State of Insurance Visions & Future
As Generation Z consumers come of age and begin to enter the workforce and build lives for themselves around the world, insurance companies are beginning to alter their marketing efforts to better reach this audience. In Japan, the life insurance sector is the largest proponent of insurance, but globally this sector is struggling as younger consumers enter the world with limited education on this market. Below are 5 characteristics and marketing tactics that are compelling to Generation Z consumers when it comes to making decisions about life insurance policies. Following each of these are insights that depict the relevance of each characteristic/tactic using statistics about this generation. Finally, since not all of the values identified are specific to the life insurance market in Japan, as requested, we have included an example of a Japanese life insurance company that is currently using each method, for reference.
Hybrid Use of Technology
Generation Z consumers are interested in a purchase journey that includes a mix of in-person and online components at different points throughout the sales process.
- According to the "Next Generations and Insurance: Understanding Buying Behaviors and Preferences of Younger Adults" report published by Applied and ORC International in late 2019, 51% of Gen Zers and 52% of Millennials would prefer a face-to-face meeting to purchase insurance. However, the most common channel actually used is direct calls to agents. Face-to-face meetings are also the preferred way for 30% of Gen Zers between the ages of 16-17 to learn about finances, compared to 21% of those between the ages of 18-22.
- Findings from Majesco indicate that 57% of Gen Zers are open to purchasing insurance through non-traditional sources. Broken down by type, 62% would be willing to buy homeowners insurance through a real estate website or app, 58% would purchase renters insurance via an apartment search site or app, and 57% would be find with buying auto insurance through a car shopping website or app.
- Only 28.3% of Japanese consumers would be comfortable with a life insurance company using artificial intelligence (AI) to interact with them during the application and question process. Globally, 43.4% of Gen Zers said they would always prefer a human interaction as opposed to AI.
- The percentage of Japanese consumers that self-identified as "digital natives" has tripled from 7% in 2010 to 21% in 2020 according to PwC.
- When asked which source they would trust must when it comes to researching life insurance, 52.5% of Gen Zers reported that they would trust family and friends the most, while 17.9% said they would trust a financial advisor, 8.9% would trust social media, 8.2% a life insurance provider directly, and 5.5% a search engine query. Only 4.1% of Gen Zers said they would trust an internet comparison website and 2.8% would trust magazines and newspapers.
- In the Asia-Pacific region, especially in Australia and Japan, 41% of insurers are already implementing changes to enhance digital capabilities and maintain resilience, while 52% are planning to do so in the very near future.
- Nippon Life Benefits offers an interactive solution on their website to help potential and current customers determine which coverage options best suit their needs. Nippon also offers a mobile app, online portal, and direct contact information for sales representatives by state in the U.S.
Personalized Marketing & Discounts for Shared Data
Generation Zers are more interested in policies and companies that approach consider their lifestyle choices in exchange for personal data.
- Japanese consumers are willing to pay at least 7% more for something that offers a superior experience, but 50% of these people feel that there is a continued need for human interactions to offer a superior experience.
- Data from Accenture suggests that 77% of consumers, particularly those in Gen Z, would be more willing to share personal data collected via wearable technology in exchange for lower premiums, coverage recommendations, or even faster claim settlements.
- In Japan specifically, 31.1% of consumers would be willing to share data from a wearable device in exchange for premium discounts on their life insurance policy.
- As of September 2015, Sumitomo Life Insurance Co. has offered coverage that goes beyond death to cover morbidity and longevity. This component of Sumitomo's policies offers disability coverage to policyholders in case of illness or injury. Sumitomo also launched SUMITOMO LIFE Vitality Shared-Value Insurance in 2018, which provides discounted coverage to policyholders that are part of the Vitality Wellness Program.
Generation Z is most attracted to organizations that support social causes they agree with, as well as those that can offer long-term security.
- 72% of Gen Zers are more likely to purchase from a company that contributes to social causes, while 31% have stopped buying from a certain company because they contributed to social causes they disagreed with.
- Another report from Applied, "The Future of Insurance: Bye-Bye Boomers, Hello Digital Natives," noted that Gen Z consumers value real life connections, are seeking security and stability, and are focused on the future with a realistic outlook.
