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How life insurers are transforming to deliver value for better living
In this episode of Insurance Talks, EY Insurance leaders discuss the NextWave report on the future of the life and pensions industry and how it is being revolutionized by technology.
The EY NextWave vision represents our global perspective on the most powerful trends and forces shaping the future of the insurance industry.
In this episode, Isabelle Santenac, EY Global Insurance leader, welcomes Martina Neary, EY UK Insurance Leader, and Jill Hitchen, EY Technology Consulting Leader, to discuss the NextWave report on the future of the life and pensions industry.
Key takeaways:
How can insurers enhance financial literacy, self-care, and healthier living by developing services and tools beyond protection, promoting a higher quality of life.
Customer priorities and preferences require changes across businesses, including products, distribution networks, and organizational structures.
The podcast is also available to listen to on Spotify.
Watch the podcast video below.
For your convenience, full text transcript of this podcast is also available.
Isabelle Santenac
Hello, everyone. I’m Isabelle Santenac, the EY Global Insurance Leader. I’m very happy today for this podcast to be joined by Martina Neary, our new UK Insurance Leader. So, Martina, welcome and congratulations for your new role.
Martina Neary
Thank you, Isabelle. I’m so honoured to lead insurance in the UK. It’s really a dream job for me. It’s such a fantastic practice. And really honoured to come and join you today and talk about this research, so thanks, Isabelle. And I have also the pleasure to welcome Jill Hitchen, who is an EY Technology Consulting Leader with more than 20 years’ experience in the life and pension industry. So, Jill, welcome.
Jill Hitchen
Absolutely delighted to be here with you both. Technology is revolutionizing our industry, so I’m really excited to be part of that at the moment.
Santenac
So, let’s start. In the NextWave report, EY (organization) highlights the profound change in the life and pension industry.
So, Martina, what do you think are the impacts for the European insurers and more particularly for the UK market?
Neary
Yes. Well, what we can see is customers really changing their objectives, their desires, their aspirations for financial wellness. I think the profound change is who they’re looking to solve those problems and achieve those outcomes and how they’re looking to do it, so how they’re looking to save for retirement, how they’re looking to protect for illness and poor health. And also the synergy between mental health, financial health, and wellness. That’s really come together for customers, and they don’t see that separately. So, that’s really the profound change and something in the report that really resonated with me is, we’ve called this industry the same name for 200 years since it started and the report said, well, maybe as an industry in 2030 we should be more thinking of ourselves as financial solutions for better living, not about death. I really enjoyed that in the report and it’s very interesting and confirming of what people want now from the industry.
Santenac
Yes. And, Jill, how do you think technology can also drive the changes needed?
Hitchen
I think it’s the key enabler. It’s key to adding value to the business and profitability but also from an interactive perspective. Technology is at the heart of the CEO agenda. They want technology to enable their customers to be able to interact better with them. So, actually customers are looking now for different ways to interact with insurers, not the traditional ways, and digital, customer-centric journeys are key. In theory, that’s a lot of jargon, but what that means is actually buying products in an easy way, in an easy journey, being able to invest in those products, and actually being able to claim against those products when the need is there. So, actually it’s very key to get that more personalized customer journey, utilizing the technology, to actually get the demand there from the customers.
Santenac
So, Martina, considering this rapid evolution, how does the industry respond to that and ensure they stay relevant?
Neary
And the industry is very busy on this topic and looking at simplification of products. That’s a theme that’s growing in resonance for the industry for cost reasons but also for attraction of customers reasons. But as well as simplification,
it’s access in the industry. We have something in the UK called Consumer Duty that’s getting to the heart of that also. So, how do we reach out as an industry to people with different socioeconomic backgrounds? How do we reach out to different shapes and sizes of family units, solo families, people who are divorced, etc., different age groups? So, that access, that relevance in the industry is really important to engage on a broader basis. And we shouldn’t forget brokers and advisors. So, in the industry, if we want to attract this broader base and different groups, some of them, when they’re joining this journey with their provider, won’t have much in the way of assets. So, how do we incentivize brokers and advisors to start them on their journey through their lifetime with their provider?
Hitchen
I think, if I was going to add to that, the simplification is key from a technology perspective as well. Simplification, removing some of the tech risk in your environment, simplifying that to the simplified products and offerings and client-centricity will enable companies to be able to invest in the technology that then adds the value to consumers, which will allow a better range of propositions out there to meet their needs rather than very, at the moment, complex estates, which actually include a lot of old technology in there.
