Navigating the Evolving Global Insurance Market
In the face of fluctuating economic signals, the life and retirement insurance industry is seeking new avenues for growth and relevance. This article provides an in-depth analysis of the industry, which is part of the broader Global Insurance Report 2025.
While certain areas show promising growth, the industry grapples with stagnant demand in its core products. The challenge lies in identifying new opportunities for expansion and ensuring the industry’s continued significance. This report explores those opportunities.
A Year of Unexpected Turns
The past year has been marked by both uncertainty and surprising positive developments. Surprisingly resilient macroeconomic conditions, including global GDP growth, decreasing inflation rates, and positive equity markets, have provided tailwinds for some sectors. This has not been uniform; not all product lines and regions have prospered. The industry needs to adapt to these changing circumstances.
About the Authors:
This report is a collaborative effort by Alex Kimura, Bernhard Kotanko, Henri de Combles de Nayves, Jason Ralph, Pierre-Ignace Bernard, and Ramnath Balasubramanian, with Alex Gestal and Ross Macdonald.
The Search for Relevance
The life and retirement industry has encountered challenges in maintaining relevance, as evidenced by slower growth compared to global GDP and a decrease in importance within capital markets. Nevertheless, significant shifts are reshaping the market, presenting both obstacles and possibilities. These include the growing demand for customized retirement solutions tailored to an aging population, the rise of customer experience as a competitive differentiator, and the increasing significance of private capital in the sector’s expansion.
Demographic Shifts and Market Dynamics
The life insurance market is being reshaped by the aging global population and the concentration of wealth among specific demographic groups. Shifting social norms, such as fewer marriages and dual-income households, present both challenges and opportunities for the industry. These factors necessitate more adaptable insurance policies catering to less conventional family structures.
Strategies for Growth and Value Creation
To meet the evolving needs of consumers and society, insurance carriers must expand their value creation capabilities beyond traditional life insurance offerings. Several key strategies are critical to finding future growth avenues.
1. Regain Relevance and Win in Retirement
The current environment, characterized by higher interest rates and macroeconomic uncertainty, creates an opportunity for life insurance carriers to meet retirement needs. Life insurers can regain relevance by providing secure retirement income, thereby holding onto accumulated assets. This is especially important as the retirement asset pool moves into its decumulation phase.
2. Move Toward Integrated Wealth and Health Solutions
As customer preferences evolve, the lines between life and wealth solutions are blurring. By embracing the synergies between these areas, insurers can offer a holistic approach to meet evolving client needs and ensure lasting growth and competitiveness. Modern consumers actively seek advisors who can address all their financial needs, which includes personalization and a holistic approach.
3. Find New Avenues to Serve Customers and Advisers
The declining penetration of life insurance, despite its increased attractiveness, suggests new opportunities exist for carriers to effectively communicate the value of protection. This involves exploring avenues such as worksite insurance programs and leveraging data- and digital-augmented distribution channels to lower the costs for advisors to serve their clients.
4. Activate the Flywheel Across Insurance, Asset Management, and Capital
As life insurance and asset management converge, a “flywheel” approach is essential for value creation. This flywheel comprises three components: the issuance of insurance policies at scale, sophisticated investment management, and effective capital management. Some insurers may excel in all areas and offer a fully integrated flywheel model; others might choose to specialize in specific components.
The Future of the Industry
Life insurance carriers play a crucial role in society by protecting against uncertainty and helping individuals build wealth. As the industry’s traditional relevance declines, there’s a promising opportunity for insurers to embrace emerging structural tailwinds and embrace a broader role beyond life insurance. The industry must redefine its position across financial services, health, and longevity care to succeed in the future.
Going beyond traditional life insurance is a necessary, exciting growth driver for the industry now and in the future.
