Life Insurance Sector Scorecard – Thematic Research

Pages: 22 Published: January 28, 2022 Report Code: GDIN-TR-S041

COVID-19 is by far the most important theme in the insurance market going into 2022. It has put great strain on economies around the world and will be a key factor in the underwriting process for the majority of products. Even as countries emerged from lockdowns throughout 2021, uncertainty remained, and that will continue into 2022. Life insurers have felt this particularly strongly due to a sharp rise in claims and the need to price in increased risk going forward. In the longer term, the pandemic may increase interest in the product as COVID-19 has emphasized the importance of life insurance. Life insurers should be looking towards key themes such as AI and automation to help reduce costs and time while looking to modernize their offerings with personalization, potentially with the help of insurtech. Personalization is found to be essential for life insurers. Prevention is increasingly becoming a key element of life insurance that appeals to both the consumer and insurer, as it promotes healthier lifestyles and reduces premiums.

What are the key themes in the life Insurance market?

COVID-19: The spread of COVID-19 will remain the most disruptive theme affecting the insurance industry, with the level of risk being especially high within the life insurance sector. While demand for life insurance is likely to increase as a result of the pandemic, this may be tempered by a reduction in disposable income for consumers around the world. The insurance industry has been hit on two main fronts, the first being from the cost of claims due either directly to COVID-19 in the life insurance space or indirectly through government lockdown measures. Insurers have also been impacted through increased volatility in financial markets and record-low interest rates, which have resulted in a decline in the value of their assets and increased solvency pressures in some instances. Life insurers in particular invest in large sums of money in financial markets and will therefore face more pressure to make profit through underwriting, as interest rates remain particularly low.

ESG: ESG is a key issue in insurance both for public relations and its future profitability. Insurance is one of the leading industries in the global economy and therefore needs to be seen as a leader in the key issues within ESG, such as sustainability and, ultimately, climate change. The impact of climate change is already seen as having a severe impact on profits. Severe weather events such as the Australian wildfires and US storms have cost insurers and reinsurers billions, and as the issue gets worse, events like these will become more common. Reinsurers will be forced to increase rates to mitigate against their exposure to a rising cost of claims, and many insurers will look to pass the increased cost on to policyholders through higher premiums as margins are already thin across numerous product lines.

Insurtech: Insurtech have grown from operating in niche areas of the insurance industry to reimagining products in core lines of business and growing to a size to be considered competitors with some of the largest incumbents. The insurtech movement has moved away from focusing on helping incumbents become more digital and agile in their operations, towards developing and delivering innovative insurance products themselves. They have less of a presence in the life sector, but companies such as Anorak and DeadHappy are challenging the traditional way that life insurance is sold though digitalization and simplification.

Artificial Intelligence: AI and machine learning are being leveraged across the insurance value chain. Some of the biggest immediate use cases for the technology are in the claims management area of the value chain, where AI is being applied to improve the detection of fraudulent claims. It can also be utilized to simplify purchasing a policy and identifying risks. This can be in simple automation of claims policies or in more complex diagnoses from symptoms. Other uses of AI can be found in the underwriting and risk-profiling area of the value chain. Given the exponential growth in the availability of data that can be incorporated into understanding a policyholder’s risk profile, AI creates an opportunity to enhance underwriting accuracy.

Personalization: Customer purchasing behavior is driving a need for more tailored products that meet both the individual’s needs and risks. Insurance products are becoming less standardized and increasingly bespoke to target specific audiences. Vitality has established itself as a leader in this field. It has used tracking devices such as Fitbits to create a rewards system that incentivizes customers to improve their lifestyles. Customers are not punished for unhealthy choices but instead are given rewards, such as coffees or cinema tickets, for healthy living. This means customers can benefit from financial rewards by sharing their data.

