Global Insurance Report 2025: Growth and Relevance in Life and Beyond
November 19, 2024
The global life, retirement, and health insurance sectors are experiencing a complex mix of challenges and opportunities, according to a new report. The report, part of the Global Insurance Report 2025, analyzes the life insurance segment, revealing the need for the industry to adapt and seek new avenues for growth beyond traditional products. The report suggests that insurers must evolve to remain relevant in a changing world.
Navigating a Shifting Landscape
The life and retirement insurance industry has seen a year of mixed signals, with unexpected macroeconomic conditions—including global GDP growth, decreasing inflation, and positive equity markets—providing both tailwinds and headwinds. While some areas experienced growth, others stagnated. The report highlights the search for ways to achieve relevance and expansion.
About the Report
This report is the collaborative effort of Alex Kimura, Bernhard Kotanko, Henri de Combles de Nayves, Jason Ralph, Pierre-Ignace Bernard, and Ramnath Balasubramanian, with Alex Gestal and Ross Macdonald, representing views from McKinsey’s Insurance Practice.
Adapting to Societal Changes
The report emphasizes that the industry has been challenged to maintain relevance, mirroring the decline in capital markets. Several structural shifts present opportunities, including growing demand for tailored retirement solutions and the emergence of customer experience as a competitive differentiator. The aging global population, particularly those aged 65 and older, is reshaping the market. Changing social norms, like fewer marriages, are also impacting traditional life insurance models, suggesting the need for flexible policies.
Finding Growth Beyond Traditional Life Insurance
To meet the evolving needs of consumers, insurance carriers must look beyond conventional offerings. The report identifies four key areas for growth:
- Regaining Relevance in Retirement: Higher interest rates and macroeconomic uncertainty have renewed the value proposition for retirement solutions, especially for pre-retirees and retirees. Life insurers have an opportunity to offer a secure retirement income and hold onto assets that might have previously gone to asset and wealth managers.
- Moving Toward Integrated Wealth and Health Solutions: Customer preferences are leading to a blurring of lines between wealth and life solutions. Consumers seek advisors who can address all their financial needs, including their health. By integrating insurance, wealth management, and healthcare, insurers can offer a holistic approach to meet evolving client needs.
- Finding New Avenues to Serve Customers and Advisors: As life insurance penetration declines, there is an opportunity to make the case for insurance to more consumers. Insurers are exploring different distribution channels, like worksites, and are using data and technology to lower advisors’ costs.
- Activating the Flywheel Across Insurance, Asset Management, and Capital: The convergence of life insurance and asset management creates value through a “flywheel” approach, consisting of insurance policy issuance, investment management, and capital management. Some insurers may excel in all three areas while others may need to focus on their strongest components.
Ultimately, life insurance carriers play a crucial role in helping individuals build wealth and offering protection against uncertainty. The industry has an opportunity to harness emerging structural tailwinds and redefine its role beyond its traditional scope. This requires building new capabilities and entering into new adjacencies across financial services, health, and longevity care. Going beyond traditional life insurance is a necessary step for the industry, offering an exciting growth imperative for the future.
