Travelers is betting that its new renters insurance policy can offer young people something different than a traditional renters insurance product.
As a growing number of insurtech startups work to lure millennials with products specifically geared for this up-and-coming generation, legacy insurers refuse to let them capture this lucrative and growing market without a fight.
The latest sign of resistance came recently when Travelers launched Traverse, a product it characterizes as an “alternative” to traditional renters insurance. While the policy covers the usual personal belongings of most millennials such as electronics and mobile phones and provides the liability coverage typically included in a renters insurance policy, it adds some unique features like identity theft protection and the option to recoup any lost money from a cancelled trip.
Unsurprisingly, Travelers reached out to its target audience when designing this product. “We asked millennials about the types of insurance that would meet their needs, and we built a completely new insurance product,” Beth Maerz, Vice President of Customer Experience and Innovation for Personal Insurance at Travelers, said in a statement. Now, the insurer waits to see if millennials will respond.
Stepping into the Digital World
Similar to other insurance startups directed at the millennial market, Traverse enables policyholders to buy a policy and make any changes to the contract online or over their smartphone. These policies can satisfy any landlord’s demand for renters insurance, but in a break from traditional renters insurance, Traverse policyholders don’t need to obtain another policy if they move to a different apartment.
Currently available in New York only, Traverse includes no deductible and costs between $8.00 and $32.00 a month, depending upon what items the policyholder wants to insure. Maerz told the Wall Street Journal that consumers can still obtain a standard renters insurance policy in New York in addition to Traverse. The product, she said, is simply intended for people — namely, millennials — looking for something other than traditional renters insurance.
Vying for the Renters Market — and More
With Traverse, Travelers hasn’t just crafted a flexible product that it hopes can attract millennials. It’s also casting its net further into the renters insurance segment — a marketplace dominated by the younger prospects it wants to convert. As of 2016, 65% of people under the age of 35 rented their homes, while 41% of those between 35 and 44 also rented, according to Pew Research.
As common as renting is, however, research from the Insurance Information Institute reveals that only 41% of renters are covered by an insurance policy, leaving startups and traditional insurers like Travelers a large untapped source of new business for this product.
Like other traditional insurers, Travelers faces stiff competition from insurtech startups like Lemonade, which advertises renters insurance policies for as low as $5.00 per month on its digital platform. Insurtech outfits are entering traditional insurance segments such as life insurance, too, all with the intention of attracting younger individuals.
With Traverse, Travelers may be playing the long game. By providing millennials with an insurance product they need now, it hopes that it can establish its name in the minds of millennials at the beginning of their insurance-buying years, giving them all the reason to stay with the company as their insurance needs change and grow.Christopher Martin, Insurtech Research Lead for the U.S. for PricewaterhouseCoopers LLP, told the Wall Street Journal that Travelers could successfully battle insurtech startups with such a strategy. “All the insurers know,” he said. “They need to try to figure out a different way to either brand themselves or brand what they’re doing.”