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

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: 

• Sustainability over brand names: Gen Z places a higher value on “green” offerings than brand recognition, making them more likely to purchase insurance from a company committed to reducing their environmental impact and offering eco-conscious products and services.

• Emphasis on transparency: Openness about pricing and policies is non-negotiable, as both Gen Z and Millennials tend to harbor skepticism toward traditional institutions. 

• Digital preference: As the first generation born into the digital era, over 90% of Gen Zers own mobile devices. Insurers offering user-friendly online platforms will inevitably attract more young customers than those who don't.  

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.