Generation Rent is only increasing as a theme due to soaring house prices and the cost of living crisis, which means insurers will have to find new ways to reach renters. Purchasing a first home is a leading trigger for buying home insurance, but insurers can no longer rely on consumers naturally coming into the market in that way.
GlobalData’s 2021 UK Insurance Consumer Survey found that 88.2% of homeowners had a form of household insurance in 2021, compared to just 48.4% of renters. As the age at which consumers buy their first home increases due to macroeconomic factors, insurers will need to go out of their way to reach people in their 20s and 30s.
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Our survey also found that only 6.3% of renters intend to stop renting within a year, with the vast majority of respondents expecting to live in rented property for at least two more years. House prices soared in the UK following the COVID-19 pandemic, and this combined with high inflation, slow wage growth, and recurrent job insecurity across certain sectors during the pandemic has made purchasing a house even harder for younger people.
As insurers cannot rely on people buying insurance automatically when they buy a house, they need to reach out to renters instead. Start-ups such as Urban Jungle and US insurer Lemonade have had success offering renters’ insurance. These policies have to be cheap, flexible, and digital to succeed, but this is something traditional insurers could offer, as they are becoming more adept at selling policies online, including through tablets, mobiles, and apps.
While such policies may be cheap and not especially profitable, they will help bring younger people into insurance and prevent the household penetration rate from gradually declining as more and more young people continue to rent.
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