Born between 1996 and 2010, Generation Z is the first generation to grow up with the internet. Shaped by the digital age, climate anxiety, a turbulent financial landscape and COVID-19, a recent report from McKinsey and Company outlined the unique characteristics of this generation – and what sets it apart from those who came before.
The research highlighted how being the first real ‘digital natives’ has shaped how Gen Zers work, shop, interact and seek out information. With that in mind, the question for the insurance market is clear – how does this generation interact or want to interact with insurance, and how can the industry meet their unique requirements and expectations?
Offering his perspective Will Wood (pictured), director of life and health at INSTANDA, outlined that while the end product of insurance may be similar, it’s clear that Gen Z customers are looking to interact with insurers differently. “Naturally, that means an updated front end, with a better user interface which is more aesthetically pleasing to use,” he said. “But it also means a refresh of the back end. Younger generations want a system which is quicker to make product updates, easier to deploy to distribution channels, and ultimately reach the market faster.”
Gen Zers are innately less patient than previous generations because they’re used to getting what they need from online retailers, which operate significantly faster than their brick-and-mortar predecessors. They’re also equally used to experiences which are designed with user interface first, such as TikTok or Instagram; two platforms built to keep users engaged.
As to whether insurance companies tend to register and respond to the different ways in which Gen Z customers want to engage with insurance, Wood highlighted that insurance is a very old industry, which might lend itself to tradition. However, he has seen that there is an appetite for change – and to engage with insurtechs as a vehicle for this change.
“Everyone is talking about Gen Z, and what they want and need,” he said. “One of the biggest changes the industry is making to serve the needs of Gen Z is creating fully digital customer experiences, which are accessible on the go using smartphones. These have been simplified by using simpler question sets, pre-filled information, online acceptance, and the ability to ask questions through online chat.”
Outlining some of the main ways in which insurance companies can look to build trust and brand loyalty among Gen Z customers, he noted that without human contact, traditional brands don’t necessarily win. Authentic, inclusive and sustainable messaging resonates strongly with the Gen Z generation. The challenge, therefore, is creating a relationship with the customer without being able to communicate with them in a traditional manner.
“This can be solved in part by making them feel heard in other ways, for example by tailoring recommendations so the customer feels like they’re being listened to,” he said. “Shorter, sharper messaging across marketing and product information also resonates further with the Gen Z audience, and DE&I initiatives which are being practised by companies go a long way – not just for brand loyalty, but also for recruitment.
“Younger generations want to see a brand both showing interest and acting on social issues, such as climate change and racial injustice.”
There are certain customer journey points across different lines of insurance that are likely to always require human interaction. As an example, making a claim for life insurance whether for a death or critical illness is an extremely emotive touchpoint for a customer, Wood said, and so requires much more delicate handling.
“As another example, if insurers are solely using data to make a decision, an insurer may decide to exclude a risk altogether,” he said. “That’s one of the ethical dilemmas that could arise with the rise of more data and insurers becoming more selective, which may point to the necessity of human reasoning within that process.”
With that in mind, insurance companies need to work to create the right ‘blended’ approach in order to achieve the best customer outcomes possible. Creating the best experience is about showing empathy as a business, both within the process, and towards the customer. Being transparent about the process, reassuring customers, and providing clarity on next stages whatever they might be can have a huge impact. This will be seen across the company’s brand image and is evident in customer retention.
“Within the same claim journey, it’s completely acceptable – and often, as we’re seeing with the younger generation, desirable – to make it easy for customers to begin the claims interaction in digital format,” he said. “This is provided it’s clear on what happens next, and that the promise of the next step is kept.”
Engaging with Gen Zers where and how they want to be engaged with is both a challenge and an opportunity for the insurance market. Wood noted that a short attention span Gen Z customer is very different to a non-technical Baby Boomer. However, he said, the key to success lies in helping insurers identify and understand every customer’s critical moment of truth, and how they prefer to engage during those instances. “Of course, these preferences will vary across different generations,” he added, “but gaining a deeper understanding of Gen Z’s needs is essential in solving a significant part of the larger customer experience puzzle.”
