Insurance Industry Strategies for Capturing the MZ Generation: Mini Insurance

MZ Generation and the Mini Insurance Trend

Background:

Insurance Subscription Status of the MZ Generation

The MZ generation (Millennials + Generation Z) has a lower insurance subscription rate compared to other age groups, but they have the highest experience attempting to subscribe through digital platforms. Notably, the attempt rate for insurance subscriptions via computers or mobile devices among the MZ generation is about 50%, which is significantly higher than the overall age group average of 28%. This trend indicates that the MZ generation has easier access to insurance in a digital environment.

Barriers to Insurance Subscription for the MZ Generation

There are several reasons why the MZ generation hesitates to subscribe to insurance. In their 20s, they may not feel the need for insurance or find it financially burdensome, while those in their 30s show a greater interest in investment products due to delayed marriage and an increase in single-person households. Therefore, insurance companies prioritize enhancing digital competitiveness and launching affordable insurance products to reach this demographic.

Rise of Mini Insurance

Mini insurance is characterized by simple risk coverage, short insurance periods, and low premiums. Various insurance companies are launching mini insurance products tailored to the digital-savvy characteristics and financial consumption patterns of the MZ generation.

Features of Mini Insurance

• Simple Coverage: Mini insurance offers straightforward risk coverage, allowing consumers to subscribe only to the insurance that meets their specific health needs or conditions.
• Low Premiums: Premiums are typically low, around 10,000 to 20,000 KRW ($8-15), minimizing the financial burden on consumers.
• Convenient Enrollment: Many mini insurance products allow enrollment without a certificate of authentication and with no medical examination required.
• Digital Platforms: Insurance products can be subscribed to or gifted through online shopping platforms, similar to gift certificates.
• Quick Capital Protection: Mini insurance can offer 100% capital protection starting one month after subscription, utilizing the cost-effectiveness of online platforms.

Examples of Mini Insurance in S.Korea

1. Lotte Insurance - Villain *Deokming Out (which refers to someone coming out as a fan.) Accident Insurance

(c) Lotte Insurance

Lotte Insurance recently launched the Villain *Deokming Out Accident Insurance to cover incidents that may occur at concert venues. Key features include:

• Coverage: It covers injuries (surgical costs for fractures, treatment costs for casts, etc.) incurred at concerts. It also protects against fraud during the direct sale of concert tickets or merchandise, compensating up to 90% of the loss amount within a limit of 500,000 KRW (about $360).
• Premium: The daily premium is 1,000 KRW. This product reflects the risks associated with crowded concert events, appealing to the MZ generation.

2. Kakao Pay Insurance

1) Overseas Travel Insurance

(c) Kakao Pay Insurance

Kakao Pay Insurance offers overseas travel insurance, enhancing user convenience. Key features include:

• Coverage: If the subscriber returns home without any incidents, 10% of the premium is refunded. It also provides coverage for up to 30 million KRW ($25-28) in medical expenses for injuries abroad and up to 400,000 KRW for loss of personal belongings.
• Enrollment Method: Subscription can be done easily via KakaoTalk.
• Premium: The basic insurance costs about 5,400 KRW ($4-5), with around 1.3 million subscribers to date. This insurance reflects the MZ generation's focus on cost-effectiveness and convenience when traveling abroad.

2) Hole-in-One Insurance

(c) Kakao Pay Insurance

Hole-in-one insurance has gained popularity among golf enthusiasts. Key features include:

• Coverage: It covers expenses for purchasing commemorative items and celebratory rounds when a hole-in-one is achieved.
• Premium: It is offered at a low price of about 10,000 KRW per game. This insurance is tailored to the golf culture, providing coverage for additional expenses incurred during such occasions.

Outlook

The insurance industry is entering a period of low growth and low interest rates, and it is expected that the launch of low-cost insurance products aimed at emerging consumer groups like the MZ generation will increase. In 2020, the Financial Services Commission relaxed capital requirements for the establishment of insurance companies specializing in small-scale, short-term insurance, facilitating the emergence of mini insurance products. These changes are likely to further activate insurance subscriptions among the MZ generation.

Conclusion

The MZ generation shows less resistance to insurance subscriptions and exhibits a proactive attitude toward enrolling through digital platforms. Mini insurance has emerged as an effective product that meets their needs, with significant growth potential ahead. Insurance companies should reflect these trends by developing more diverse products and enhancing their competitiveness in the digital landscape.