Published on Apr 17, 2023
There is no getting around the fact that India, despite being one of the world’s leading economies has an abysmally low level of penetration when it comes to Insurance.
As a new cohort makes its way to working age and begins to confront the many dilemmas of adulthood, Insurance seems to have taken center stage. A looming pandemic, coupled with the younger generation being witness to the ill effects of rapid urbanization and sedentary lifestyles has highlighted the importance of insurance to India’s GenZ population.
Tiered Expectations
Urban India hosts about 30% of the Indian population, with the remaining 70% being distributed amongst Tier 2/Tier 3 cities and rural areas. In the absence of definitive data regarding GenZ’s outlook towards Insurance, we shall rely on the prevailing attitudes demonstrated by millennials (who are astoundingly close to GenZ when it comes to outlook and behavior).
An online study conducted by Policybazaar revealed that respondents from Tier 2 and Tier 3 cities were far more likely to renew their health and term insurance when compared to their Tier 1 counterparts (89% versus 77%).
A large part of this could be attributed to Tier 2/Tier 3 cities being more grounded in familial values, and higher incidences of diseased folk not having access to advanced medical care in times of distress. Furthermore, Tier 2/Tier 3 cities are less likely to feature more avenues of distractions thereby inculcating a more conservative attitude amongst the younger folks in these places, particularly GenZ.
This attitude has a direct bearing on the kind of services that GenZ customers from smaller towns expect. Since they are not as informed, they tend to seek more information and niche insurance plans that are uniquely suited to their needs. Agents who can empathize with them are also a welcome addition to it.
As for Tier 1 residents, those who come from relatively affluent backgrounds are less likely to worry about insurance as they have a solid safety net to fall back on. Consequently, expectations have less to do with the variety and depth of insurance plans, and more to do with slick, delightful user interfaces that are on par with the other consumer-facing apps that they are used to.
Several respondents, across both Tier 1 and Tier 2/Tier 3 cities who were hospitalized experienced the distress of not having a proper insurance plan (or a plan with limited coverage) and were jolted into seeking a comprehensive insurance plan. The collective sentiment is that health coverage ought to hover anywhere between ₹15 – ₹20 Lakhs to ensure that medical expenses do not end up denting one’s savings.
Despite the ongoing economic slump, GenZ has woken up to the perils of putting the horse before the cart and is more likely to prioritize their health over almost everything else. The insurance market could very well experience a period where demand is relatively inelastic as Insurance becomes a non-negotiable for many young Indians.
InsurTech firms and a redefined Insurance distribution playbook only mean that the age-old model of deployed agents and brokers is going to be upended. GenZ, being a digitally savvy and precocious lot is more likely to undertake extensive research and seek out honest advisors before purchasing an insurance product.
Insurance, Disrupted
Technology has finally caught up to the insurance industry and is working its way toward disrupting it at a record pace. Improved connectivity and radically improved customer service in adjacent industries have raised the bar for satisfying GenZ. This is the primary factor that is driving the expectations and attitudes of GenZ when it comes to Insurance.
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