The financial futures of young people are heavily in focus right now, and rightfully so.
From property prices endlessly increasing, to unprecedented levels of student debt, to soaring living costs – their anxiety about their financial prospects are well-founded.
We were particularly interested in a recent report by independent think tank Demos that highlighted that nearly half of people aged 18 – 30 were deemed to have low ‘financial resilience’, meaning they’re unprepared for an unexpected big cost, or sudden change in circumstances. This is extremely worrying for their financial futures – and is also taking a big toll on their immediate mental health, which needs to be addressed. It isn’t fair.
Despite this, there is also promising evidence that young people do want to take control of their money back into their own hands. A report from FutureLearn found that just over two-fifths (41%) of Millennials and just under half (47%) of Gen Z say they want to learn more about managing personal finance. This was compared with just 21% of older generations.
This presents an opportunity for the insurance industry to help young people on this journey – which benefits all parties involved. Products like contents insurance can protect young people against the sudden big costs and change in circumstances that they’re vulnerable to – and can be another string to their bow when looking to take their financial future into their own hands.
However, the industry is simply not living up to this potential, and young people everywhere are falling through the cracks in the industry – seeing insurance as an expendable ‘nice to have’, rather than the part of their financial futures that it can be. This audience is jaded and is losing trust in the industry.
The most obvious example of this has been a glaring lack of innovation, such as implementing the proper technology to provide a stellar user experience. Delivering products seamlessly using technology is now a requirement for younger people. They have grown up with the internet, and interact daily with businesses built around incredible interfaces – Spotify and Monzo to name but two, and the benchmark has been set for every other product in their lives.
The traditional insurance industry hasn’t reacted quickly enough here, and most of the major players have painfully outdated procedures for getting a quote, purchasing and claims.
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The modern user expects simple, digitally-driven, and buy-on-the-spot financial products.
Why are they lagging so badly? Well, the main driver is the high barriers to entry in insurance, as it’s (rightfully) an extremely tightly regulated industry. The result of this is incumbent players have not been forced to innovate as much as other industries. However, inaction has hit boiling point – and now we’re seeing a wave of promising insurance challengers coming to the forefront, disrupting the industry, and looking to win back the trust of the masses. We all have a responsibility to do this.
Another big issue comes from understanding the needs of Millennials and Gen Z, which aren’t currently being met across the board. They demand greater flexibility – the ability to cancel at any time without fees, and need more reassurance about how their data is being used. Big players aren’t fulfilling this.
On contents insurance, we only ask 5 questions – whilst others ask as many as 70, so the whole process takes just a few minutes, and users don’t feel that they’ve been discriminated against based on pedantic factors like how flat their roof is.
Consider these issues, and how you can improve right now.
Understand that a one-size-fits-all approach won’t work with young people. Create tailored insurance products that meet their actual needs – without asking 70 questions. Think about how technology can help bridge this gap, as well as your overall user experience.
Written by Stephen Cowap, Insurance Director, Urban Jungle