How Gen Z’s Financial and Lifestyle Choices Are Reshaping the Future of Insurance and Finance
Bucking the trend of previous generations’ financial choices, research indicates that rising rent, stagnant entry-level salaries and high asset prices have led many young adults to choose – or be forced by circumstance – to live with family.
Further studies show that many Gen Z individuals – or Zoomers – are forgoing car ownership. High insurance premiums, steep maintenance costs and the appeal of flexible transportation options like ridesharing, have collectively reduced the incentive to buy a vehicle.
Likewise, the prospect of homeownership, long heralded as a cornerstone of traditional financial success, seems very low on their list of priorities. Despite strong saving habits and a cautious approach to debt, affordability challenges and a shift in lifestyle priorities (including choosing to have children later), more and more Gen Zers are choosing to postpone buying a home.
While exact definitions vary, Gen Z individuals were born between 1996 and 2012, which means the oldest amongst them are 29 years old this year.
Financial Literacy and Planning
Studies also show that Gen Zers are open to alternative forms of insurance, such as usage-based insurance, and investment opportunities, like cryptocurrencies and micro-investing platforms. They prioritise saving for emergencies and long-term goals, influencing the demand for savings products and emergency fund solutions. Gen Z is cautious about debt, with many avoiding credit card debt and seeking alternative financing options.
Because of their eagerness to save money, study shows that many Zoomers are just aging off their parent’s medical aid and may start at a later stage to educate themselves about insurance and financial planning. Companies that empower them to transition toward financial independence – through workshops, webinars, and personalised online consultations – stand to build lasting trust and loyalty within this group.
Car and Mobility Insurance
Gen Zers’ financial approach is significantly impacting the industry as they are driven by their unique experiences, values, and tech-savviness demanding tailored financial products and services, driving the need for institutions to offer flexible and adaptable solutions.
With over 40% of Gen Z backing ESG investments, financial institutions must prioritize environmental sustainability and social responsibility to attract this generation. Therefore, traditional auto insurance models may need to pivot toward more flexible products which then encourages collaboration with insuretechs.
Opportunities in the rapidly growing mobility sector, including ridesharing and micro-mobility solutions, are likely to grow – especially in the embedded insurance space.
Home and Renters Insurance
This generation also expects online and mobile interactions, driving the need for financial institutions to invest in digital transformation. Overall, Gen Zers’ financial approach requires the industry to adapt and innovate, prioritising digital transformation, sustainability, financial literacy, customisation, and flexibility.
The combination of high property prices, stringent lending criteria, and the need for substantial deposits makes homeownership a distant prospect for many Gen Zers. However, there is an emerging opportunity in renters’ insurance and even in niche products that protect shared living arrangements, co-living spaces and short-term rental stays.
Travel and Pet Insurance
What’s more, Gen Z is likely to have families later than previous generations, further disincentivising the need to buy a home or car or to take out traditional life and funeral insurance products. However, the money they save by forsaking typical investments makes them more likely to travel, and invest in experiences, opening up growth in certain insurance markets.
Pet insurance may also rise in popularity amongst this age group as they choose to substitute children with ‘fur-babies’.
What Does Gen-Z Value?
Insuretech leverages advanced data analytics, AI, and machine learning to assess risks more accurately and identify potential threats. Also, enables customized policies tailored to individual needs, increasing customer satisfaction. Therefore, the traditional product-centric approach may no longer resonate with a generation that values flexibility, transparency and personalised solutions in this risk prone environment. Gen Z is likely to reject one-size-fits-all products, desiring customisable products that allow them to adjust coverage levels and payment terms based on their evolving financial realities. Critically, the focus should be on building long-term relationships with Gen Z clients based on trust and understanding, rather than simply pushing products.
Zoomers are also digital natives who expect seamless online experiences. Policy management, claims processing and financial planning that are AI-driven to improve efficiency and always-on responses are likely to attract and retain this demographic. What’s more, jargon and reams of Ts and Cs will likely put off complexity-shy Zoomers. Convenience is the name of the game if you want to compel them to invest in a product.
Why Insurance Must Evolve for Gen Z
Gen Zers demand trust, authenticity, and a customer-first approach from financial service providers. Research shows that they are poised to benefit from significant intergenerational wealth transfers, and their financial prudence today sets them up for future investment opportunities.
In my experience, those who recognise Gen Z as current – not just future – consumers will be best positioned to capture their business. Companies that prioritise education, personalisation, and digital convenience will not only earn their trust but also build relationships that could extend across decades as this generation grows into its full economic potential.
Ready to align your services with Gen Z’s financial and lifestyle choices? Contact us today to explore tailored solutions that meet the needs of this emerging generation.