Uncover the Hidden Potential in Life Insurance
Life and Retirement in an Unpredictable World
The life and retirement industry has faced a tough time in recent years, with growth lagging behind global GDP and losing its significance in capital markets. However, unexpected macroeconomic resilience has provided some tailwinds, such as growing global GDP and decreasing inflation. But not all regions and product lines have benefited equally. There are bright spots of growth around the globe, especially in the past two years. Overall, traditional products and major markets are stuck, and the industry is on a quest for growth and relevance.For instance, in some developed countries, the aging "silver" population of people aged 65 and above is reshaping the life insurance market. At the same time, changing social norms and lifestyles, like fewer marriages and more dual-income households, are challenging the traditional model. But this also opens up opportunities for more flexible policies to cater to non-traditional family structures.
Regaining Relevance in Retirement
Higher interest rates and macroeconomic uncertainty have created a favorable environment for life insurance carriers to meet retirement needs. This new cohort of pre-retirees and retirees sees the fundamental value proposition of life insurance in a new light. It's a timely opportunity for insurers to provide stable and secure retirement incomes, holding onto accumulated assets that might have otherwise gone to asset managers.For example, in certain regions, there has been a surge in demand for retirement solutions tailored to the specific needs of this aging population. Insurers are stepping up to offer comprehensive retirement packages that address not only financial security but also healthcare and quality of life aspects.
Integrated Wealth and Health Solutions
As customer preferences change across different demographics, the line between life and wealth solutions is blurring. Modern consumers want advisers who can handle all their financial needs. Insurers can leverage the synergies between life insurance, wealth management, and healthcare to offer a holistic approach. By doing so, they can meet evolving client needs and stay competitive in a dynamic market.Take, for instance, how some insurers are combining life insurance with health monitoring services. This not only provides financial protection but also helps in early detection and management of health issues, enhancing the overall quality of life for policyholders.
New Avenues to Serve Customers and Advisers
Despite the increased attractiveness of life insurance, its penetration rate is declining. This presents an opportunity for insurers to reach out to more consumers and tell the story of protection. Advisers, too, are aging and need more efficient ways to serve their clients. Insurers are exploring different channels like worksite and digital distribution to lower costs and provide better service.For example, some insurers are using data analytics to identify potential customers at worksites and offer them personalized insurance plans. This targeted approach helps in increasing customer acquisition and improving customer satisfaction.
The Flywheel across Insurance, Asset Management, and Capital
As life insurance and asset management converge, a "flywheel" approach is crucial for value creation. It consists of issuing insurance policies at scale, differentiated investment management, and capital management. Some insurers are aiming for a truly integrated flywheel model, while others need to focus on specific parts based on their strengths.For instance, an insurer might excel in issuing policies quickly and efficiently while partnering with specialized asset managers for better investment returns. This combination helps in creating a self-sustaining cycle of growth and value creation.
In conclusion, life insurance carriers play a vital role in protecting against uncertainty and helping individuals build wealth. While the industry's relevance has declined, there are ample opportunities to harness emerging structural tailwinds and redefine their role. By building new capabilities and stepping into new adjacencies, insurers can ensure sustained growth and competitiveness in the financial services landscape.