Digital transformation may be the latest buzzword driving digital adoption. And adopting direct-to-consumer digital channels is critical. But for insurers, just going digital isn’t enough to get the attention of Millennial and Gen Z consumers.

By Louw Hopley, co-founder and CEO of Root

Millennials and Gen Zers, the generations born between 1981 and 2021, are an increasingly large portion of the economically active population. According to 2020 TransUnion research, “South Africa’s Gen Z consumers – those born in or after 1995 – are becoming increasingly credit active and are helping fuel the growth of the consumer credit market.”

Millennials – born between 1981 and 1994 – became the largest living generation in 2019. According to RGA, they have lagged previous generations in progressing through the life stages of adulthood, but they are progressing – and that progression includes buying insurance.

What all this means is that Millennials and Gen Zers are out there, wanting to buy insurance. Yet, given insurance industry models, they are likely being frustrated by existing customer journeys that don’t work the way they do.

These generations are digital natives; they grew up with technology, and paper-based systems are something of a foreign concept. They don’t recall a world without the internet and have always been able to purchase and consume services via the web and their mobile phones. They expect near-instantaneous responses to queries, and, as RGA notes, will flee to insurers that can provide this.

Adding digital front-ends to analogue back-ends won’t cut it, in other words. If consumers have to wait for an agent to call them back, or go through pages and pages of questions on a website to get what they want – they’re going to abandon the attempt.



The Jobs To Be Done framework is useful here in working out how to effectively target these consumers. The ultimate user journey for purchasers of insurance is embedded, meaning buying insurance is a part of satisfying the Job To Be Done, not separate from it.

In other words, what is the consumer trying to achieve? For example, their Job To Be Done when buying a car is that the money they spend now will ensure transportation for the next five years with no additional capital expenditure.

How do you meet this need? By including motor insurance as a part of the product being bought, so you’re selling an insured car, not just the car.

Sibylle Fischer of Baloise describes the concept best: embedded insurance means that “the insurance product is not sold to the customer ad hoc, but is instead provided as a native feature…in the purchase of a product, service, or platform”.


Embedded insurance (as a service)

Those at the forefront of industry strategy understand that enabling embedded insurance is crucial in gaining and maintaining a piece of the growing distribution pie. According to Munich Re (referencing 2020 research) “truly embedded insurance has just started to emerge and has the potential to grow into a trillion-dollar market”.

Facilitating this evolution in the market is the concept of insurance-as-a-service, the lesser-known and under-loved sister of banking-as-a-service. An example of insurance-as-a-service is the use of application programming interfaces (APIs) to allow a digital retailer to sell goods to consumers and include insurance as part of that purchase journey.

By packaging insurance products digitally over APIs, insurers can target consumers in a way that suits digital generations. Similarly, having turnkey insurance products available over API allows businesses with mass digital platforms to add insurance to their offerings without having to build a complicated insurance business.

Insurance businesses that can adopt this model, enabling simple customer journeys with easy-to-understand products that are easy to buy will be well ahead of the game.