Insurance Gets Hip

American Demographics, Jan 1, 2002

Prior to the nightmare of Sept. 11, the insurance industry seemed like a conspicuous province of the boom days of the 1950s. With GI Bill-educated warriors entering the white-collar world, and their families cashing in war bonds and sprawling into subdivisions, the country brimmed with new money, new earning power and a new sense of household propriety. And the insurance business boomed as well, selling peace of mind and security.

Insurance was something few ever expected to see advertised to the viewers of MTV.

Yet, if you tuned in recently to the erstwhile music network, or ESPN or Comedy Central, you might have seen the stylish, fisheye spots for State Farm, the Bloomington, Ill.-based insurance giant, which had $78 billion in total assets in 2000. "Like a good neighbor," State Farm agents have stripped down to their shirt sleeves to hang with twentysomethings, skateboarding with them, scratching at the rave, browsing at the fashion-victim salon. On the Web, cruise into a young adult targeted Web site, say, Rollingstone.com, and you may behold a giant pop-up ad that presents a streaming progression of trendy young people, under the copy, "No matter who you are or what you drive ... there is a State Farm agent for you." The Gen X reps - overly made-up, vinyl-adorned poseur, the guy in dreads, the white punker also in dreads - appear in tandem with an automobile that matches their own offbeat look.

In terms of iconography, this is not the intrepid insurance person of the myriad home and casualty ads of the past 20 years, showing up after the horrible storm, or the quirky, comedic pitch for the lowest auto insurance rates in the business. In an industry that has long put on a somber, hyper-honest face, State Farm may be the first company to try to put on that sardonic grin that seems the province of Gen X.

"We do life solutions, and we do that by following life stages," says Melinda Mueller, marketing manager at State Farm. "A first car. Graduating from college. Getting your first job. Getting married. You start buying life insurance when you have a baby. Most renters happen to be in this younger group, but only 3 in 10 have renters insurance. Statistics show that people are getting credit cards and managing their finances younger and younger. But as we analyzed our portfolio business, and compared our market share and market penetration in this group, we saw a great opportunity."

It's the old business chestnut, via baseball metaphor, of "hitting 'em where they ain't." And as insurance goes, Gen X is a relative void, simply because it's entering such stages for the first time, and later in life than previous generations. According to U.S. Census Bureau data, today's young adults are getting married later: the median age for men rose to 27 from 22 a generation ago, and to 24 from 20 for women. This behavior pattern is likely the result of the 40 percent divorce rate of the 1970s in which they grew up. Coming of age in the era of downsizings, they consider jobs less careers than the means to cover this year's rent: the median stay at jobs by workers in their early 20s has been halved since 1983, from 2.2 years then, to 1.1 today, according to the Bureau of Labor Statistics. Although skewed by their time in the work force, Gen Xers' average investments in savings accounts, IRAs, mutual funds and stocks all stood at around half the amounts of Baby Boomers', according to a 1998 report, "Generation X - A Market in Its Prime," by life insurance industry association LIMRA International.

At worst, this does not indicate a market with the inclination or wherewithal to invest in financial support services. In the related life category, as of 1998, according to LIMRA, 55 percent of those age 25 to 34 were protected by some type of life insurance, but individual life insurance owned by 25- to 34-year-olds had dropped a precipitous 9 percentage points since 1992.

Still, Gen Xers have shown more of a propensity to save what they do make for the future than Boomers. According to a 1999 survey by the Employee Benefit Research Institute, 68 percent of Gen Xers had begun saving for retirement, an impressive rate, compared with younger Baby Boomers (68 percent) and older Boomers (77 percent), and a higher rate than earlier generations, according to LIMRA.

At the same time, a cabal of interested parties have done much to flip this general have-not-but-forward-thinking status for ulterior purposes. For all the hay George W. Bush made last year about re-channeling Social Security dollars into private investment portfolios, such privatization has been the decade-long mantra of PR praetorians masquerading as Gen X advocates. Largely underwritten by financial service giants, these fronts beat an incessant drum of Gen X's festering disgruntlement over the "Ponzi scheme" of Social Security, to call for the scrapping of current fiscal safety nets in favor of a private investment sluice.

If true, this could well indicate a young adult market that would be friendly to a broader bourgeois phalanx of financial services, from investment brokerage to insurance - but it's a big "if."