Asia-Pacific insurers told to start targeting Gen Z

They are less aware about insurance products than Millenials.

Insurers in the Asia-Pacific region should start tapping the insurance market for Gen Z — they are now adults and are in the weeds of financial responsibilities and stress — if they want a steady source of premiums, analysts said.

“It's about how you really engage in digital media, social media and how you create a language and a narrative that resonates with that population,” Bernhard Kotanko, a senior partner at McKinsey & Co., told Insurance Asia in a Zoom interview. “I don't think we have seen that yet.”

/Bernhard Kotanko, a senior partner at McKinsey & Co.

Whilst they are early in their careers, Gen Z people — born in 1997 to 2012 — display strong ambition and confidence in their financial literacy. But awareness of insurance products remains lower than Millenials, according to a Peak Re report in September.

The survey expects Gen Z to make up at least 25% of the Asia-Pacific population by 2025, with China's Gen Z population alone estimated at 233 million and contributing 13% to household spending.

With the ageing population expected to double by 2050, it becomes more difficult for insurers to connect with the demands of the next generation.

“Some are getting better in it and try to really engage also with the young families,” Kotanko said. “We need to create a language and solutions that are relevant to that age band.”

“Private households will need to rely on their savings to finance their retirement period, and this brings with it a set of new risks — long-term care, health risks, and even legacy planning,” he added.

The challenge lies in a market that has focused on wealth accumulation. "Asia has been very much an accumulation market so far," Kotanko said, adding that the shift needs to happen soon.

Martin Wong, regional CEO at Grandtag Financial Consultancy & Insurance Brokers Ltd., said insurers should also target young high-net-worth people in the coming year, noting that 30% of them are in the Asia-Pacific region.

/Martin Wong, regional CEO at Grandtag Financial Consultancy & Insurance Brokers Ltd.

“High-net-worth individuals seek sophisticated strategies that adapt to their changing needs and ensure their wealth transfers smoothly to the next generation,” he said in an emailed reply to questions. “The key to success in 2025 will likely lie in how well Grandtag can adapt to these challenges whilst continuing to innovate.”

The Asia-Pacific region’s wealth has almost tripled since 2008, faster than any other region, UBS Group AG said in a July 2024 report.

Millennials, who are now 28 to 43 years old, and Gen Z expect real-time insights and a seamless digital experience. “The pace of modern financial markets has fundamentally changed how clients interact with their investments,” Wong said. 

For example, Grandtag’s insurance products now allow premium payments using alternative assets. Some products allow customers to balance growth potential with the long-term goal of legacy preservation. 

Wong noted that “cookie-cutter solutions simply do not work for legacy planning.” Families often span multiple countries, creating challenges related to cross-border tax compliance and regulatory requirements. 

‘Lean products’
On the other hand, Kotanko said engaging these groups requires a radically different approach. For example, disability coverage is a pressing yet underappreciated need amongst young professionals who rely heavily on their incomes. But few insurers promote these products.

Health concerns are another defining factor for Gen Z, with mental health issues such as depression and anxiety ranking high with traditional concerns such as cancer and cardiovascular diseases, according to the Peak Re report. 

Stress and anxiety levels amongst Gen Z are similar to those of Millennials and Gen X but are driven by factors such as social pressures, work-related stress, and caregiving responsibilities. Many see themselves as primary caregivers for their parents, a responsibility that brings both pride and emotional strain.

“We see significant opportunities here," Kotanko said. “Insurers need to act assertively, embracing a more proactive and digital-first approach. The best insurers in Asia are capable of serving customers across the intersections of life insurance, wealth management, and health.”

Insurers also face an untapped opportunity to design lean products for the mass market. Kotanko suggested focusing more on niche products that can be delivered cost-effectively.

“What are the three to five core products that would fit this segment?” he asked. “What kind of distribution model would allow insurers to produce these at very low cost and tap into the parts of the population that need protection the most but don’t have the financial means of the affluent and high-net-worth segments?”

Wong warned about the challenges posed by cross-border complexities, a demanding regulatory environment, and talent shortage.

“With family members often spread across multiple jurisdictions, each with its own regulatory requirements and tax implications, creating cohesive insurance solutions that work effectively across borders whilst maintaining compliance has become increasingly complex,” he said.

The insurance industry is likely to struggle with the shortage in international brokers, he added. “The market requires professionals who can understand complex financial structures, navigate cross-border issues, and effectively communicate with multiple generations of wealthy families.”

“Asia’s insurance professionals also lack certain critical skills, from emerging technologies to sustainable finance,” he added.