Gen Z are here. Whatever you may think about this youngest generation of consumers, they’re now firmly in the market and have come a long way since some of them were eating Tide Pods almost half a decade ago. Let’s start with the elephant in the room: traditionally, young people don’t buy insurance. However, Gen Z have more insurable assets than any previous generations of the same age as phones, laptops and tablets have become both necessary and relatively affordable. Moreover, in order to build trust with younger customers, insurers can provide an experience right out of the gate to turn first-time buyers into long-term customers and even brand advocates.
To shed some light on this latest generation of consumers, we sat down with Javier Bosch, CEO and Co-Founder at Cleverea, a personal lines P&C insurtech. He started with an interesting observation: “I would say that we no longer compete with incumbents. Customers will look for the bar that other brands like Uber and Amazon have set before us.” Essentially, the insurance industry isn’t competing within itself any more. It’s competing against tech companies.
On Gen Z’s buying habits, Javier commented: “They’re looking for convenience rather than just pure price. They grew up with an iPhone in their pockets, which means that everything has to be super accessible fast. It needs to be flexible.” Fast and flexible. Two crucial words there. Will a generation whose attention is usually drawn by short-form content on platforms like TikTok really want to engage in the lengthy process of buying an insurance policy? I’ll leave that for you to decide, dear reader.
Before we even get to the purchasing stage we have to think about one of the challenges at hand. Young people don’t buy insurance. This isn’t news. This has been true as long as insurance has existed. Javier tackles this particular challenge through narratives: “One thing that works is to communicate real stories of customers that had to deal with insurance claims in the past. It’s not that we want to scare people but it’s just providing real stories of other people that used insurance and what it was worth to them.” It’s true that stories work. When you hear a story that resonates with you, you’re far more likely to remember it and, more importantly, tell someone you know about it. Of course, data is the lifeblood of any business but anecdotal evidence can create an emotional connection with an issue that leads to sweeping changes.
Let’s say, for the sake of argument, that we now have a cohort of early twenty-somethings that are eager to buy insurance. What do we want the experience to look like? “Look, price will always be a key variable of any product. But think about product flexibility – you can give people the chance to re-evaluate after a few months if they don’t think they’re getting value from it. 50% of our customers value the purchasing experience more than even the coverage itself. They want it fast, online and also to understand what they’re paying for.” Product understanding, or lack thereof, has long been an issue for insurers. When customers who have been prioritising price over everything else, not knowing what their policy covers can lead to difficult claims experiences. The industry has a unique challenge: you have to lead this horse to water and you might also have to help it drink.
We also can’t forget the claims experience itself as both a pain point and differentiator. We know that Gen Z are looking for flexibility, but what else: “These consumers are looking for real time information. They want to know the status of their claim, the next stage, who takes care of what, what they’re supposed to do, what documents they need. They want to be kept informed.” With things like push notifications on smart phones, it shouldn’t be too hard to create that on the front end. Javier continued, “They also want the flexibility to approach their insurer in different ways. Some prefer to call, some like e-mail, some like WhatsApp. When something’s important or urgent, most people want to speak to someone, not deal with a chatbot. We’ve tested that and it doesn’t work!” So it’s not all about digitising the whole experience. While Gen Z might be able to navigate through websites and platforms much easier than older generations, the old fashioned call centres are still a necessity.
A crucial element for Gen Z is how this cohort perceives the insurance industry. Javier said “Honestly, if I asked any of my peers to name around 10 or 20 brands that they know, they probably wouldn’t mention an insurance company. At some point it just becomes perceived as a ‘necessary evil’ that you don’t want to deal with until you really have to face reality.” Essentially, the perception problem is that there is no perception. Young people simply don’t engage with these brands regularly.
Javier commented, “Another issue is that Gen Z consumers are looking for brands that appear to align with their values. Going beyond being a provider of a service or product, they want brands that have strong values or opinions that reflect their own.” We all generally know what these values are related to – sustainability and DEI are two key areas that are consistent talking points currently. Javier added: “Not only do our customers look for that but also our own employees. Both our customers and our employees are aware of the impact of our brand in the world both in terms of our internal and external operations. So we want to make sure that even our partners are aligned with the values of being respectful to the environment, integrity, diversity in the team. For example, we have 7 or 8 nationalities in a team of 50 people which we hope reflects at least some of that.”
You only have to take a quick glance at the agendas of insurtech conferences around the world to know that these issues are a key focus of the industry. ESG is consistently discussed. Insurers’ HR teams are prioritising diversity initiatives. Improvements made to internal operations and teams can elevate employer branding and, as a result, customer acquisition and retention. It all links together.
While younger consumers might not be a key target demographic for insurers just yet, there are still plenty of opportunities for some departments to focus on. Life insurance might not be the battleground as of yet, but the personal P&C space should definitely take note and try to create strong connections between brand and consumer. You never know, if a 23-year old has a great experience insuring their first car with you, they might be swayed into buying their first ever homeowners policy with you as well. However, it’s not a slam dunk. Insurers need to show that they’re keeping up with the times, or customers might just look elsewhere.