Driving insurance uptake among Millenials, Gen Zs

The level of global interest and investment in insurance technologies continues to grow.

But insurance penetration in Africa has remained relatively low, averaging 3.2 percent in 2022, mainly attributable to lower disposable income in the continent and the slow growth of alternative distribution channels such as mobile phones to ensure a wider reach of insurance products to the masses.

South Africa remains the largest and most established insurance market in Africa with a penetration of over 12 percent, just about five percent above the global average, owing to a mature and highly competitive market, coupled with strong institutions and a sound regulatory environment.

According to the Insurance Regulatory Authority and the Kenya National Bureau of Statistics 2023 Economic Survey, insurance uptake in Kenya has significantly remained low compared to other key economies with the insurance penetration at 2.3 percent, which is below the global average of seven percent.

The low penetration rate is attributed to the fact that insurance uptake is still seen as a luxury and mostly taken when necessary or as a regulatory requirement.

Although the insurance industry has been slow in adopting digital trends, the onset of the Covid-19 pandemic saw the adoption of digital distribution of insurance products as a matter of necessity.

However, the insurers’ future success depends heavily on their ability to attract future generations, create a foundation and build loyalty to provide insurance coverage throughout their lifetime.

The ageing population is continuously seeking to manage their wealth and legacy; millennials are sinking into debt and need help to ensure that these debts do not become a burden to them while Gen-Z is entering the workforce with a zeal to becoming financially independent at a younger age with liquidity preference.

This young generation is continuously maturing and has started entering the workforce and spending money on products, services and solutions, thus an increasingly significant customer segment in the insurance industry.

The big question is how these digital natives can be encouraged to take up insurance, given their different needs, which will increase the coverage both locally and globally.

Seamless online experiences

Gen Z specifically are technologically savvy as they have grown up using digital technology as an integral part of their personal, social, and educational lives.

This is key for insurance players in order to drive growth and increase insurance penetration in the country. Today’s younger generations of customers not only expect online experiences but also high levels of efficiency and convenience.

This means designing customer journeys that allow for seamless channel-switching and ensuring the consumer receives the same experience whether they are interacting through email, text, telephone, website, social media, or customer portal.

The goal should be to deliver a high-tech, high-touch customer journey tailored to understanding and meeting their unique needs.

Personalised offerings and customer experiences

While Gen Z and millennials value personalised advice and education from human financial advisers, it is impossible to provide human assistance to each policyholder with different needs and levels of knowledge.

Traditional insurance models, which still offer a wider range of products and services, are slower to adopt new technologies and have complex claim processes focused primarily on risk coverage, but there is a growing demand for experience-based insurance solutions, especially from millennials.

This can be made possible through leveraging data analytics, artificial intelligence, and automation.

Flexible coverage options

From the perspective of the younger generation, having the ability to increase coverage as their one grows and financial responsibilities increase can be vital.

Additionally, for those who may be dealing with financial struggles, the ability to decrease coverage can help reduce the financial burden of paying for premiums. It is therefore imperative for insurance providers to be flexible in their coverage options in order to meet the different needs of the younger generation and retain them as policyholders.

Leverage on technology to educate

Lack of knowledge about insurance is the greatest obstacle preventing younger adults from purchasing coverage. It is very critical how insurers educate and engage with younger adults.

It is becoming an industry standard for insurers to use AI-powered chatbots to drastically speed up and simplify the purchasing process and provide an always-on, contextual educational experience.

For example, digital assistants and generative AI-powered chatbots can answer questions about coverage, simplify complex insurance jargon, coach users through the insurance purchasing process, articulate why each step is necessary, or connect prospects and policyholders with human advisers.

Artificial intelligence and automation through machine learning and blockchain technology are constantly evolving based on brand preferences and content performance and thus instrumental in improving performance and forecasting customer behaviour including fraud detection and prevention.

Technology has increased opportunities to distribute insurance products to the younger generation of consumers and those consumers who have not been served through traditional distribution methods.

It is time that the insurance industry adopted innovation to appeal to the next generation of consumers’ appetite for fast, personalised, digital-first experiences with flexible coverage options.

The writer is an Underwriting Assistant at Kenya Orient Insurance Limited.