Medical IoT: The Internet of Things (IoT) is among the most disruptive technologies in the insurance sector. It has the potential to redefine the traditional insurance business model, shifting the focus from merely protection to prevention. Related gains include new revenue streams, claims/risk prevention, and a more intimate and connected relationship with customers. The main basis for medical IoT is wearables. Some insurers have shown that linking up devices and creating products through the data collected and analyzed is both possible and extremely beneficial. Wearables are the key to IoT in the life insurance sector, as depending on the type, they can collect a range of health-related data, which can lead to valuable insights on health and either improvement or deterioration over time.

Demographics: Insurers need to understand in detail the trends and dynamics of global populations in order to provide adequate risk recovery solutions. The personalization of risk and changing customer behavior means insurance providers will need to target their propositions to key customer groups. Different demographics have developed different expectations when it comes to their insurance policies. The younger demographic are more open to flexibility with their insurance policies, making on-demand coverage increasingly popular. In contrast, older demographics typically favor longer-term annual policies. The industry has recognized the different expectations and how shifts in demographics are impacting their consumer base.

Which are the key players in the life insurance market?

The major life insurance companies include Discovery, Ping An, Dai-ichi Life, YuLife, Manulife, AXA, dacadoo, Bupa, Allianz, Oscar Health, Prudential Financial, Sun Life Financial, Great-West Lifeco, Bright Health, Aflac, AIG, Chubb, China Pacific Life, Anorak, DeadHappy, HDFC Life, Aviva, Aegon, China Life, BIMA Mobile, Cigna, Zurich Insurance, Cathay Financial Holdings, AIA, Legal & General, Old Mutual, Humana, LV=, Anthem, Royal London, MetLife, and Saga.

Life insurance sector scorecard, by key players

Life insurance sector scorecard, by key players

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Market report scope

Key Companies Discovery, Ping An, Dai-ichi Life, YuLife, Manulife, AXA, dacadoo, Bupa, Allianz, Oscar Health, Prudential Financial, Sun Life Financial, Great-West Lifeco, Bright Health, Aflac, AIG, Chubb, China Pacific Life, Anorak, DeadHappy, HDFC Life, Aviva, Aegon, China Life, BIMA Mobile, Cigna, Zurich Insurance, Cathay Financial Holdings, AIA, Legal & General, Old Mutual, Humana, LV=, Anthem, Royal London, MetLife, and Saga.
Key Themes COVID-19, Personalization, ESG, Artificial Intelligence, Medical IoT, Demographics, Insurtech, Emerging Economics, Wellbeing, and Computer Vision

Scope

  • COVID-19 is by far the most important theme in the insurance market going into 2022. It has put great strain on economies around the world and will be a key factor in the underwriting process for the majority of products. Even as countries emerged from lockdowns throughout 2021, uncertainty remained, and that will continue into 2022.
  • Life insurers have felt this particularly strongly due to a sharp rise in claims and the need to price in increased risk going forward. In the longer term, the pandemic may increase interest in the product as COVID-19 has emphasized the importance of life insurance. Life insurers should be looking towards key themes such as AI and automation to help reduce costs and time while looking to modernize their offerings with personalization, potentially with the help of insurtech.

Reasons to Buy

  • Benchmark yourself against the rest of the market.
  • Discover market leaders across 10 essential themes to life insurance.
  • Discover what the 10 key themes are and understand why we believe them to be so crucial.

Key Players

Discovery, Ping An, Dai-ichi Life, YuLife, Manulife, AXA, dacadoo, Bupa, Allianz, Oscar Health, Prudential Financial, Sun Life Financial, Great-West Lifeco, Bright Health, Aflac, AIG, Chubb, China Pacific Life, Anorak, DeadHappy, HDFC Life, Aviva, Aegon, China Life, BIMA Mobile, Cigna, Zurich Insurance, Cathay Financial Holdings, AIA, Legal & General, Old Mutual, Humana, LV=, Anthem, Royal London, MetLife, Saga

Table of Contents

Executive Summary

Introduction

Themes

Sector Scorecard: Insurance

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