How life insurers are transforming to deliver value for better living

New consumer needs, tech-driven disruption and societal shifts are reshaping the life, group, health insurance and retirement markets.

In brief

• Huge savings and health insurance gaps, profound shifts in employment and aging populations are fundamentally changing the rules of retirement.
• Insurers, banks, wealth managers and employee benefits providers are competing on financial wellness, which all types of consumers increasingly want.
  
• By enriching the value proposition, simplifying products and expanding access, the industry can drive growth, serve more customers and meet societal needs.

Will “life insurance” as traditionally defined, still exist in the next 12-15 years? Given rising customer demand for financial wellness, longer lifespans, the emergence of the gig economy and the unlikelihood of traditional retirement for huge numbers of consumers, the question is not at all far-fetched.

Indeed, it is the focus of our latest NextWave Insurance report, which is focused on the life, group and health insurance and retirement sectors.

Certainly, in the mid-2030s, people will still need the protections that life insurance has historically provided. But any firm that continues to think of life insurance in the same old ways risks irrelevance in the very near term. While life, group and health insurance and retirement sectors vary by country, a few common themes apply to major global markets, including the need to engage customers more frequently, adopt better technology and develop new business models and distribution channels (including ecosystems).

Our report highlights both the profound forces reshaping the market today and the key capabilities insurers and other firms need to develop or access through partners if they are to thrive in the future. It also provides inspiration by highlighting the companies around the world that are pointing the way forward through bold and creative innovations.

3. Caring for loved ones and family

Changes to family and household structures and uncertain macroeconomic conditions have created new savings and protection needs for consumers worldwide. Gaps in health insurance coverage and the social safety net mean that more people are serving as caregivers.

Women who have to look out for both their children and elderly parents feel less financially secure in the long term. That’s true despite their making most of the household decisions about discretionary spending, having a significant influence on financial planning and taking on responsibility for more assets. As wealth is being transferred to women, they are engaging more but don’t feel well-served by the industry. Better solutions and more personalized services designed for the unique needs of women are another opportunity for the industry.

4. Instilling financial resilience

Increased financial resilience is a common theme across all consumer groups, and that’s value that insurers can ultimately deliver via savings, investment and income-protection products and solutions that support different goals – rainy-day or emergency savings, home improvements, “a family trip of a lifetime,” accumulating assets for a comfortable retirement, or funding a sabbatical.

Again, flexibility in product design is key, such as retirement savings and pension plans that allow shifting levels of withdrawals and close monitoring of drawdowns. For some segments, the emphasis will be on providing access to advisory services via ecosystem partnerships. To promote financial confidence and resilience, consumers will be looking for holistic views of their financial situation via intuitive dashboards that integrate data from checking and savings accounts, investment positions, insurance policies, employee benefits plans and other sources.

4. Instilling financial resilience

Increased financial resilience is a common theme across all consumer groups, and that’s value that insurers can ultimately deliver via savings, investment and income-protection products and solutions that support different goals – rainy-day or emergency savings, home improvements, “a family trip of a lifetime,” accumulating assets for a comfortable retirement, or funding a sabbatical.

Again, flexibility in product design is key, such as retirement savings and pension plans that allow shifting levels of withdrawals and close monitoring of drawdowns. For some segments, the emphasis will be on providing access to advisory services via ecosystem partnerships. To promote financial confidence and resilience, consumers will be looking for holistic views of their financial situation via intuitive dashboards that integrate data from checking and savings accounts, investment positions, insurance policies, employee benefits plans and other sources.

5. Making the most of payouts and benefits

The payout of life insurance claims and the maturation of annuities are clear opportunities for insurers to build deeper relationships with beneficiaries. Advisors worry about losing this business, too. Insurers can keep beneficiaries engaged by reaching out proactively with timely guidance long before claims are paid and then provide a clear, non-stressful wealth transfer experience when they are paid.

Insurers engaged in strong ecosystems can expand their offerings to include access to life coaching and grief counseling. Smart decumulation strategies and multigenerational advice for managing inheritances are attractive to growing numbers of customers. Those services can help insurers engage with their customers’ families long before claims need to be paid.