The World Life Insurance Report 2023 states that one third of the world’s population will be over the age of 50 by 2050. Yet, it says most seniors lack a financial plan for aging well.
The report, published by Capgemini, states that 60% of individuals aged 65 or older have not sought professional financial advice to prepare for retirement, or to transfer their wealth.
It says many people approaching retirement are being forced to shoulder more of the financial responsibility for aging well as “…unique economic headwinds, declining governmental support, and increasing healthcare costs exacerbate the cost-of-living crisis”.
The report’s authors, drawing on data from 20 countries including Australia, point out that despite a greater need for life insurance, consumers face growing barriers to product adoption.
Policyholders, it states, report complexity across life insurance offerings and limited awareness (39%) as the biggest obstacles, followed by a lack of trust (29%).
…The demographic shift coupled with the greatest wealth transfer to take place in the coming years threaten the life insurance industry…
This is a concern because, states the report, the world’s 40 largest life insurers will transfer US$7.8 trillion to beneficiaries by 2040.
“The demographic shift coupled with the greatest wealth transfer to take place in the coming years threaten the life insurance industry, as it competes to serve the needs of an aging population,” says Samantha Chow, Global Leader for Life, Annuity and Benefits Sector at Capgemini.
“To help policyholders age well, carriers must find a way to appeal to the evolving needs of consumers by creating a personalised and tailored experience through more innovative product design.
“Ecosystem partnerships, such as engaging with firms that specialise in serving seniors, can help insurers orchestrate value-added services and close their capabilities gap in key areas.
“Those that prioritise early engagement with clients and their beneficiaries will generate trust and safeguard their assets.”
The report states that the biggest challenge life insurers currently face is staying relevant amid the greatest wealth transfer.
To protect the assets under management that are at risk, the report recommends insurers prioritise affluent and mass affluent consumers who hold 39% of global wealth and account for about 20% of the aging population.
…the report recommends insurers prioritise affluent and mass affluent consumers…
“This segment has the greatest need for aging-well solutions, with more than 75% wanting innovative life products. However, only 27% of insurers have the advanced product development capabilities to provide them,” states the report.
According to the report, more than 44% of 50-plus year old affluent and mass affluent customers expect their insurers to provide such services, ranging from wellness initiatives to assisted living.
Ecosystem partnerships will prove critical for insurers to close this gap by orchestrating a wide universe of value-added services, it states.
It adds that insurers can drive policyholder and beneficiary engagement to deepen customer relationships by simplifying and personalising the onboarding journey; elevate the claims experience by providing flexibility in claims restructuring; and capture a single view of the customer by modernising their technology layer.
“Those insurers that succeed through this journey will be able to fortify trust across generations, foster future growth and safeguard the significant assets at risk to be transferred in the near future,” the report concludes.
