As reports signal that 28% of Gen Z has already abandoned an insurance provider, the industry assumed it knew why. The usual suspects: pricing and coverage gaps.
But, on a deeper level, the survey tells a different story. The switch is not about what is being sold, but rather about how: difficult portals, redundant form fields, and account creation for platforms that nobody revisits. The product was fine, but the process was the dealbreaker.
And, with Gen Z projected to reach $12.6 trillion in global spending by 2030, simply assuming they are disinterested would be a grave mistake.
Everyday life might obscure it, but the behavior patterns of how Gen Z operates tells a clear story. Uber charges a card with no interaction; Apple bundles device protection at checkout – one tap and done. These are not just isolated conveniences, but rather a mirror of a broader demand. 84% of Millennials and Gen Z want insurance embedded directly into the transaction they’re already completing – not tucked behind a link, but embedded within it.
Friction Creates Risk, Not Just Frustration
The digital wave in the insurance industry is coming, and it’s moving fast. As estimated by EY, over 30% of insurance transactions will flow through embedded channels by 2028.
Many might be tempted to jump right in, but it’s important to remember that embedding insurance into a digital platform is only half of the equation. If the systems behind enrollment still depend on a tenant completing a manual process, for example, friction has not been eliminated; it has just been relocated.
A 24-year-old, for instance, signs a lease. While unpacking, she gets a link to enroll in insurance, but sees a complicated registration page asking for her Social Security number, previous addresses, and a disorienting coverage menu. Thinking to herself she’ll come back later, she closes the tab – but never returns.
This gap, between those who are enrolled and covered, is where risk lives. After property managers send an enrollment link and assume the system handles the rest, carriers see units marked as covered in their portfolio data and trust the numbers. But, who audits the space in between?
The unfortunate day something goes wrong – a pipe bursts in the unit above – the tenant files a complaint with the leasing office for her closet and destroyed laptop, when everyone discovers she was not actually insured. She’s out thousands of dollars, the property faces a potential liability dispute, and the carrier’s risk model just proved it had a blind spot the size of an entire apartment.
A report by the National Association of Insurance Commissioners makes clear this is far from an isolated case – only 21% of Gen Z adults carry renters insurance. More telling, 16.2% of the generation that rents or owns property has opted out of coverage entirely, preferring convenience rather than navigating exhausting, overwhelming and anxiety-inducing manual processes.
The downstream consequences can compound fast, especially if the backend – from COI tracking to compliance verification – remains unchanged. When the workflows fail in so much as a tiny step, risk doesn’t vanish. It just goes unnoticed.
Digital Portals Are Not the Answer
Carriers are increasingly quick to say, “We have an app. We have a portal. We’ve gone digital”. And while digitalization is a step forward, it does not automatically solve the access problem, especially for Gen Z. If a portal still pulls customers out of their existing workflows and asks them to make coverage decisions without adequate context, the friction has just been digitized, and the risk remains.
Stakeholders, instead, should be looking at invisible insurance: coverage that demands zero manual input from the user. In many cases, residents can be automatically enrolled in a master policy when they sign a lease, ensuring liability coverage that protects the property management firm while compliance is tracked quietly in the backend.
Additional protections – higher coverage limits or insurance for valuables like jewelry, for instance – would still require residents to opt in separately, but the core of the coverage can be handled automatically and seamlessly; freeing tenants from enrollment forms and property managers from chasing them.
The industry is already taking steps in this direction, with 94% of insurance executives saying that embedded insurance is critical to their future strategies. Nonetheless, 74% of carriers still run on legacy systems for core functions, and up to 70% of annual IT budgets go toward keeping those platforms alive.
What Needs To Change?
Closing the gap between enrollment and coverage requires everything from better marketing, redesigned portals and dashboards, and a shift in how enrollment happens. Ultimately, the process needs to be embedded into the transaction it’s attached to.
Tenants are already on the property management platform, signing their leases; car buyers are already at the dealership. Insurance has to meet people in those moments, where they are at.
Deloitte projects that embedded insurance will reach $700 billion in gross written premiums globally by 2030; in the U.S. alone, Conning forecasts over $70 billion in embedded P&C premiums through the same period. It is thus clear that insurance should be embedded at the point where leases are being signed, or cars purchased rather than as separate errands afterward.
But, conversely, embedding alone will never be enough if the backend remains manual. The industry needs systems that handle manual tasks automatically for every new unit, lease renewal or lapsed policy – including compliance tracking or policy activation. While portfolios continue to scale, it will become more unrealistic to manually chase enrollment confirmations and manage compliance.
That is precisely where technology plays a crucial role. Key tools including automation, centralized compliance dashboards, and direct integrated application programming interfaces (API) integrations power a fundamentally different operating model: instead of relying on enrollment email open rates, the metric that these solutions prioritize is how many users end up with active, compliant coverage – a figure that should be close to 100%.
The companies that make insurance invisible will win the next generation of customers. The rest will compete over a steadily shrinking pool who still tolerate filling out forms.