Members of Generation Z who have worked with insurance agents believe they are knowledgeable and help them make better choices. Nevertheless, Gen Z is under-tapped in the independent agent channel and over-indexes on direct writers.
During a recent Travelers Institute webinar, Jacqui Heidelberger, Travelers assistant vice president of market research, shared this information, as well as additional new research on Gen Z’s motivations to buy insurance and how best to engage with the demographic. The insights she shared were sourced from surveys, interviews, digital discussion platforms and more.
“Gen Z may be a small segment of most agencies’ books today,” Heidelberger said, “but they will become a meaningful proportion soon.”
Who is Gen Z?
More than half of Gen Z are adults; the demographic’s members were born between 1997 and 2012. The generation accounts for about 70 million Americans and comprises a quarter of the workforce. Forty-eight percent of Gen Z identify as Black, Asian, Native American, Islander, Alaskan, Hispanic or a combination of two or more races.
And Gen Z is more than just racially and ethnically diverse, Heidelberger said. They’re also diverse in other ways, including gender identity and gender expression, the family structures they’ve grown up in or their living arrangements.
This makes a commitment to diversity, equity and inclusion “increasingly important,” Heidelberger said. That starts with ensuring marketing and communications materials are inclusive. Over time, Gen Z will look for agency staff to be “more reflective of an increasingly diverse population,” Heidelberger added.
Geographically, Gen Z is most likely to live in the suburbs, followed by small cities and then large cities. Only 13% of Gen Z lives in rural America. Sixty percent of Gen Z lives with parents or caregivers.
The 26-year-old customer of today is different from the 26-year-old customer many insurance agents may be accustomed to. As members of Generation Z delay milestones like marriage and buying a home, they enter a new life stage that shapes how they navigate the world.
In 2020, for example, only 58% of 18-year-olds had driver’s licenses, compared to 80% in 1983. Eighty percent of young adults between the ages of 20 and 24 had a license in 2020 — compared to 92% in 1983 — and 84% of those ages 25 to 29 had a license three years ago, while 96% did in 1983.
The median marriage age has increased beyond 30 for men and 28 for women, and the average age of first-time homebuyers was 36 in 2022 and 33 in 2021. The average age of first-time mothers is over 27.
As members of Gen Z navigate what has become known as “emerging adulthood” between the ages of 18 and 29, Heidelberger encouraged agents to be prepared to apply winning tactics they’ve developed for younger customers to slightly older customers. Don’t assume awareness, familiarity or comfort with insurance decision-making based on age, she said, and don’t be surprised if parents or other trusted adults begin to become more involved in the decision-making process.
Connecting with Digital Natives
Members of Gen Z have never taken a breath in a world without the internet.
The average age at which they receive their first smartphone is between the ages of 11 and 12. This makes them “highly visual, video-first communicators,” Heidelberg said. Coming of age with social media and cloud technology has woven collaboration and co-creation into their identities.
Heidelberg shared an example of a 26-year-old who told Travelers researchers he prefers insurance agents to walk him through conversations regarding coverages as opposed to reading about them in an email in his inbox. Heidelberg highlighted this as an example of Gen Z’s collaborative nature and “how natural and intuitive it is for them to want to be able to see what they’re talking about, as well as go through it together.”
These conversations don’t have to happen in person, she added. They know how to build relationships online, and they view the internet as an effective and pragmatic meeting space. Heidelberg said agents “absolutely” should offer video meetings and emphasized the importance of screen sharing and visual aids.
Ninety percent of Gen Z spends an hour a day on social media, and half of the demographic spends more than three hours a day on the platforms. While Facebook is the leading platform for Baby Boomers, Gen X and Millennials, Instagram and TikTok outpace Facebook considerably for Gen Z.
According to data presented by Heidelberger, compared to Baby Boomers, members of Gen Z prefer to self-service a variety of insurance tasks, such as adding or changing coverage and filing claims. She encouraged agents to embrace and promote digital self-service solutions and create digital relationships.
Common Gen Z Mindsets
Gen Z is aware of and anxious about their future financial selves. This differentiates them from millennials when they were at Gen Z’s age, Heidelberg said, and macroeconomic circumstances have made many members of Gen Z “deeply aware that the decisions they make today could have a meaningful impact on their future financial stability,” Heidelberger said.
Nevertheless, they’re also price-sensitive. Heidelberger encouraged agents to keep this in mind, position insurance as a financial protection tool, consider telematics as a tool to control prices for customers and consider showing more options to young customers.
Having grown up in a volatile world, choices are particularly comforting to Gen Z, Heidelberger explained. This aligns with the independent agent model.
“But the onus is on us to make the connection,” Heidelberger said.
Watch the full webinar on the Travelers Institute website.
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