Life insurance companies face new challenges in next decade
The landscape is changing for life insurance companies, and they must be able to successfully maneuver an evolving market to remain competitive during the next decade. Those are some of the findings from a new report issued by PwC US.
Entitled "Life Insurance 2020: Competing for a Future," the report touches on four factors that will influence how insurers do business in the years to come. PwC US frames these factors as the following challenges:
- Two-speed global growth: According to the study, life insurance companies are increasingly operating on a global level which means they must adjust to the needs of both emerging markets as well as more economically developed countries. While the market for life insurance is growing in emerging countries, changing demographics in the U.S. offer new opportunities for the companies that can tap into the needs of aging Baby Boomers as well as market the varying benefits of whole life and term life policies.
- Distribution disruption and the consumer revolution: At the heart of this challenge is how consumers have changed their buying habits in the wake of the digital era. While life insurance was previously sold primarily through intermediaries such as brokers, PwC US notes consumers are increasingly turning to social media for insurance information as well as apps and websites to find life insurance quotes.
- Information advantage through 'big data:' While social media and online tools may present a challenge for insurers who are used to doing business through more traditional means, they offer opportunities as well. The study suggests the use of 'big data' - information extracted from a myriad of sources such as online profiles - can be pieced together to create a more accurate picture of a potential customer's status. Information related to health status, income and purchasing behavior can then be used to more accurately price life insurance rates and market products to individuals.
- Big and fast - evolving business models: Although consumers have traditionally been drawn to large companies that are perceived to offer stability and value, emerging technology has changed how many consumers shop for and buy life insurance. PwC US says consumers now factor in speed of service and delivery methods when selecting a life insurance company.
As insurers grapple with these challenges, consumers may find their options to find life insurance change in the years to come. The PwC US report seems to indicate that more companies will offer life insurance quotes and other services online while working to provide more customized services and products to individual consumers