006 to 2016, 9.1 million consumers became renters. In 2019, the cost of homeownership continued to rise as inventory shortages and high demand drove home sale prices up. Currently, 44.1 million U.S. households are renters. While the American homeowner has been a key demographic among auto insurance advertisers for many years, it is vital that auto insurance carriers and agents develop a keener understanding of the American renter, a segment of the population that is increasingly purchasing car insurance. 

Millennials And Gen Z Represent Largest Share Of U.S. Renters 

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Over the last decade, a series of financial scenarios have compounded to create a rise in rentership. The Great Recession caused many Millennials to experience periods of unemployment and underemployment. Many college grads returned to living with their parents after graduation to save on housing costs, and then mortgage rate spikes in 2017 and 2018 preventing many prospective homebuyers from entering the market. Millennials and Gen Zers currently make up a majority of the U.S. renter population. According to the National Multifamily Housing Council (NMHC), 72% of renters are age 44 and younger, with 23% of renters represented by consumers age 30 to 44 and 49% by consumers age 30 and younger. 

More Millennials Choose To Rent

After witnessing the Great Recession and housing crisis first hand, Millennials have recreated the American dream without relying on homeownership. For many Millennials, the job crisis that came during the Great Recession accelerated the impact of their student loan debt, establishing obstacles preventing them from achieving homeownership. Renting allows Millennials the flexibility to move around and cater to their needs and an evolving job market while they pay down other debt. From 2009 to 2016, the number of Millennial households that owned a home experienced a steady decline. Millennials simply could not afford to become (or remain) homeowners, and those who could afford the investment often did not have enough inventory to choose from in their price ranges because of housing shortages. 

While some Millennials are still priced out of homeownership because of affordability and inventory concerns, others are choosing to remain renters to avoid the hidden costs of owning a home. In addition to price, Millennials are reviewing the total value of homeownership in regards to their lifestyle preferences. In many major metros such as New York City, Austin, Los Angeles and Miami, even Millennials who can afford homeownership are opting to rent instead because the cost of homeownership in these areas is simply too expensive and entry level down payment thresholds would still require years of saving.

Gen Z Sees The Value In Renting, For Now

In 2019, Freddie Mac found that, while a majority of Gen Z value the benefits of renting, they feel “homeownership is something to be proud of.” While Gen Zers enjoy the flexibility renting gives them, they are not looking to avoid homeownership altogether. According to data from Freddie Mac, last year, 86% of Gen Zers surveyed claimed to “want to own a home someday,” with most respondents believing they can achieve homeownership by age 30. 

The economic conditions that have resulted from the global pandemic will likely alter projections for Gen Z homeownership. In Q2 2020, the share of unemployed Gen Zers living with their parents jumped 53% from just the quarter prior. By August, the number of unemployed Gen Zers living with family had slipped to a still elevated 10.2 million, up from just over 8 million in February. 

In November, there were indications that Gen Zers were returning to the rental market. With the oldest segment of Gen Zers now age 23, this audience segment will continue to be a key demographic for the rental market, as it is the only demographic segment to experience an upward trend.

Common Values, Behaviors & Lifestyles Of Renters

As the mindsets of renters shift, advertisers must stay abreast of their evolving habits, behaviors, values and lifestyle preferences. Here are the common attributes to consider when targeting the U.S. renting audience according to the 2020 Apartment Residents Preference survey conducted by NMHC. 

Renters Want Mobility & Flexibility

According to the National Association of Realtors (NAR) Community and Transportation Survey in 2020, walkability and access to major roads and highways remains a top preference across all generational segments in relation to where they choose to live. In the 2020 Apartment Residents Preference survey, NMHC found that 75% of renter households take a car, truck, van, motorcycle or taxi to work.  

Renters Prefer To Live Closer To Where They Work

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Data from the NAR 2020 Home Buyers and Sellers Generational Report indicated that 74% of Millennials surveyed listed convenience to a job as a factor that heavily influences where they choose to live. NMHC revealed that 62% of renter households in the U.S. had a commute time of 30 minutes or less. The survey also found that, at the time, 58% of renters did not telecommute and those who did worked remotely only a few times a month or less. This has obviously changed in 2020, with an increase in the share of renters telecommuting likely to be significantly higher into 2021 and beyond.

Why Does This Matter To Auto Insurance Providers? Auto insurance providers should consider marketing mileage-based programs and coverage options to renters. Renters will likely value insurance options that appeal to their driving habits, which include shorter commute times to work. Offering renters auto insurance programs that are tailored to low mileage driving may result in higher conversions for insurance brands. 

Renters Value Connectivity

The NMHC apartment preference survey reported that 91% of renters consider strong mobile phone reception important at home. Renters also value access to high-speed internet, pre-installed wi-fi and community wi-fi options. There is also a growing trend of renters becoming interested in smart home features and devices such as smart thermostats, smart lighting, dynamic glass and virtual assistants like Amazon Alexa or Google Home. While smart home features could be costly to install or own, they are less expensive when included in resident rental or building fees at an average of an additional $29 to $30.

Why Does This Matter To Auto Insurance Providers? More and more renters value connectivity and access to reliable technology. Renters will likely value insurance companies that offer their customers seamless online experiences and user-friendly mobile apps. When targeting renters, insurance providers should promote their mobile app’s convenience and accessibility as a way for drivers to easily tap into their auto insurance coverage benefits and connect with their provider. 

Renters Want Convenient In-Unit Amenities And Products

Buying a new appliance could be costly, however, renter’s enjoy the convenience of having new household gadgets accessible in their homes as part of their rental agreements. According to the NMHC apartment preference survey, 91% of renters want an in-unit washer and dryer and 55% would not rent a unit without it. Additional features renters value are in-wall USB ports and garbage disposals, with 76% of renters interested in these amenities. 

Why Does This Matter To Insurance Providers: Renters are cost-conscious but, they are also highly motivated by products that add and hold value over time. Renters are willing to pay for something if it allows them to have flexibility and accessibility. Insurance providers should curate marketing messages that position their bundling incentives for renters and auto insurance and promote options that allow renters to create an insurance plan based on unique preferences with more a’la carte options.  

As Rentership Increases, Auto Insurance Brands Have An Opportunity To Engage & Acquire New Audiences

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As the rate of rentership in the U.S. continues to grow, brands and advertisers need to consider the wants of this audience. According to the 2020 Auto Insurance & Emerging Consumers Trends published by Digital Media Solutions (DMS), the share of non-homeowners seeking auto insurance during the first three quarters of 2020 grew from 54.4% the prior year to 63.3%. While many auto insurance companies have traditionally targeted homeowners, there is a major opportunity for auto insurance advertisers to connect with renters. Bundling renters insurance with auto insurance is one strategy that is likely to convert a larger share of the renter market.

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Digital Media Solutions

Digital Media Solutions, Inc. is a leading provider of technology-enabled digital performance advertising solutions connecting consumers and advertisers within auto, home, health and life insurance plus a long list of top consumer verticals. The DMS first-party data asset, proprietary advertising technology, significant proprietary media distribution and data-driven processes help digital advertising clients de-risk their advertising spend while scaling their customer bases. Learn more at https://digitalmediasolutions.com.