Forty-four percent of U.S. consumers are interested in purchasing insurance products directly through their financial institutions (FIs), and this interest is especially strong among younger consumers and those with higher incomes.
These are just some of the key findings included in PYMNTS Intelligence’s, “Why Consumers Are Looking to Financial Institutions for Insurance,” a collaboration with Franklin Madison, that is based on surveys with nearly 2,200 U.S. consumers who were asked about their insurance buying preferences.
The report also reveals that nearly one-third of consumers are more interested in buying insurance through their FI than they were three years ago.
What’s sparking this recent preference to purchase insurance through an FI?
Ease of use and convenience are the two biggest factors behind the shift. Right now, the most common insurance sources that consumers turn to to meet their insurance needs are their employers, government agencies and insurance providers themselves — three sources that are not exactly celebrated for the levels of customer experience they provide.
FIs, on the other hand, have risen in the ranks of nontraditional insurance providers — which should not come entirely as a surprise. Afterall, consumers already trust their primary FI to manage their day-to-day finances, and, because FIs operate in a highly-competitive marketplace, most place a premium on providing top-notch customer service.
According to PYMNTS Intelligence data, the demographic most likely to buy insurance for the first time, Generation Z, is also the one that is most interested in purchasing insurance from an FI. Nearly two-thirds of Gen Z consumers say they are interested in purchasing insurance through their FI. And, given the overall tendency to repeat insurance purchases from FIs — 76% of consumers who previously bought insurance through their FI say they are interested in doing it again — it suggests Gen Z consumers could be an especially productive market segment for FIs to pursue.
But it’s not just younger consumers interested in buying insurance through their FIs. Forty-seven percent of high-income consumers (those earning more than $100,000 annually) also say they are at least somewhat interested in buying insurance through their FI in the coming year. And, in most cases, these higher-income consumers may also be in a position to spend more on their insurance needs, which may include specialized coverage.
As the figure above illustrates, 15% of consumers have already bought some type of insurance through their FIs. Nineteen percent of consumers purchase home warranty insurance through their FIs, likely because consumers are already engaged with their FI when it comes to buying a home.
Meanwhile, 28% bought cyber insurance from their FIs, perhaps because FIs are associated with strict cybersecurity standards that provide consumers with peace of mind. The fact that 11% of consumers buy their accidental death and dismemberment insurance through FIs may reflect the fact that such policies are sometimes offered when accounts are opened.
These statistics show that consumers are already comfortable purchasing certain types of insurance through their FI. However, FIs interested in growing their insurance channels may want to consider increasing awareness about their insurance offerings.
PYMNTS Intelligence found that 48% of consumers have not received information from their FIs about insurance products in the last year. Given the high levels of interest in these products — with both younger and affluent consumers — FIs may benefit from generating more awareness around the insurance products they offer.