Reimagining insurance for millennials and Gen Z

With each passing year, millions more millennials and Gen Zs will enter financial maturity.

That fact has ramifications across nearly every industry, but it's especially critical for insurance providers, which will continue to see policyholder demographics transform before their eyes.

The vast majority of millennials are now in their 30s or older — the age when many people buy their first homes, get married, have children and more. By 2030, Gen Zwill make up around 30% of the workforce, bringing more weight and spending power to their decisions.

As a result, it's critical for providers to find new ways to appeal to these consumers, who have different needs, priorities and interests than previous generations. That said, when considering a group so large, it's easy to embrace platitudes or stereotypes that may, ultimately, steer companies astray.

Below, we're breaking down some of the biggest things providers should actually keep in mind when attempting to capture Gen Z and millennial policyholders.

Not all values are created equal

While it's true that millennials and Gen Z have different priorities than the generations before them, providers shouldn't ignore the big picture.

For example, environmental issues are notably important to younger people. It's true that a majority of both Gen Z and millennials are saying they'd pay more for a sustainable product or service. However, this doesn't mean insurance providers should drop everything to satisfy this sole sentiment alone.

Consider this: A 2023 survey found that 51% of millennial and Gen Z consumers said affordability was the most important factor when choosing insurance. So, ultimately, a majority of younger policyholders still want low-cost, quality coverage. Offerings and decision-making that prioritize more altruistic values are essential, but not at the expense of the customer's bottom line.

With that in mind, providers should focus on factors that combine ethical and financial benefits into one. This can include home insurance rates that transparently incorporate disaster risk and telematics-based auto policies that encourage fuel-efficient driving.

Personalization is key

The same premise rings true for personalization, another key value for Gen Z and millennials. Research from the consulting firm CCG Catalyst shows that over 80% of consumers in those age demographics would share some or all of their data for a more personalized customer experience.

Here, the relationship between affordability and values-based decision-making is even more straightforward. Providers have an opportunity to enter into a clear, win-win relationship with policyholders when consumer data is exchanged for cheap, personalized coverage.

The practical applications of this are nearly endless. They can include everything from telematics and flexible premiums to customizable HSAs and health policies rooted in wearables data.

It could also mean offering features that younger consumers currently see as lacking in the marketplace. A great example of this is mental health coverage, with a recent survey by Bain & Company finding that 38% of Gen Z — and 31% of millennials — say mental health is a major health and wellness goal. Compare that to the figure for baby boomers, which was just 13%.

Meanwhile, a recent survey found that 45% of insured adults give their provider a poor rating when it comes to mental health coverage. The lesson here is that by focusing on the gaps between what younger policyholders have and what they want most, insurers can offer personalized solutions to real, tangible problems.

Digital is key, but it isn't everything

It's an easy impulse to assume that younger generations, most of whom grew up with the internet, social media and smartphones as a part of their daily lives, value smooth digital experiences.

And while millennials and Gen Z have a preference toward online shopping and education, that doesn't mean they don't want face-to-face interaction as well.

A 2023 study of life insurance shopping habits found that nearly 50% of Gen Z and millennial shoppers would prefer to research policies online before ultimately buying them in person. While this is just a one-off example for a particular type of insurance, it does demonstrate that younger people aren't prepared to fully digitize their policyholder experience.

Instead, providers should focus on practices that incorporate digital tools seamlessly into an already-great personalized service model.

Even with the rise of AI, wearables, predictive analytics, telematics and more, insurers will still find that consumers are looking for a human expert at the end of their biggest questions. The trick, however, is listening to policyholders and understanding that the line will continue to move.

It's also worth noting that, in terms of interest, not all digital platforms are created equally. And even more critically, millennials and Gen Z have different perspectives on how they expect to receive information.

For example, a 2023 survey found that 68% of millennials — some of whom are now in their 40s — said they got financial advice from Facebook. That figure led all platforms, with YouTube coming in a close second.

Meanwhile, Gen Z turned to Instagram, TikTok and YouTube for financial advice at rates higher than their millennial counterparts. These disparities reveal just a few of the many points that distinguish millennials from Gen Z, and vice versa.

Above all, keep it simple

The reality, ultimately, is that younger policyholders should be treated like any other demographic — in that they are dynamic, varied and prefer companies that cater to their unique wants and needs.

Transparency is key, as it turns this understanding into a two-way street, with consumers well aware that their feelings are being considered. The more providers can lean into this principle, the more secure they'll be in the long run.