Generation Z’s appetite for personalized, digital-first experiences can unlock new revenue opportunities, both now and in the future.
In this article, we review how insurers can leverage this opportunity to develop longstanding relationships with this digital-first generation:
- Adjusting the insurance value proposition
- Nudging for healthy behaviour
- Maximizing digital engagement and brand authenticity
Generation Z, or “Zoomers,” the cohort born between the late ’90s and early 2010s, is widely known as the first “digital native” generation. They are also the least likely to purchase any form of insurance. Insurers should understand the unique coverage needs of Zoomers and how they interact with corporate brands to maximize long-term revenue growth and customer retention.
Zoomers don’t buy a lot of insurance. They typically do not own homes, have dependents or own vehicles, and they are generally in good health. Many already have some coverage from a family member’s policy anyway.
Same Products, New Value Proposition
Nevertheless, older Zoomers in or entering adulthood do need various types of insurance — it may just look a little different. It’s the industry’s job to help these young people understand the benefits of coverage. Their appetite for personalized, digital-first experiences can unlock new revenue opportunities, both now and in the future.
Let’s take life insurance as an example. Most Zoomers skip life insurance because they don’t have dependents, making it difficult to justify the cost of the policy. But what if we presented an alternative value proposition?
Life insurance marketing often focuses on financial protection for a traditional family structure. A socially conscious twenty-year-old is far more likely to purchase a life insurance policy if it is marketed as an inexpensive and customizable way to support a particular cause and leave a legacy.
Some innovative carriers are even marketing life insurance as a way to buy a tattoo for a friend, pay for an environmentally conscious funeral or send a friend or family member on a trip to Europe. In this way, life insurance is positioned as an act of love. Most importantly, the customer feels like he is in control.
Personalized messaging, at different points of life, is key to filling generational gaps in coverage. By crafting an alternative value proposition, insurers can turn Generation Z into their most valued customers.
Generation Z’s Unique Characteristics Spell Opportunities to Deliver Personalized Experiences
Between growing up amid the Great Recession and experiencing the COVID-19 pandemic in late childhood or early adulthood, Generation Z’s confidence in life planning and financial security has been shaken. Indeed, workers under age 25 were 93% more likely than workers over 35 to be laid off during the pandemic, contributing to lost insurance coverage.
As a result of these experiences and their ability to easily find information online, Generation Z is highly price-sensitive. 60% of Zoomers said price was the biggest factor when choosing which brand to buy from. Young people today are savvy consumers — comparing prices, identifying discounts and reading reviews.
“They don’t want to pay full price for anything,” says Jason Dorsey, a Gen Z consultant and researcher.
The implications for insurance are clear: Insurers that offer both lower prices and price transparency will attract post-millennials.
“Offer lower prices” is easier said than done and has been a priority long before Generation Z. Instead, where insurers can really shine is in offering the right product at the right time to the right user.
For example, Generation Z is the most likely to celebrate their pets’ birthdays (81% do, according to a recent survey!) and treat them like a member of the family. How likely might they be to purchase pet insurance from an insurer that offers discounts and rewards on their furry friend’s birthday?
With the recent turmoil in the job market, many Zoomers are turning to gig work full-time. The growth of the gig economy means health, dental and life coverage traditionally offered through employer plans must be provided differently. Gig workers often seek untraditional terms for the insurance products they purchase, in some cases day-to-day or gig-to-gig.
While Gen Z is highly price-sensitive, this is balanced by their increased comfort with sharing personal data in exchange for discounts and personalized policies. This opens up a massive window of opportunity for insurers to deliver personalized experiences to this demographic.
Insurers that can provide on-demand, flexible coverage of key products, with simple self-service options and real-time quoting will find great success serving this underserved market.
Nudging the Health-Conscious Generation
Generation Z is the perfect consumer for life and health insurers. According to a UNiDAYS survey:
- 87% of Gen Z exercise three or more times per week
- 65% use fitness apps
- 28% use wearable technology to track workouts.
Insurers that leverage health and activity data to offer rewards and discounts can expect a high level of engagement from Generation Z. This generation embraces relevant technology and prioritizes their physical and mental health.
Wearables, like the popular Fitbit or Apple Watch, can help customers track various health indicators such as physical activity, heart health, sleep and nutrition. Insurers can then leverage this data to send coaching triggers via a digital assistant to encourage healthy behavior based on customer goals through personalized multichannel notifications via mobile, web, email, etc.
This technique is called nudging. Nudging is a behavioral science approach that uses subtle interventions to help users make better decisions while respecting their freedom of choice.
Using the same platform, insurers can offer timely discounts, recommend additional coverage and suggest more personalized policies based on the customer’s unique characteristics identified through health and behavior tracking.
Sun Life’s digital assistant, Ella, gave clients 15 million nudges in 2020, leading to an 83% increase in additional coverage purchased. Carriers that adopt nudging and behavioral analytics will maximize customer engagement and increase revenue.
Maximizing Digital Engagement Among Gen Z Consumers
Gen Z is known to be less likely to display brand loyalty, meaning they will happily switch from one insurer to another that offers lower prices. However, Gen Z is more likely than previous generations to be enthusiastic about a brand, engaging via digital channels and providing valuable insight into the marketplace.
Recent research from IBM shows that, if given the opportunity, 44% of Gen Z would submit ideas for product design and 36% would create digital content for the brand. When they share opinions online, they offer 2X more positive feedback than complaints. Gen Z, due to their digital literacy and shopping habits, are also highly influential in family spending.
While the benefits are clear, they come with high expectations. Post-millennials will switch insurance providers in a heartbeat if they are not provided with an always-on customer experience on their preferred platform.
When shopping for insurance online, Zoomers will compare multiple options by “parallel browsing” (having multiple tabs open at once). Insurers must adapt to this behavior by encouraging the user to remain on their website or app. Aside from the price itself, Zoomers reward clarity of information (i.e., “apples to apples”) and instant quoting that simplifies their research.
A recent Gen Re survey of Zoomers in Germany found that most respondents found insurance to generally be “non-transparent, difficult to comprehend and untrustworthy.” This generation is not easily swayed by polished marketing campaigns. Instead, they seek authenticity and integrity.
Insurers should also structure their digital presence to “coach” users through the insurance purchasing process, articulating why each step is necessary. One recent survey shows that many Zoomers do not have life insurance because it seems too complicated. Trends such as accelerated underwriting (AUW) and digital assistants can drastically improve the customer experience and speed the purchasing process.
Of course, a great mobile-first experience is essential. Zoomers are on their phones day and night!
The Window of Opportunity Is Open
There is no one-size-fits-all solution to engaging Generation Z. It’s actually the opposite: Post-millennials expect an always-on, personalized digital experience from the brands they interact with.
To be successful, insurers should be prepared to engage with Gen Z across multiple digital channels, offer more flexible policies and articulate a value proposition that is aligned with this generation’s appetite for risk, their increased social consciousness and their hunger for transparency and authenticity.
As Gen Z matures, they will establish their tastes and preferences as consumers. Insurers that prioritize the needs of this generation will not only establish themselves as trusted insurers to an aging Gen Z in the future but will be even more influential to older generations today.