Discovery’s efforts not wasted on young, reckless travellers
• Policies for millennials, despite low take-up of life insurance, work because of their interests
Are we really supposed to believe millennials behave any differently from the way we all did at their age? George Bernard Shaw said youth is wasted on the young, and it is still true. According to Discovery, even the word “millennial” doesn’t quite convey the special characteristics of the generation born between 1982 and 1996. It talks of Marouns, which I assumed to be the nickname of one of the more obscure World Cup teams. In fact it stands for “millennials at risk of underinsurance”, a phenomenon that is keeping hundreds of actuaries employed — even though it is nothing new.
A lot was written about my generation, the baby boomers, and the “generation gap” with our parents. We were considered unique, the generation who wanted it all, material and family success. We were the first generation in which women rose to senior positions in the professions and business. We like to think our iconic moments, such as the Woodstock music festival, were unprecedented and will never be repeated. And we moved effortlessly from hippie to yuppie.
The generation following us, Generation X, doesn’t seem to have the same self-confidence and seems to enjoy identifying with dark comics and goth costumes. But I can see a lot of baby boomer-style confidence in millennials. We used to talk about “getting it”, which is similar to what they call “woke”.
Millennials are the largest segment of the South African population (though in western Europe it is substantially smaller than the boomers and outnumbered by Gen X). Trends may come and go, but the gap between the amount of insurance people under 30 need and the amount they take out never seems to change. There is a R4trillion gap for under 30s. Of course they can’t afford to pay it. Maybe, as leading journalist Maya Fisher-French says, their parents should pay it, but it is a pipe dream to expect everybody to be covered for all eventualities, long or short term.
That hasn’t stopped Discovery from looking at the under30s market. Death might seem a remote prospect in your 20s, and of course deaths are much lower than for older age groups. But if there is a permanent disability it could mean 60 or 70 years of limited ability to earn an income.
Deaths through cancer and heart disease still happen in the younger age groups, but Discovery’s claim statistics show that the millennials’ motor accident fatality rate is 60% higher than the average of all other age groups. The life office says young persons have a naive sense of invincibility and ignore the probability of suffering a lifechanging event — just as we did. As Gareth Friedlander, a marketing actuary (sic) at Discovery says of the 145,000 graduates entering the workplace at the end of 2018, 3,900 will die or be disabled by 35. He hints that they should continue to pay their disability premiums as the count goes up to 10,000 by 45 and 23,900 by 55.
Only 35% of millennials are saving for the long term. So is this such a bright, well-informed generation? An elementary knowledge of compounding will show how valuable it is to start saving in your 20s, even if you save the equivalent of the price of one cappuccino a week.
No surprise — other than to an insular actuary playing with his slide rule — that there is a preference for instant gratification among millennials, and most other human beings. So only 11% of millennials are consciously saving for retirement, compared with 40% for (shortterm) emergencies.
Almost two-thirds of millennials have a personal loan. Will some of the pressure come off them when free higher education is extended? They’re probably behind their parents and carers in the queue.
The saving grace of the millennials should be their technological savvy. For me an electric vegetable chopper was hightech. The under-30s are taking up Discovery’s Vitality programme in droves, though they also have the skills to game the system to their advantage. Be sceptical about the number of footsteps they claim to take.
What is intriguing is a report from the UK, and Discovery believes trends are similar here, on insurance favoured by the young. Travel insurance is the most popular, and millennials certainly plan to travel more than other generations. It is closely followed by home contents insurance. Both of these are almost three times as popular as life insurance.
Yet life insurance is most important when families are youngest. In SA it is also necessary to take out life insurance to ensure parents are looked after on passing.
Discovery Health’s female members on average have their first baby at 30 and get married at 31. This will not reflect SA as a whole, but it helps to explain why there is limited demand for long-term insurance for people in their 20s.
A challenge for Discovery is that only 16% of Marouns say they are prepared to work with financial advisers. But it is fighting this by employing millennials into its agency force who are more photogenic than your typical stuffy pinstriped adviser.
They realise that technology doesn’t have to be the enemy of human advice but a tool to make it effective. Discovery’s products are notoriously complex and don’t lend themselves to off-theshelf purchases.
Discovery’s Smart Life Plan for under-30s has inducements to improve behaviour, both driving and fitness, which can sometimes lead to a full rebate of premiums. It also offers a promotion tracker, which increases disability cover in line with expected salary increases from climbing the corporate ladder.
TRAVEL INSURANCE IS THE MOST POPULAR, AND MILLENNIALS CERTAINLY PLAN TO TRAVEL MORE THAN OTHER GENERATIONS