Santenac
Yes. I fully agree with that. In my role, I have the pleasure to meet with a lot of executives across the globe, and I think everyone is looking for innovation and we see a lot of innovation, particular in Asia, but also everyone is thinking about ecosystems. Because what you describe is that the proposition from the insurance industry needs to be broader than it is today, and the industry cannot provide by themselves all those products. We see already some benefits of ecosystem for the group insurance and employers’ benefits markets, and we see that coming also in the rest of the life and pension industry. So, I think that’s something to watch in the future but certainly something which is a big trend, and that technology will of course support. So, it has always been difficult to talk about preparing retirement with people younger than 40 years old. Today, it’s absolutely critical, considering the lack of sustainable solutions proposed by most of the governments, that our youngest people start to think about their retirement early in their life. So, Martina, how do you think the industry should approach better this generation?
Neary
Well, I think one thing it can do is look internationally, what’s happening internationally. But certainly, for younger generations, micro policies that follow your life, and of course, there’s other reasons to accumulate assets before your retirement, and as retirement goes longer and longer and actually maybe some people are going to continue to work part-time in retirement, that full stop at 65 doesn’t really exist anymore. So, micro policies that develop, that you can change, you can adapt, to Jill’s point, you can personalize through your life is really key for the attraction not just of the younger generation but people in their 50s and 60s, too, who aren’t just going to put their feet up in five years’ time.
Hitchen
I think that’s a really good point, that at the moment we have traditionally not had that customer contact on a regular basis throughout their life stages. It’s always been where there’s an event, which isn’t generally particularly a good event sometimes. So, actually picking up on that and actually having more customer contact, growing the customer relationship is really key. Actually you can do that through the data you collect on the customer and personalizing it more and providing more nudges. Martina picks up on a great point. Retirement is not what it was. Workplace is not what it was. The gig economy, casual working, is a lot more prevalent across the globe now and we are going to have to change our products to actually meet that. As Martina says, retirement is not something that you do. You actually just change the way that you work. You’re changing your lifestyle and we need to reflect that in the propositions that are being offered to people and adapt to that. Technology is quite key in that as well to be able to make it immediate for people, not something that is, I’ll talk to you in 20 years’ time. What’s happening now, what can I help you with now, is what people need and people want.
Santenac
Yes. EY has made the consumer survey in 2021 across several countries in the world and what was really fascinating is that most of the people said in the survey that they don’t really understand the life insurance products, that they need help, whether with their family or with friends. So, it seems to me that one of the critical success factors to attack this generation is to propose simpler product, easy to subscribe, potentially more short-term as well, because this generation doesn’t like to commit on 20, 25 years. So, how do you think the industry communicates and creates more value for this population?
Neary
Yes. Well, as Jill said, traditionally the contact came when your pension was due, you’d lost someone and you’re in grief, or your annuity was due. Actually, the industry has realized that that’s too late. If we look at the pensions industry, assets leave. Once pension freedoms came in and people could take their money, they did because there was no loyalty. There was no relationship at that point. The industry has tried to lifestyle that and get in touch a bit earlier, but of course in your 50s now, I’ve got friends who have got really young children. I’ve got other friends who are retiring and buying big houses and climbing Kilimanjaro. So, that’s not the answer either. So, if we come back to your point of ecosystems and the value of the industry, if you can work with a group of companies that can provide maybe life coaching, career counselling, it can help mental health awareness or even support services, physical health services. We’ve actually seen in the UK a great demand for inheritance tax planning. You could go to one place, one provider, your trusted partner, and they can connect you into their partners that can help you with that. That’s going to be super-compelling. So, even for a young person, they’re going to understand all of those things are required. Then, if you can add that it’s on your mobile and it’s three clicks away, job done. Easier said than done, but that’s what customers are looking for and that’s the profound change. we’re talking about in this report.
Hitchen
And it’s a really interesting proposition because there’s a big educational piece there and actually we’re seeing other organizations educate people behaviorally around how they’re dealing with things. Life and pensions has been quite slow in that market globally. It’s not really gone for that. What we need to do is see that a consumer is a consumer, not a life and pensions, and that’s how they will be educated in some of this more ecosystem that brings all those companies together that actually is really a one-stop shop for somebody that gets the trust of the individual and they understand the wellbeing, the kind of lifestyle changes that people want now. I think that’s a really important for somebody to be able to then trust and understand the terms that are being used rather than the outdated terms of annuity and retirement. It’s more relevant to the younger generations.
Santenac
Fascinating insights. Thank you very much. In the report, EY (teams) believes that in the next decade the traditional life insurance industry will not be relevant anymore. So, I think with what we just discussed there is a lot of room for improving the proposition, the value to the customer, but also how to engage to the customer, how to educate more, how to be part of a broader ecosystem to ensure that the industry can meet the needs of the customers across their life. You’ve both mentioned how life is different today than it was before. So, I think a lot of opportunities for this industry. Thank you very much, Jill and Martina, and thank you all.
The views of third parties set out in this podcast are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.
