{"id":19734,"date":"2020-10-01T13:38:35","date_gmt":"2020-10-01T17:38:35","guid":{"rendered":"https:\/\/www.insurance-canada.ca\/?p=68052"},"modified":"2020-10-01T13:38:35","modified_gmt":"2020-10-01T17:38:35","slug":"the-future-of-life-insurance-reimagining-the-industry-for-the-decade-ahead","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/10\/01\/the-future-of-life-insurance-reimagining-the-industry-for-the-decade-ahead\/","title":{"rendered":"The future of life insurance: Reimagining the industry for the decade ahead"},"content":{"rendered":"

Over the past decade, life insurers have struggled with growth and profitability. By focusing on three priorities, insurers can reinvent themselves and reestablish their vital role in customers\u2019 lives.<\/h3>\n

By Pierre-Ignace Bernard, Kweilin Ellingrud, Jonathan Godsall, Bernhard Kotanko, and Andrew Reich<\/h4>\n

\u2192 Read the whole McKinsey report<\/a><\/i><\/h4>\n

Chicago, IL (Sept. 29, 2020) \u2013 The global life insurance industry has seen significant changes over the past decade. Developing economies\u2014predominantly emerging markets in Asia that were formerly small contributors\u2014have become global growth drivers and now account for more than half of global premium growth and 84 percent of individual annuities growth. The availability of data has skyrocketed, and insurers have made progress in advanced analytics and artificial intelligence. Digital and mobile advances have raised the bar on transparency and service quality: customers can now file claims and access agents, insurance quotes, and policy information with a few taps on a screen.<\/p>\n

The past decade has also introduced new challenges. Life insurers have not benefitted from the bull market. Global penetration fell to 3 percent, and premium growth within most developed markets, hovering just below 2 percent per year, struggled to match GDP. Globally depressed interest rates curtailed investment portfolio returns. More recently, the COVID-19 pandemic has depressed global interest rates even lower than those seen in the 2007\u201308 global financial crisis, leading to disproportional impact on life insurance stock relative to the rest of the market.<\/p>\n

Meeting the moment across three key areas<\/h4>\n

Several trends show promise for the life insurance industry in the next decade. Customer demand is at an all-time high. Indeed, the COVID-19 pandemic has only reemphasized the need for mortality protection. Public pension replacement rates are declining and healthcare expenditures are rising\u2014trends also accelerated by the COVID-19 crisis. Economic and demographic trends will also offer tailwinds. The global middle class is rapidly expanding, bringing higher incomes, growing financial wealth, and heightened risks to manage. By 2030, all baby boomers will be age 65 or older, and many are expected to outlive their retirement savings.<\/p>\n

We believe the life insurance industry faces a pivotal, dual opportunity: the chance to fulfill growing customer needs while returning to profitability and growth. To achieve these goals, we expect winning life insurance companies to outperform in three areas in the decade ahead:<\/p>\n