Combined, Gen Z (born between 1997 and 2005) and Millennials (born between 1981 and 1996) account for 43% of the US population. As these two groups continue to age into the workforce and begin to inherit generational wealth, their buying power is substantially increasing. This poses a window of opportunity to attract the loyalty of these consumers and count them as customers for years to come. In order to capitalize on this, insurers must be reevaluating their go-to-market strategies and asking themselves how they can best appeal to younger generations.
As one can imagine, the insurance needs of Millennials and Gen Z are different from those of any generation that has come before them. The problems that concern them and what motivates them to buy are shifting the standards for engagement between insurers and individuals. Plus, this group has virtually never not known a technology-driven world without instant connection and gratification. Providers must rethink how they interact with, attract, and retain these new generations of customers.
In our recently released research report, “Future-focused Insurance: Inside the minds of emerging insurance consumers,” we examined the attitudes of Millennials and Gen Z towards insurance; specifically uncovering how well these younger generations understand insurance, what they value about it, and what drives their purchasing decisions.
As the report reveals, if insurers want to win over the next generations of insurance buyers, they must differentiate themselves and meet Millennials and Gen Z where, when, and how they want to shop. Here’s how.
The report's findings reveal that 56% of respondents do not feel confident in their insurance knowledge (especially younger consumers, as Gen Z respondents were 23% more likely than Millennials to say this). Meanwhile, 48% of respondents do not feel confident that they’re making the best possible choices when purchasing insurance, and 50% are not confident that they even currently have the correct amount of insurance coverage for their needs.
Clearly, there is a distinct opportunity for insurers to bridge this knowledge gap and instill trust with young consumers; it’s in an insurer’s best interest to help young people gain a better understanding of insurance and how it impacts their lives. When insurers go beyond just selling policies to consumers, and pay more attention to providing better outreach, education, and experiences, they are bound to differentiate themselves from the competition (which is much needed considering 75% of Millennials and Gen Z in the study believe that most insurance providers are the same). The most successful insurers in the years to come will be those who are able to show distinct value to each consumer by acting as a trusted resource and establishing transparent and meaningful relationships with them throughout every touchpoint and interaction.
One can safely assume that Millennials and Gen Z are pretty comfortable interacting with digital tools and experiences. 96% of those in our survey said that when researching insurance policies, they search for options online. However, 75% say that they still want access to the advice of an insurance professional, even when purchasing online. Afterall, these consumers don’t feel like they know enough about insurance (as evidenced in the statistics previously mentioned), so having the support of someone who does is certainly beneficial.
An omnichannel approach gives insurers the ability to engage with customers using both digital and offline touchpoints to ensure customer satisfaction. When asked their two most preferred channels to use when working with an insurance professional, respondents answered (in order of preference): phone, in-person, email, online chat, and text message. Meanwhile, when searching options online, the most valued sources are: insurance company websites (65%); comparison websites/marketplaces (58%); insurance-adjacent websites, like those of banks and realtors (31%); and independent agent websites (29%).
Interestingly, 40% say they also consult social media while researching insurance online, with 69% of these respondents saying they pay attention to social media influencers and are 54% more likely to purchase products from brands that partner with influencers they follow.
Thus, insurers need to be thorough in their approach to meeting their customers. A unified presence across all channels – both digital and offline, traditional and emerging – requires continued investment in modern, integrated solutions as technology evolves and new opportunities for engagement emerge. Leveraging advanced tools like APIs for embedded experiences or texting capabilities to communicate with customers on their terms is key to being on the forefront of innovation and maintaining relevance with younger consumers.
When it comes to prioritizing the cost of insurance or the amount of coverage they have, Millennials and Gen Z are torn. 49% say that they prioritize ensuring they have adequate coverage for their needs, while 51% prioritize the price of coverage.
And while some don’t have a choice but to prioritize price (due to their current income or economic concerns), they still certainly realize the importance of having the right coverage: 50% of respondents have encountered a situation where they did not have adequate insurance to meet their coverage needs (Gen Z respondents were 21% more likely than Millennials to say this). 60% of respondents overall say that finding out they didn’t have enough coverage from a provider would make them less likely to purchase from them again.
This data shows that while pricing plays into their purchasing decisions, Millennials and Gen Z are keenly aware of the importance of having the right coverage in place. This along with the fact that these consumers lack confidence in their insurance knowledge again highlights the opportunity that insurers have to step up and act as a trusted source of information for these younger customers. Plus, it’s to the benefit of the insurance companies that their clients have enough coverage, so that if and when a loss occurs, costs are more controlled.
Thus, using transparent pricing and personalization seems like it would only attract these customers. In fact 94% of respondents believe that personalization should be the standard for insurance policies. And considering a vast majority of this age group is willing to share financial information (83%) or telematic data (73%) in exchange for discounted insurance rates, there is a distinct opportunity to attract this cohort through usage-based insurance programs or risk-prevention services.
Not only are Millennials and Gen Z interested in interacting with insurers directly through different channels, they’re also interested in accessing insurance in ways that fit into their already established lifestyles. 64% say that being offered the option to buy insurance alongside a relevant purchase makes them more likely to purchase insurance that they otherwise wouldn't seek out. A whopping 94% of those who have actually purchased insurance alongside a relevant purchase say they did so because they trusted the brand, and it didn’t matter who the insurance provider was. As they say, convenience is king and since two-thirds (66%) of Millennials and Gen Z admit to dreading the insurance purchasing process, co-opting a pre-existing relationship status between brands and their respective customers will not only meet consumers where they already are, but also expand your market presence at a lower acquisition cost.
Additionally, Millennials and Gen Z are interested in having a choice when it comes to which insurance companies they purchase from. As the cost of just about everything is on the rise and the market hardens, consumers will be shopping around for insurance. If you can’t offer them the best price or the best product for their needs at a particular moment in time, wouldn’t you rather let them see other options from other carriers, while still retaining a relationship with them and at least benefitting from a commission?
In fact, a majority of our respondents would be just fine with that. 78% of Millennials and Gen Z say that if they were shopping directly with a carrier that could not meet their needs, they would appreciate the option to purchase from another provider within the same purchase journey. This also plays into being a trusted and transparent provider as mentioned already. Sometimes filling that role for a consumer also includes knowing when you're not the right fit for them, but still creating an efficient way to help. It says a lot to a consumer when you’re there to help them do whatever you can to help them get the coverage they need, even if it’s with a different provider.
It might surprise some to know that 92% of MIllennials and Gen Z review their insurance policies at least once a year. Insurers should see this as an opportunity to engage with customers more intentionally and frequently. Insurers must be suited with the right technology, distribution strategies, and partnerships in order to remain top of mind when these customers need help with accessing coverage.
As Millennials and Gen Z enter a time in their lives where they increasingly need to secure insurance (and those needs might be much different than their parents), insurers should aim to connect with and inspire these new generations to get the protection they’re looking for in a manner that works best for them.
Simply put, the business of insurance is no longer as predictable as it once was. If insurers are able to redefine the role they play for customers, and show distinct value through better outreach, education, experiences, and coverage options, they will be well positioned to have a positive impact on the lives of younger consumers, and count them as customers for years to come.
To read the research report in full, please find it here.
Note: A version of this article was published via Carrier Management on May 25, 2023. Reprinted here with their permission.