Life Insurance Trends for 2022 and beyond
We all have witnessed a year in which economic and emotional demolish left by Covid 19 pandemics were intricated. During this period, insurers have faced a situation in which the sector presented a contraction of 2.8% for the first quarter of 2021, according to the Mexican Association of Insurance Institutions (AMIS).
Before we look forward, let’s give a quick recap of 2021.
- The COVID-19 pandemic resulted in supply chain issues across a large number of industries, impacting many businesses’ ability to function on a basic level. Those businesses’ demand for insurance dropped, but claims for damaged and delayed goods skyrocketed.
- Work-from-home became the new normal for many companies and their employees, resulting in brand new cyber-security risks from hundreds of thousands of new home offices.
- Speaking of cyber-security, ransomware and phishing attacks targeted businesses of all sizes, across all industries.
- Technology became an even more integral part of our lives as new tools emerged to help teams work and collaborate from afar. Source
Moving ahead, the life insurance industry continued to take some of its biggest leaps.
- Increased awareness and the need for protection helped the industry to turn headwinds into tailwinds.
- Widespread vaccine deployment and easing of pandemic-related restrictions acted as catalysts towards rebuilding confidence among people and businesses alike while fuelling economic recovery.
- Life insurance selling, which was heavily dependent on in-person interaction, moved to predominantly digital channels and self-service.
In addition to the pandemic-induced uncertainties, turbulent markets and falling interest rates played a key role in increasing demand for pure protection plans, and solutions offering guaranteed returns and assured savings.
The need for life insurance has gained significant visibility since the pandemic struck, as the uncertainties of life have become starkly visible. The Health and wellbeing of self and loved ones have become a priority, which has made financial protection a crucial task. Quite naturally, protection solutions including life and health insurance have become an essential requirement in every financial portfolio.
The preferred methods of insurance buying are also changing. Customers are not only comfortable buying digitally but also interacting digitally with advisors on various platforms. As millennials continue to become a larger part of our economy, this trend is likely to become even stronger, prompting insurers to relook at the customer experience through various distribution channels.
As we move into 2022, life insurers will let customers take the wheel and guide transformation for the post-COVID era. Here are some key trends we expect to emerge in the new year.
- Life insurers are digitalizing distribution channels to provide enhanced convenience, advice, and reach- They are empowering agents and brokers with advanced tools that boost the ability to engage with policyholders and sell more effectively. They are also augmenting direct-to-customer connections through digital channels.
- Insurers are revisiting their product strategy to target under-protected segments- Life insurers are exploring new market opportunities by coming up with new offerings to cater to under-protected segments such as low-income customer groups and gig economy workers.
- Promoting health and wellbeing is becoming mainstream- More and more life insurers are offering wellness initiatives and digital content to promote customer health to bridge customer disconnects and improve policyholder stickiness.
- Novel insurance business models are enabling more efficient go-to-market strategies- Life insurers are exploring pay-as-you-go business models and experimenting with blockchains to enhance customer experience and improve profitability.
- Insurers are leveraging alternate data sources and AI Technologies to generate actionable customer insights- Life insurers are leveraging alternate data sources and innovative solutions based on AI to generate actionable customer insights and processes across the value chain more efficiently.
In a nutshell: Digital adoption, value-based personalized purchasing, and increased awareness will further shape customer behaviors and will redefine the next year. Such trends will be a game-changer for the life insurance industry and will provide an opportunity for the industry to think beyond the usual, innovate and offer granular, value-based, and integrated products to meet customer needs. The focus will be on insurance offerings that will combine risk transfer with proactive and value-added services and emerge as a differentiator. It will be critical for insurers to stay relevant and adapt to the changing times.
Needless to say, the Life insurance business is at a pivotal moment. The low product penetration in India will continue to provide significant headroom for the sector to grow. Given these trends, 2022 will be a year wherein the demand for suitable life insurance offerings will remain strong, and the long-term opportunities for growth will remain as compelling as ever.