51% of Millennials Living at Home Could Be a Big Problem for Auto Insurers

dries-augustyns-UrXMQmhjUOo-unsplashA Pew poll recently reported that for the first time since the Great Depression, a majority of young adults in the US lived with their parents. This has happened as colleges and employers have shut down or moved to remote interaction due to the COVID pandemic. The result is that large numbers of younger, higher risk drivers that are not included on their parents' policies will now be operating their vehicles. As things shift to what is termed the 'new normal' the risk is that these undisclosed drivers will lead to a significant unanticipated increase in casualty losses on those policies.

To protect against this risk carriers need exception processes in place during underwriting, claims and even policy cancellation that allow them to raise the issue with at risk policyholders during the transaction. Carriers also need to be able to compare existing drivers on a policy to past drivers identified on that policy, to other policies that household members have recently cancelled as well as to drivers listed on claims.

But most importantly, carriers need to take stock: how many claims from unlisted drivers? How many policies with multiple quotes? How many policies with a high (>2.5) vehicles to listed drivers’ ratio? This will give them a clearer picture of how much damage this alarming trend is likely to do.