The rise of digital services is reshaping the life insurance industry. It’s forcing insurers to rethink how they structure and deliver products and services. It’s also changing the target markets of the industry.
In my previous blog I discussed the growing importance of the Gen D market. This multi-generation group of digitally empowered consumers offers enormous potential. It’s under-served, hungry for financial protection, and possesses substantial spending power.
Accenture has identified some more big opportunities for life insurers. I want to discuss the findings of a recent Accenture study of the U.S. market – the world’s largest life insurance market. My next blog will highlight examples of innovative Digital Transformers in Europe and Asia who are applying digital services to gain competitive advantage in the life insurance industry.
Market opportunities identified by Accenture in the U.S. include:
- Retirement planning. Seventy-five million Baby Boomers are on the verge of retirement—an average of 10,000 people will turn 65 each day for the next 20 years. Fifty-three percent lack the information they need for retirement, and 86 percent say they have little or no awareness of retirement products offered by life insurers. Europe’s Baby Boomers are also leaving the workforce in big numbers. What’s more they’re living longer. There’s an urgent need for customer solutions that combine wealth, health and protection and support people living 20 or 30 years after retirement and even longer.
- The middle market. There are about 52 million U.S. households with annual incomes between $35,000 and $100,000—yet they account for just 4 percent of all life insurance purchased in the US. It’s a similar situation in Europe where the middle market bears the bulk of the €10 trillion protection gap.
- Millennials. Now the largest age group in the U.S., Millennials, burned by the 2008 economic crash, are thrifty and cautious investors. Forty percent say they are motivated to build and pass along wealth, and 43 percent identify themselves as conservative investors. In Europe, Millennials will comprise 75% of the total workforce by 2025. Life insurance is the perfect product for them.
- Small businesses. Businesses with fewer than 100 employees comprise 98 percent of U.S. firms. Together they employ 42 million people—around 36 percent of the national workforce. Only 41 percent of these businesses offer their workers life insurance. However, when they do, participation is 96 percent. Similarly, in Europe businesses with fewer than 250 employees comprise 99% of the workforce. Penetration of this sector is also very low. Small businesses offer a big opportunity for life insurers.
To capitalize on these opportunities, life insurers have got to change how they do business. Digitally empowered consumers are looking for solutions that address their specific personal needs. These solutions must match consumers’ digital lifestyles and provide constant availability and easy integration with other products and services. Innovative digital ecosystems and partnerships will be essential for life insurers eager to make the most of current and emerging opportunities.
In my next blog I’ll show how some life insurers around the world are using digital services to engage with prospects and customers in radically new ways.
For further information of emerging opportunities in the life insurance industry take a look at some of these links:Changing the Distribution Dynamic: Strategies for Increasing the Value of Distribution in Life Insurance.
Beyond Insurance: Embracing Innovation to Monetize Disruption.
Digital Insurance Era: Stretch your Boundaries.