There is ‘unprecedented opportunity’ for life insurers across the globe, as three-in-four consumers are interested in innovative life insurance offerings to help them age well – but insurers lack the product development capabilities, according to Capgemini.
The Capgemini Research Institute’s World Life Insurance Report 2023, highlights an unprecedented shift for life insurers as they face a significant outflow of assets under management (AUM), ahead of what it calls history’s largest inter-generational wealth transfer.
“Life insurers have an unprecedented opportunity to heighten their relevance, boost policy holder trust, and accelerate growth through meaningful engagement with people aged 50 and above,” Capgemini said.
The report took data from two primary sources; the 2023 Global Insurance Voice of the Customer Survey which polled 6,775 over-50 insurance customers in 20 countries, and the 2023 Global Insurance Executive Interviews which covered 23 markets.
It also included insights from interviews with 200 senior insurance executives of leading insurance companies across 14 markets.
The report said that “many people approaching retirement are being forced to shoulder more of the financial responsibility for aging well as unique economic headwinds, declining governmental support, and increasing healthcare costs exacerbate the cost-of-living crisis“.
“Despite these conditions creating a greater need for life insurance, consumers face growing barriers to product adoption,“ it added.
Policyholders reported complexity across life insurance offerings and limited awareness (39%) as the biggest obstacles, followed by a lack of trust (29%).
Assets under management
To protect AUM that are at risk, the report recommends prioritising affluent and mass affluent consumers who hold 39% of global wealth and account for about 20% of the aging population.
It said this segment had the greatest need for aging-well solutions, with more than 75% wanting innovative life products.
However, only 27% of insurers had the advanced product development capabilities to provide them, Capgemini said.
According to the report, more than 44% of affluent and mass affluent customers aged 50 or older expected their insurers to provide such services, ranging from wellness initiatives to assisted living.
Ecosystem partnerships will prove critical for insurers to close this gap by orchestrating a wide universe of value-added services.
Samantha Chow, global leader for life, annuity and benefits sector at Capgemini said: “To help policyholders age well, carriers must find a way to appeal to the evolving needs of consumers by creating a personalised and tailored experience through more innovative product design.
“Ecosystem partnerships, such as engaging with firms that specialise in serving seniors, can help insurers orchestrate value-added services and close their capabilities gap in key areas.
“Those that prioritise early engagement with clients and their beneficiaries will generate trust and safeguard their assets.”