Generation Z is the generation that follows the millennials. Generation Z (born approximately between 1997 and 2012) is approaching insurance differently from previous generations. Their approach is influenced by their digital upbringing, financial priorities, and unique perspectives on risk. Here’s how Gen Z is going about selecting insurance for themselves:
#1 – They’re Taking a Digital-First Approach
According to a 2023 study from the Society of Actuaries Research Institute, about half the younger generation (Gen Z + Millennials) prefers to purchase insurance online. Gen Z, in general, wants to buy and manage their insurance policies online or through mobile apps. They’re more likely to use digital tools to compare prices, learn about coverage options, and complete transactions.
This generation is quick to adopt insurtech solutions that offer convenience, transparency, and customization. Companies that provide a seamless digital experience, such as quick quote comparisons and easy claims processes, are particularly appealing to them.
Social media also plays a significant role in their decision-making process. Many Gen Z consumers rely on reviews, influencer recommendations, and social media ads when selecting insurance providers.
#2 – They’re Focusing on Affordability and Flexibility
Many Gen Z individuals are still in college, graduate school, or early in their careers. So, affordability is a key factor in their insurance decisions. These young adults often prioritize the most cost-effective options, even if it means they’ll end up with lower coverage limits or higher deductibles.
Gen Z also favors flexible insurance products that they can have turned on or off as needed, such as pay-per-mile car insurance or short-term rental coverage. This flexibility allows them to align their insurance spending with their actual usage and lifestyle. They are also likely to explore bundling options (e.g., combining auto and renters insurance) to maximize discounts and reduce overall costs.
#3 – They Emphasize Simplicity and Transparency
Gen Z values simplicity and transparency in insurance products. They prefer policies with clear terms and conditions, straightforward language, and no hidden fees. This generation seeks to understand exactly what they’re buying. Insurers who provide educational resources, such as blogs, videos, and interactive tools, are more likely to gain their trust.
#4 – They Have Very Specific Coverage Priorities
Health Insurance: With the ongoing emphasis on mental health and wellness, Gen Z is particularly interested in health insurance plans that offer comprehensive mental health coverage, telemedicine services, and wellness programs.
Renters Insurance: Given that many Gen Z individuals are renting rather than owning homes, renters insurance is a popular choice. They seek affordable policies that cover personal belongings and liability, especially electronics and other valuable items.
Auto Insurance: For those who own cars, Gen Z is interested in affordable auto insurance that offers usage-based pricing, such as pay-per-mile or driving behavior-based discounts, which align with their financial priorities. They especially love the idea of telematics, where apps or devices track their driving habits and reward safe driving with lower rates.
Life Insurance: While not as high a priority for Gen Z members, some are exploring life insurance options. They’re especially interested in term life policies that provide basic
coverage at a lower cost. Their interest often stems from personal finance education or family encouragement.
Pet Insurance: Pet ownership is popular among Gen Z, and many are purchasing pet insurance to cover unexpected veterinary costs. They prefer policies that offer easy claims processing and flexible coverage options.
#5 – They’re Very Environmentally- and Socially-Minded
Gen Z is highly conscious of environmental issues and the need for urgent action. They make conscious lifestyle choices that reflect their environmental values, such as reducing waste, embracing plant-based diets, and opting for sustainable fashion.
This mindset extends to their insurance choices. Gen Z members expect companies to take responsibility for their environmental impact. They’re more likely to support insurance companies committed to sustainability, whether through eco-friendly policies, investments in green initiatives, or paperless operations.
Social responsibility is important to Gen Z, so insurers with strong commitments to social causes or community support are likely to resonate with them. They may favor companies actively engaging in charitable activities or supporting diversity and inclusion.
#6 – They’re Open to Peer-to-Peer and Community-Based Insurance Models
Gen Z is open to alternative insurance models, such as peer-to-peer (P2P) insurance, where groups of individuals pool their premiums to cover each other’s losses. This approach appeals to their sense of district and distrust of traditional financial institutions.
Some Gen Zers might use crowdfunding platforms to cover unexpected expenses, including medical bills, instead of relying solely on traditional insurance.
#7 – They Gravitate Toward Technology and AI
Gen Z expects insurance companies to use AI and data analytics to offer personalized insurance solutions. They appreciate tailored recommendations that match their specific needs, budgets, and preferences. They are comfortable interacting with chatbots and virtual assistants for customer service, policy management, and claims processing because they value the efficiency and 24/7 availability these tools provide.
#8 – They’re Impacted By Cultural and Behavioral Shifts
Gen Z is delaying traditional life milestones like homeownership, marriage, and having children. This tendency, in turn, affects their insurance needs. Because many of them are freed up from the responsibilities of marriage, owning property, and parenting, they’re more likely to rent, share rides, and freelance.
This less conventional lifestyle influences the types of insurance they purchase and prioritize. For example, they generally tend to value experiences over material possessions, which impacts their insurance choices. They might prioritize travel insurance over high-value item insurance.
Since they are getting married and having children later, they’re less likely to prioritize life insurance.
#9 – They’re More Apt to Focus on Mental Health and Well-Being
Gen Z places a high value on mental health and seeks out insurance policies that offer coverage for mental health services, counseling, and other wellness-related benefits. They’re also interested in insurance that supports preventive care, including gym memberships, nutrition counseling, and wellness programs.
Final Thoughts
Generation Z’s approach to insurance is shaped by their digital lifestyle, financial realities, and values. They prioritize affordability, flexibility, and transparency and are drawn to insurers who align with their environmental and social values. Insurers that can adapt to these preferences are more likely to succeed in capturing this emerging market.