Currently, individuals aged 65 or older hold 40% of insurers’ assets under management (AUM), totalling US$7.8 trillion for the 40 largest global life insurers. The report underscores the urgency for insurers to adapt to this unprecedented wealth transfer set to unfold over the next two decades.
The foundation of the World Life Insurance Report 2023 rests on data sourced from two primary channels: the 2023 Global Insurance Voice of the Customer Survey and the 2023 Global Insurance Executive Interviews. This comprehensive research amalgamates findings from 23 diverse markets, spanning Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Italy, Japan, Malaysia, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.
The Voice of the Customer Survey, conducted collaboratively with Phronesis Partners in May and June of 2023, engaged 6,775 insurance customers aged 50 and above across 20 countries. Furthermore, the report incorporates insights gleaned from interviews with 200 senior insurance executives from leading companies, encompassing 14 markets. Collectively, these markets represent the three major regions: Americas (North America and Latin America), EMEA, and APAC.
United Nations projections for global populations
Highlighting the demographic context, the United Nations projects that 33% of the global population will be over 50 by 2050. However, a significant portion of senior citizens lack a financial plan for aging well, with 60% of individuals aged 65 or older not seeking professional financial advice, as revealed by Capgemini’s latest findings.
As individuals approach retirement, they face increased financial responsibility for aging well amid economic challenges, diminishing governmental support, and rising healthcare costs contributing to a cost-of-living crisis. Despite a growing need for life insurance, consumers encounter obstacles in product adoption, with complexities in life insurance offerings (39%) and limited awareness ranking as the primary challenges, followed closely by a lack of trust (29%).
The report sheds light on the imperative for the life insurance industry to innovate and address evolving consumer needs, particularly as a significant demographic shift unfolds, necessitating tailored solutions to navigate the complexities of wealth transfer and aging well.
Speaking about the report, Samantha Chow, Global Leader for Life, Annuity and Benefits Sector at Capgemini, said: “The demographic shift coupled with the greatest wealth transfer to take place in the coming years threaten the life insurance industry, as it competes to serve the needs of an aging population. 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.”
She continued: “Those that prioritise early engagement with clients and their beneficiaries will generate trust and safeguard their assets.”
New partnerships key to seizing opportunities with affluent consumers
The biggest challenge life insurers currently face is staying relevant amid the greatest wealth transfer. To protect the assets under management that are at risk, the report recommends prioritizing affluent and mass affluent[4] consumers who hold 39% of global wealth and account for about 20% of the aging population. This segment has the greatest need for aging-well solutions, with more than 75% wanting innovative life products. However, only 27% of insurers have the advanced product development capabilities to provide them.
According to the report, more than 44% of 50+ year old affluent and mass affluent customers expect 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.
Transform the customer lifecycle to boost growth
As insurers navigate the road ahead, they must find a path to protect assets and boost growth. The report highlights a journey that will take insurers from today’s product-centric approach to an operating model focused on customer-centricity, with comprehensive, higher-value solutions designed to help consumers age well. This transition requires a value chain evolution aimed at enhancing the customer onboarding process and driving policyholder and beneficiary engagement. Subsequently, beneficiaries can be transformed into new customers and claims effectively converted into opportunities for revenue generation.
To start, insurers can consolidate data for a single view of the customer and digitally empower agents by leveraging artificial intelligence, including generative AI, to offer hyper-personalised advice. However, only 21% of insurers have the tools for advanced data analytics capabilities, and fewer (19%) are taking advantage of advanced technologies to streamline operations, enrich experiences, integrate across emerging ecosystems, and make faster and more data-driven decisions.
Insurers can drive policyholder and beneficiary engagement to deepen customer relationships by simplifying and personalising the onboarding journey; elevate the claims experience by providing flexibility in claims restructuring; and capture a single view of the customer by modernising their technology layer. Those insurers that succeed through this journey will be able to fortify trust across generations, encourage future growth and safeguard the significant assets at risk to be transferred in the near future, the report concludes.
Author: Joanna England