- 77% of consumers around the world reported to Deloitte that they believe their insurers are beginning to reprioritize environmental, social, and governance issues as a result of the COVID-19 pandemic, creating a positive outlook on the market by consumers.
- Approximately 55% of Gen Zers are loyal to a brand, primarily because they use it regularly (63%), the brand aligns with their personal values (9%), and/or because the brand and its products represent a lifestyle they agree with (12%).
- Dai-ichi Life, one of the top five largest life insurance providers in Japan, recently published their Responsible Investment Report at the end of 2020 to show their customers how the business is striving to be responsible and prioritizing future generations. According to this report, Dai-ichi Life is especially focused on ESG (environmental, social, governmental) investments, and is also working to place more emphasis on their shareholder votes.
- Sumitomo Life, another life insurance group in Japan, engages in Social Contribution Activities to encourage their customers to be active and exercise and stay up-to-date on their health status'. Sumitomo Life also donates to child raising awareness funds and global environment protection research.
Innovative Policy "Packaging"
Generation Z consumers are compelled by dynamic life insurance policies that are either purchased alongside something else or include competitive additions.
- Data from Majesco published in 2020 suggests that 38% of Gen Zers would be more willing to purchase a life insurance policy that offers dynamic pricing and underwriting. An additional 38% of Gen Zers would also be willing to purchase a bundled life/health/wealth service.
- 60% of Gen Z reported that they would prefer insurance be automatically included in the price of an important purchase (i.e cameras, bikes, cars, etc.).
- At least 19.8% of consumers in Japan have a savings plan that also includes life insurance. On the other hand, 25.7% have a critical illness coverage, 6.4% have income protection, 33.9% have personal accident/accidental death coverage, and 84.6% have some other form of life insurance protection.
- In the wake of the COVID-19 pandemic, Meiji Yasuda Life Insurance Co. opted to include payment for hospitalization benefits for individuals infected with COVID-19.
Authentic, Trustworthy, & Transparent Customer Service
Generation Zers are more likely to choose an insurance or life insurance company that is clear in their goals and interests, appears trustworthy, and has competitive customer service offerings.
- At least 79% of Gen Zers reported to Majesco that they value life insurance.
- 60% of Millennials and Gen Z report that 24/7 access to customer service is very important to them when choosing an insurance provider, an 42% said the same about mobile app access.
- 35.3% of Gen Zers reported to Remark Group that they would be very uncomfortable purchasing life insurance from a company that has no previous association with this industry. Comparatively, 53.8% said they felt neutral about this, while 10.9% reported feeling comfortable doing so.
- The most trusted purchase channels for life insurance by 30.1% of Japanese consumers is directly in-person with the insurance company. 20.0% of Japanese consumers would rather purchase life insurance via an internet comparison website, 18.0% through a professional advisor with an insurance company, 13.9% via an independent, professional financial advisor, and 9.1% directly online with the insurance company. Only 7.5% would prefer to purchase over the phone and 1.4% via social media.
- 88.7% of Japanese households have a life insurance policy. Approximately 53.7% of these policies are sold via a tied sales representative and 17.8% are made via a life insurance agent.
- Nippon Life Benefits offers all of their customers 24/7 access to customer service. The customer service members at Nippon are multi-lingual, based in the U.S., and have reported a 95% satisfaction rate in their jobs. This customer service program is applicable to account management, Nippon's mobile app, employer portals, and member portals.
To provide a comprehensive overview of how the insurance market, particularly the life insurance industry in Japan, is working to reach Generation Z consumers more efficiently, we initially began our research by searching for sources that addressed this market specifically. While we were able to locate a few studies from credible organizations including McKinsey, Deloitte, and Applied, these findings either only addressed the life insurance market as a whole (not specific to Gen Z), or discussed Gen Zs interests and priorities when it comes to decision-making as an adult (not specific to insurance or life insurance). Because of the disparity in data between these sources, we opted to instead pull together findings that depicted what attracts Gen Z consumers, what characteristics they look for in insurance, and factors that make certain insurance offerings more competitive than others. Although this presented us with varying statistics, we were able to correlate many of them specifically to the Japanese geography and life insurance market. Using these findings, we then proceeded to locate examples for each insight identified via the above process of Japanese life insurance companies that have made attempts to implement each of the tactics.