Target group Gen Z
Flexibility is playing an increasingly important role, especially for young customers. Even though insurance solutions have become increasingly flexible in recent years, they do not yet meet current customer needs. The question arises as to what insurers can do to attract this important customer group.
Attitudes towards working life have changed massively in recent years, accelerated by Covid-19, moving away from traditional career patterns towards more meaningfulness and flexibility. Gen Z shows an increased tendency towards part-time employment and flexible working hours, which affects the predictability of income. This is reinforced by trends such as the platform economy, which leads to a high degree of uncertainty about future income.
In recent years, insurers have significantly worked on costs, but also on the quality of their products in the form of flexibility (e.g. deposits and withdrawals, premium increases and reductions or premium holidays). Nevertheless, pension insurance policies are not perceived as flexible. The large number of different cost types and the non-linearity of the calculated costs make it difficult for customers and brokers to understand both the overall amount and the pattern of costs. The effective costs have fallen significantly in recent years and are now at a low and fair level. However, this assumes that all premiums are paid in as planned, which does not reflect the reality of life for many customers, especially young ones.
ETF savings plans are often recommended as an alternative, but do not offer the lifelong annuity payments of pension insurance. Nevertheless, insurance companies can learn from neobrokers in particular.
WHAT INSURERS CAN DO TO ATTRACT YOUNG CUSTOMERS
Low-threshold entry and capitalise on momentum with good UX: Neobrokers offer good interest rates on overnight money, which attracts customers to the platform. This allows them to quickly establish an initial customer relationship. They then encourage customers to undertake investments through the streamlined and intuitive UX of their app. Deposits or savings plans with contributions from €1 can be implemented in what feels like three clicks - insurers have a lot of catching up to do here.
More flexible products for flexible life situations: As the income situation in particular is unclear for young customers for the next few years, insurers should focus on making premium payments more flexible. The first insurers are offering company pension schemes for employees with fluctuating salary components that go in this direction. The advantage for customers is that there are no double acquisition costs. This means that reductions in premium and subsequent increases or the suspension of premium payments are no longer a return killer. However, it should be noted that these product solutions do not include an up-front acquisition commission, so the commission is only paid when the premium is paid. This represent a significant distribution challenge, which somehow needs to be challenged.
Stay in contact with the customer: Finally, it is important to strengthen the relationship with the customer through regular contacts and to address possible purchase remorse and ideally to leverage cross-selling potential. A survey shows that many customers would like comparative information on what "insurance policies other customers with similar profiles have". In-depth information such as explanatory videos are also seen as helpful. The advantages of pension insurance should be made clear to customers on a regular basis.
You can read the full article „„Zielgruppe Gen Z“ in the current of issue of Versicherungswirtschaft on pages 70 – 73 or at Versicherungswirtschaft heute.