The Power Of Life Insurance In Enabling Tomorrows Wealth Transfer

People are living longer and healthier. By 2050, the population over 50 will reach 3.2 billion, or 33 percent of the world's total population, according to the United Nations. Longer lifespans are good news for humans. But struggling public finances and a widening gap in pension protection mean that the responsibility for a financially secure retirement is increasingly shifting to individuals. As we live and work longer, the impact of an aging population on the life insurance market landscape will be significant.

Recent research shows that 60% of people age 65 and older don't have a financial advisor, even as the largest intergenerational wealth transfer in history approaches. Insurers have reason to worry. Policyholders age 65 and older control more than 40% of insurers' assets under management, and most of these assets will be transferred to beneficiaries in 2040.

About three-quarters (71%) of this wealth goes to beneficiaries age 50 and older. This underscores the importance of the industry prioritizing deeper relationships with former policyholders and their beneficiaries. In order to protect their existing assets under management and unlock future growth, insurers must strengthen engagement and build trust with senior policyholders and their beneficiaries.

To achieve these goals, insurers must develop comprehensive services that support healthy aging (which we define as the ability to maintain financial security, physical health, and quality of life), including life insurance support and protection. other retirement solutions.

Demographic changes bring challenges and opportunities for carriers

Changing demographics and macroeconomic trends, including government budget tightening and volatile inflation rates, present opportunities and challenges for the industry. Demand for life insurance and related offerings (including annuities, long-term care services and financial advice) is growing. As more consumers seek help with aging, dramatic growth is expected between now and 2030. Meanwhile, life insurance premiums, including annuities, are set to grow 49% to $4.2 trillion in 2020.

The current landscape presents an unprecedented opportunity for life insurers to increase their relevance, increase their policyholders' confidence and accelerate their growth by meaningfully engaging with people aged 50 and over. This customer segment is ready to take advantage of comprehensive and flexible solutions that help them finance their retirement and old age. Some insurers have already started taking steps to take advantage of it.

For example, AXA has made strategic investments in aged care facilities in Japan and Italy in response to rising life expectancies and a clear need for quality facilities. AXA's Alternative Investments division, which manages more than $201 billion in assets, is leading efforts to focus on cities with large senior populations.

Despite clear consumer demand, barriers to life insurance adoption persist. These barriers include product complexity and limited knowledge, which slow growth and limit insurer compliance. These challenges, combined with declining government support and rising health care costs, are widening the retirement security gap. In fact, the World Economic Forum predicts that amount will triple by 2050, and the largest existing pension market will reach $400 trillion.

Life insurance. adapt to the growing demands of policyholders

So what can insurers do to close the pension protection gap and protect their assets under management? I believe that success begins with engaging with prospective beneficiaries earlier and more effectively.

For example, Guardian Life has partnered with Israeli startup Empathy to provide personalized support to beneficiaries, helping families cope with the challenges of losing a loved one. Recipients receive professional disaster, money, recovery and health assistance.

Insurers can provide greater value by equipping intermediaries with digital tools and strengthening channel integration for better, more personalized interactions with policyholders and their beneficiaries.

They can take advantage of the opportunities presented by an aging population by strengthening ecosystem partnerships and developing and organizing a set of value-added services specifically aimed at the silver economy. Operators that improve touchpoints throughout the customer lifecycle will be well positioned to pave the way for future growth. The goal is to move from the current product-centric approach, where offerings are largely determined by what is technically feasible, to a more customer-centric model based on broader value propositions and a more personalized experience.

In order to grow successfully, insurers must change the customer lifecycle. This includes identifying aging gaps and opportunities, driving engagement with policyholders and beneficiaries, and then converting those beneficiaries into new customers, converting claims into revenue-generating opportunities. Modernizing technology and improving data management capabilities are priorities to streamline operations, enrich the customer experience, and make more informed decisions. However, according to Capgemini research, only a limited number of insurers have advanced technology and adequate data analytics capabilities.

Life insurers have struggled to stay relevant for some time. The industry now has a unique opportunity to reverse this trend by simplifying offerings and personalizing every step of the pre- and post-retirement journey. This is how the industry can build sustainable trust while helping consumers live longer generations. In this way, insurers will protect 40% of assets under management at risk.

Samantha Chao is the global leader of life insurance, annuities and benefits at Capgemini. Contact him at [email protected] .

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