Infographic – Insurance trends for Gen Z & Millennials
By Katerina Mansour - 20 June 2022
The insurance sector has been undergoing a digital transformation for several years now, namely with the emergence of insurtech solutions reshaping the sector. Indeed, the insurtech market is projected to be worth $152 billion by 2030. Furthermore, a survey showed 88% of insurers believe insurtech offers key opportunities. However, while many insurance trends centre around optimising processes for insurers, there are also key challenges to overcome when it comes to the insured. A hot topic has been the different ways Gen Z and Millennials perceive and interact with insurance versus older generations.
In this infographic (bottom of page), we look at some of the key insurance trends specific to Gen Z and Millennials. We also highlight some recent news and key startups that illustrate how the insurance sector is adapting to young consumers’ expectations and demands.
What do Gen Z and Millennials look for in insurance?
Some of the key challenges insurers face today is adapting to what younger generations expect from insurance policies. Studies and surveys have shown that their preferences differ from those of older generations. Let’s look at some of the expectations younger generations have for their insurance:
A fully digital experience
Too much paperwork is a common reason behind Millennials’ and Gen Z’s frustration with insurance. This often leads them to forego getting insurance altogether. Complicated processes go hand and hand with this challenge. When you have to go through too many hoops to get insured, it can quickly become frustrating to the point where you give up.
While a simplified digital experience to acquiring and managing an insurance policy presents benefits for all generations, it’s especially important for Millennials and Gen Z. Mobile apps with just a few quick steps to define and set up an insurance policy are emerging worldwide in recognition of this fact.
New types of coverage
Many insurance startups are also adapting to the different needs of younger generations. For example, studies have shown insuring a pet is something Millennials and Gen Z are more likely and keen to do. A survey showed 31% of American Millennials with pets have pet insurance. As such, digital pet insurance with an easy set-up process is growing in popularity.
Other startups are including coverage within their policies that is more comprehensive than traditional insurers. An example of that could be covering accidental breakage of one’s personal effects as part of a home insurance policy.
Of course, it has also become more common in recent years to provide insurance for items like phones, drones, and other tech gadgets as well.
Personalisation and flexibility
One of the many reasons younger generations cite for being uninsured is cost. Traditional policies often include coverage that doesn’t apply to the customer’s personal situation and on top of that, are often costlier. Millennials have become known as a generation that is smart with its money. Careful budgeting and being frugal are arguably linked to the financial crises they’ve lived through. As such, they often do extensive research to try and find the best-priced policy. The insurtech sector has taken note of this and is providing more flexibility when it comes to payments and the contents of a policy. Lower prices, more flexible payment plans and policies tailored to the client’s specific situation are becoming key characteristics of today’s insurance policies.
Personalisation is a key element that Millennials and Gen Z tend to gravitate towards in all sectors. As such, it’s one of the many insurance trends as of late. A Capco survey showed 47% of Gen Z and Millennial policyholders are willing to share data from smart home devices with an insurance company to unlock personalised products and services.
Another example could be auto insurance based on collected data on how well and how much you drive. Health or life insurance based on data regarding your lifestyle and current situation is also one of the rising insurance trends. Overall, it’s clear the “one size fits all” approach is not a winning choice for younger generations. Many insurtech startups are therefore seeking ways to make policies as tailored to their users as possible.
Market education is still necessary
Although factors like the pandemic have increased interest in life insurance policies from younger generations, there’s still a lot of work to be done. Indeed, Millennials and Gen Z often don’t feel they need to purchase policies like life insurance. Capco’s 2021 survey indicated 43% of Gen Z don’t feel well informed about available insurance products. More education targeting younger generations could make a difference. An IBM survey showed that 70% of Millennials would be likely or very likely to buy life insurance if they understood better their options and potential benefits.
Recent news and startups to watch
2021 was a great year for insurtech startups. They secured $15.4bn in funding, up 90% from 2020. As of late, many insurtechs have reached unicorn status through these successful funding efforts. For example, Branch raised a $147m Series C at a $1.05bn valuation earlier in June, officially becoming a unicorn.
We selected three startups that illustrate some of the trends highlighted in our infographic:
- Dead Happy: a digital life insurance solution with a flexible pay-as-you-go plan that’s less costly than traditional policies. The startup simplified the process of applying as well. It only requires a few quick steps, none of which involve providing medical documentation.
- Dalma: a simplified platform for pet insurance with quick reimbursements. It also provides access to a message centre with veterinarians to answer questions and give recommendations.
- Hedvig: digital home and auto insurance with ‘clumsiness’ coverage, that donates its surplus funds to charity. Its ‘all-risk’ policy covers damages such as spilling coffee on your laptop or sitting on your glasses.