How can insurers engage with Gen Z consumers?
Connecting and engaging with Gen Z customers is a challenge for all businesses on every continent. Entire management consultancy reports and conferences are dedicated to the subject. Here are some key factors insurers need to be aware of.
Who are Gen Z consumers?
“There is no standard scope, but we define Generation Z as aged between 11 and 24. This spans young people who are in and outside the workforce,” says André Schlieker, Accenture Research Global Insurance Lead.
This places Gen Z between the older Millennials and the younger Generation Alpha.
In Europe, the Gen Z population is estimated at 17.0%. In the US, Brookings estimates Gen Zs comprise 20.3% of the population, writes William H. Frey in his article “Now, more than half of Americans are millennials or younger”. In Asia Pacific, McKinsey forecasts that by 2025, Gen Zs will account for one-quarter of the region’s entire population (“What makes Asia−Pacific’s Generation Z different?” by Aimee Kim, Paul McInerney, Thomas Rüdiger Smith, and Naomi Yamakawa).
It’s important to grasp the regional differences. Gen Z is not a homogenous cohort in terms of cultural and educational background or financial means. Although Gen Z mindsets share similar behavioural influences, they respond to distinctive local and regional factors as well as global trends.
How important are mobile technologies for Gen Zs?
“There are some features that make Gen Zs a less obvious target for product development, marketing and distribution,” says Thomas Müller, Accenture Song Europe Design Co-Lead. “However, in a competitive business environment, Gen Zs will set new standards and illustrate building blocks of future success in the insurance business.”
“Gen Zs will set new standards and illustrate building blocks of future success in the insurance business.”
Gen Z attitudes are shaped by their upbringing with mobile technologies and digitalised experiences. Gen Zs are instinctively mobile-centric. Platform technologies, such as e-marketplaces, streaming and short-video apps, are used daily for consumption and entertainment. As voracious users of social media, Gen Zs trust their social peers and influencers to help shape their own opinions about brands, products and services.
“At the same time, Gen Zs experience their own uncertainties in their environment and have a strong desire for security and protection. This has been accelerated during the pandemic,” says Thomas Müller.
How do Gen Zs perceive the insurance industry?
“The insurance industry has an image issue for the younger generation. Insurance addresses unsettling topics at an age where risks are barely seen or recognised,” says André Schlieker. “They are yet to fully recognise the benefits of insurance protection and mitigation in various areas of family or social life and activities.”
Their youthful age and relative inexperience in the workplace mean Gen Zs have relatively few financial and physical assets, and limited care responsibilities towards children or family members.
“Gen Zs are yet to fully recognise the benefits of insurance protection and mitigation in various areas of family or social life and activities.”
“They are at an early stage in terms of provision for their own old age and retirement. The physical assets they own and value may be mobile, such as laptops, sports and entertainment equipment,” says André Schlieker. “This might lead traditional insurers to look at different risks to the ones they would typically cover, such as cyber risks.”
Will Gen Zs drive demand for emerging insurance products?
“Gen Zs reflect the shift in risks that insurance carriers are facing today,” says Thomas Müller: He cites aggregated revenue opportunities for areas of insurance that will expand by 2025, and that will be influenced by rising Gen Z demand. Based on an end-of-2021 assessment, for European insurers these products will include Smart health (about USD 10 billion), Freelance workers (about USD 6 billion), Cyber risks (about USD 5 billion) and Small-ticket items (about USD 3.5 billion). He adds that many revenue growth areas for insurers over the coming years will need to be addressed through innovative approaches.
“Gen Z consumers will share personal information with insurers in return for certain added benefits and more personalised, relevant service,” says Thomas Müller. Increasingly, financial services are built on data and delivered through mobile channels. This adds value for Gen Zs beyond mere insurance coverage.”
Why should insurers be ready for gamified promotions?
Making customer interactions engaging and participative is vital. “Gen Z’s digital upbringing shapes the way this generation sources information, guidance and advice for their commercial interests,” says Thomas Müller.
Gen Zs navigate seamlessly between physical and digital spaces. This places emphasis on marketing through direct digital channels, plus augmented reality and metaverses.
Retail brands in Asia are developing gamified mobile marketing to encourage consumers to interact in challenge-based promotions inspired by computer gaming. This enables Gen Zs to be digitally entertained while learning about new products and services.
Gen Zs also buy into pay-as-you-go and subscription-based offerings,” says Thomas Müller. “More than other consumer cohorts, their focus on a healthy lifestyle and preparedness for new cyber risk solutions is shaping their risk exposure – and, eventually, the price and the value-for-money of their insurance products.”