Gen Z comes of age: Insurance's turn to mature

Gen Z comes of age: Insurance’s turn to mature

Time Stamp: October 24, 2023 9:39 AM
Source Node: 2953271

Gen Z, the digital-native generation, is entering adulthood and making financial decisions for the first time. This demographic is the lowest category of uninsured Americans (9%) compared to previous generations (39%). This mindset shift toward financial planning presents a unique opportunity for insurance providers.

Traditionally, the insurance industry has been slow to adopt digital changes, with 60% of insurance companies reporting challenges with legacy system modernization and integration of tech platforms despite a 57% increase in customer demand for digital insurance applications. However, insurance providers must pivot to offer products and tools tailored to the changing needs of Gen Z customers if they want to catch this generation’s attention. 

Gen Z is a tech-savvy generation expecting seamless digital experiences from their financial partners. Gen Z also values personalization and convenience. Insurance providers who meet these demands will be well-positioned to win over this generation and more to follow.

Gen Z-friendly insurance

So, what is Gen Z looking for in an insurance provider? Well, they’re the most racially diverse generation in American history. Growing up in a culturally mixed world has led to nearly 90% of Gen Z greatly valuing diversity, equity and inclusion (DEI) initiatives and seeking insurance partners with similar values. Other concerns include: 

To meet Gen Z’s needs and expectations, insurance providers must understand and incorporate those shared values into operations. Reducing paper use, avoiding fine-print surprises and investing in digital innovation are all actions companies can take to meet this generation where it’s at.

To attract younger consumers and build a sustainable business for the future, insurance providers can:

  • Design mobile-friendly websites and apps: Gen Z accounts for 20% of the population, yet 40% of mobile users. This generation values digital convenience, so insurance providers must offer mobile-friendly websites and apps to manage policies and file claims on the go.

  • Engage on social media: Gen Z has an active online presence. Insurance providers should engage with them on these platforms by providing helpful information, responding to customer questions and running social media contests.

  • Partner with influencers: Over half of Gen Z trust the advice about the brands or products influencers promote. Insurance providers should partner with social media influencers who align with their brand and can effectively promote their company messaging.

  • Use AI for customer experience: Insurers should leverage AI to automate and expedite tasks like rental insurance claims processing. Gen Z expects a seamless customer experience, and this technology frees customer service representatives to focus on more complex issues.

  • Offer discounts through digital channels: Compared to boomers in their twenties, Gen Z is paying nearly 100% more for their homes and has 86% less purchasing power. Insurance agencies can use cross-channel promotions or unique methods like deposit insurance to incentivize tech-savvy customers through their website or app.

Insurance products tailor-made for Gen Z

Insurance companies finally recognize Gen Z's unique needs and preferences and have broadened their approach to provide innovative options this generation appreciates. For example, some companies have introduced pay-per-mile car insurance, an ideal solution for remote workers. This model bases coverage on actual mileage, offering flexibility and more affordable options for infrequent drivers.

Green insurance appeals to sustainability-conscious Gen Z customers by incentivizing low-mileage driving and environmentally friendly repairs of covered losses. This offering aligns with eco-friendly values and encourages responsible driving practices.

Homeownership remains a distant goal for many young adults, so renters and security deposit insurance have become essential. With most Gen Z opting for rental accommodations, these insurance products offer peace of mind and financial security.

These insurance products offer the level of personalization Gen Z seeks and demonstrate insurance institutions' commitment to providing coverage reflective of the new adult generation's reality, lifestyle and values. Gen Z is redefining the insurance landscape. Their demand for transparency, ethical practices and social responsibility aligns with their appetite for cutting-edge digital solutions.

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