National Insurance Day: How insurance industry is adapting itself to fit into Gen Z's landscape

India's Generation Z, composed of individuals born between the mid-1990s and early 2010s, is experiencing rapid growth and now represents over 20% of the country's population, surpassing the global average. By 2030, millennials and Gen Z will make up half of India's population, as per a Nasscom report. This demographic shift will significantly impact various sectors and necessitate tailored strategies to engage with this tech-savvy and diverse group effectively. 

In the realm of the life insurance industry, this demographic presents a dual nature - a challenge and an opportunity for insurance providers. Gen Z is deeply entrenched in the digital landscape, preferring online platforms for communication and engagement. Gen Z individuals are drawn to brands that provide tailored and genuine experiences that align with their unique traits and principles.

Life insurance is a crucial financial tool that serves as a safety net and investment opportunity for individuals. By incorporating a life insurance plan into their financial portfolio at an early stage, individuals can harness the benefits of compounding, cultivate financial discipline through long-term investments, and secure relatively affordable premium rates.

Insurers acknowledge the varied financial objectives and risk tolerances of the younger population, adjusting their products accordingly. This change is driven by evolving market trends and aims to empower young people to better manage their finances. 

Talking about Gen Z and their varied needs in terms of insurance, Madhu Burugupalli, Sr. EVP & Head of Products, Bajaj Allianz Life Insurance, said though, at present, there is no set purchase pattern for Gen Z, but insurance and retirement are still not their primary concern. 

"Data from some of our recent product campaigns reflect that millennials' interest is balanced across various product groups like term plans, ULIPs, traditional plans, and pension plans. While there isn’t a huge skew even when it comes to Gen Z, their inclination towards pension products is slightly lesser, given that it might be too early for them to foresee retirement. Additionally, their risk appetite might be higher, so their interests are slightly inclined towards ULIPs," said Burugupalli. 

"The Covid-19 pandemic has heightened awareness about financial security, particularly among Millennials and Gen Z. The insurance industry has transformed significantly, especially in catering to these segments. While millennials value stability and security, Gen Z's digital-first behaviour has changed how they interact with insurance. They expect immediate trust through genuine customer stories and experiences. This evolution reflects a broader industry trend towards digitalisation and customisation to meet the evolving needs of consumers. A key factor has been the emphasis towards ease in purchase experience and access to knowledge via digital engagement," said Karthik Chakrapani, Chief Business Officer, Pramerica Life Insurance.

What fits for Gen Z

Burugupalli added that the younger generation has more eyes towards savings and prefer simple, innovative and flexible products when it comes to insurance.
 
"As per a survey, 32% of Indian Gen Z prefer savings over spending. This highlights the appeal of life insurance as a long-term investment for peace of mind. Clubbed with this savings-oriented mindset, in today's tech-driven world, Gen Z expects products and services at the click of a button and their expectations from financial services including insurance are no different. They are looking for simple, innovative and flexible products, transparent processes that are easily and digitally accessibility," Burugupalli added. 

"For Gen Z, insurance plans offering easy online management and genuine customer service initiatives are particularly attractive to them. While term insurance is an obvious choice and is a must have because of it’s affordability and simplicity, this segment is also completely aware of it’s financial needs for various life stage goals. They value customisation, seeking insurance products which are modular in nature and can be tailored to their unique needs and life stages. Many new-age insurance plans are offering flexibility to cater to this trend, including Pramerica Life Insurance. Pramerica Life offers saving insurance plans such as Pramerica Life Flexi Income Plan customised to help meet financial needs as per individual's life goals and dreams. These plans are considered low-risk financial instruments that offer guaranteed returns," Chakrapani said.

Will Gen Z choose insurance plans in the future?

Chakrapani further said that Gen Z's approach to insurance is distinctly different as they prefer straightforward insurance products and place their trust on their peers more than traditional institutions.

"Insurance provides a safety net and financial security, which are important regardless of the generation. However, the way Gen Z interacts with insurance and the types of insurance products they choice may change. Gen Z's approach to insurance is distinctly different. They seek schemes that resonate with their values and lifestyle, going beyond traditional offerings. The industry is leveraging digital media influencers or opinion leaders who are relatable to discuss financial planning. Through these influencers and transparent communication, life insurance is transforming into a financial tool rather than a mere obligation. While the traditional concept of insurance may evolve with Gen Z, the fundamental need for financial protection and security that insurance provides is likely to remain," he added.

In light of the shifting landscape influenced by millennials and Gen Z, it is imperative for insurance companies to swiftly and effectively adjust to their evolving needs. This adaptability is critical for the long-term sustainability of insurers in a changing market and for bolstering the financial stability of a demographic poised to reshape global societies.