The life insurance industry: What does the future hold?

Social media influencers and digitally savvy agents with significant online followings will increasingly challenge the status quo of the traditional broker model. Insurers will also have to deal with more competition in the shape of ‘add-on’ life insurance policies embedded into other solutions or products.

As ESG becomes more important to investors and customers, the regulatory landscape will likely evolve in tandem. Insurers will probably be required to provide more detailed ESG reporting which will likely be standardized across the industry. Data privacy regulations may also become more stringent, especially in light of how wearables and other devices gather and send personal data and health information.

Insurers and distributors can generate more value for customers as they modernize their data architectures, allowing them to shift towards fully automated underwriting. AI will also become more prominent, transforming processes such as underwriting, claims processing and sales. What’s more, it could potentially serve as an ‘ethical gatekeeper’ that reduces biases and discrimination in model assumptions.

1. Embedded solutions will see companies – typically in the wealth and health sectors – build partnerships to offer complementary services that meet all their customers’ needs (including life insurance). They will likely use various channels and marketplaces to reach new customers and offer fast, flexible services – especially to less affluent or younger customers who may be currently underserved in some parts of the market.

2. Through continuous product development, life insurance players will bring new, in-demand products to market faster, as well as deliver pricing flexibility driven by better data quality and analysis.

3. Insurers will look to offer enhanced value propositions and become more sophisticated in how they market their products and enhance their messaging. This includes educating their customers, enabling insurers to be a more integral part of financial planning conversations.

4. Enhanced business models may be an option for some insurers looking to divest capital away from non-core, underperforming service lines and reinvest it into sustainable, higher-growth and core business segments. Some players will complement this approach by driving diversification through investments. Businesses will also explore cost efficiencies as well as consolidate operational capabilities and improve operating margins.

To stay ahead of the game, insurance players need to move quickly and strategically to implement the necessary changes that will lead to an enhanced CX aligned with these evolving expectations.

In order to build critical mass to give more added value to their clients and partners, insurers need to use outside-the-box thinking and keep a sharp eye on potential M&A opportunities.

Ultimately, this means that the future front-runners in the insurance industry need to work backwards from long-term goals, breaking down specific tangible business objectives into smaller projects with big impact.

It is crucial for insurers to remain agile. Significant change comes with learning opportunities, and the companies that will be the most successful are those that implement strategic plans. They must, however, be prepared to do so imperfectly, failing fast, learning from mistakes and adjusting course as necessary.

Last but not least, life insurance companies must not forget the importance of human interaction. Although technology is become increasingly embedded in insurers’ operations, the human factor remains vital.

The future starts today! Reach out to KPMG’s team of industry experts who can help you on your optimization journey, ensuring you always keep clients at the heart of your business as well as manage enterprise risk and regulation every step of the way.