6 minute read 17 Jul 2023

New consumer needs, tech-driven disruption and societal shifts are reshaping the life, group, health insurance and retirement markets.

Three generation family having a good time at dusk

How life insurers are transforming to deliver value for better living

By Nicole Michaels

EY Global Insurance Business Transformation Leader

Transformation leader in insurance. Passionate about diversity and inclusiveness as a business imperative and growth driver.

6 minute read 17 Jul 2023
Related topics Insurance Consumer Products

Show resources

  • NextWave Insurance: Commercial and reinsurance (pdf)

New consumer needs, tech-driven disruption and societal shifts are reshaping the life, group, health insurance and retirement markets.

In brief
  • Huge savings and health insurance gaps, profound shifts in employment and aging populations are fundamentally changing the rules of retirement.
  • Insurers, banks, wealth managers and employee benefits providers are competing on financial wellness, which all types of consumers increasingly want.
  • By enriching the value proposition, simplifying products and expanding access, the industry can drive growth, serve more customers and meet societal needs.

Will “life insurance” as traditionally defined, still exist in the next 12-15 years? Given rising customer demand for financial wellness, longer lifespans, the emergence of the gig economy and the unlikelihood of traditional retirement for huge numbers of consumers, the question is not at all far-fetched.

Indeed, it is the focus of our latest NextWave Insurance report, which is focused on the life, group and health insurance and retirement sectors.

Certainly, in the mid-2030s, people will still need the protections that life insurance has historically provided. But any firm that continues to think of life insurance in the same old ways risks irrelevance in the very near term. While life, group and health insurance and retirement sectors vary by country, a few common themes apply to major global markets, including the need to engage customers more frequently, adopt better technology and develop new business models and distribution channels (including ecosystems).

Our report highlights both the profound forces reshaping the market today and the key capabilities insurers and other firms need to develop or access through partners if they are to thrive in the future. It also provides inspiration by highlighting the companies around the world that are pointing the way forward through bold and creative innovations.

Envisioning the customer journey – from early days to retirement(s)  

As ever, customers dictate the future of the industry. Their needs, objectives and even aspirations should inform and inspire the growth strategies and innovation agenda for all industry stakeholders. Advisors and regulators are stakeholders so important that it’s useful – even desirable – to view them as customers, too.

Enabling technology and strong partnerships will allow insurers to execute on holistic value propositions via deeper and more meaningful engagement with more types of customers, including women, who are currently underserved and will control a greater proportion of wealth in the future.

Ecosystems will soon become the most effective models because insurers simply cannot go it alone in meeting consumers’ evolving needs across critical life stages. The group insurance and employer benefits market is already showing the upside of ecosystems. Insurers around the world have orchestrated ecosystems to expand their offerings and meet diversifying needs, particularly in the realm of mental health and holistic wellbeing.

The focus should be on solutions that combine protection, savings and investments and are designed to flex as customer needs expand and evolve across five critical life stages.

1. Getting started on financial wellness

Insurers, annuity providers and other firms have long recognized the need to engage younger consumers but have largely struggled to make the connection. The first step is to demonstrate the value of insurance relative to financial goals besides retirement savings. Meeting the rising post-COVID demand for protections against short-term economic shocks (e.g., the loss of income or unexpected hospitalization) is one opportunity.

Portable micro-policies and lifestyle insurance that evolve over time would suit many young people just starting their working lives. To gain traction, insurers must ensure they offer individuals full digital experiences through their mobile phones and that brokers and advisors are motivated to build and grow relationships with individuals with few assets to invest. 

Proportion of Gen Z consumers in US who say they need less than $250,000 to retire


Source: Harris, Northwestern Mutual

2. Managing through a life’s work

With traditional pensions and defined benefit plans becoming increasingly rare and fewer workers able to access employer-provided benefits, traditional retirement is beyond the reach of a growing number of individuals. There is much insurers can do to bridge the gap and satisfy unmet market needs.

Flexible and affordable solutions are key. Integrated policies could automatically cover workers toggling between standard employment and side hustles. Portable coverage for full-time gig economy workers and the self-employed, as well as add-on features for employer-provided policies, could spur meaningful growth. So could products that support specific financial goals – buying a home, saving for children’s education, funding mid-career retraining and “sabbaticals.”

Workers covered by at least one social protection benefit


Source: International Labour Organization

3. Caring for loved ones and family

Changes to family and household structures and uncertain macroeconomic conditions have created new savings and protection needs for consumers worldwide. Gaps in health insurance coverage and the social safety net mean that more people are serving as caregivers.

Women who have to look out for both their children and elderly parents feel less financially secure in the long term. That’s true despite their making most of the household decisions about discretionary spending, having a significant influence on financial planning and taking on responsibility for more assets. As wealth is being transferred to women, they are engaging more but don’t feel well-served by the industry. Better solutions and more personalized services designed for the unique needs of women are another opportunity for the industry.

Proportion of UK wealth to be in women’s hands by 2025


Source: Barclays Bank

4. Instilling financial resilience

Increased financial resilience is a common theme across all consumer groups, and that’s value that insurers can ultimately deliver via savings, investment and income-protection products and solutions that support different goals – rainy-day or emergency savings, home improvements, “a family trip of a lifetime,” accumulating assets for a comfortable retirement, or funding a sabbatical.

Again, flexibility in product design is key, such as retirement savings and pension plans that allow shifting levels of withdrawals and close monitoring of drawdowns. For some segments, the emphasis will be on providing access to advisory services via ecosystem partnerships. To promote financial confidence and resilience, consumers will be looking for holistic views of their financial situation via intuitive dashboards that integrate data from checking and savings accounts, investment positions, insurance policies, employee benefits plans and other sources.

Global consumers interested in products that pay three months of income in the event of a job loss


Source: EY Global Insurance Consumer Survey

5. Making the most of payouts and benefits

The payout of life insurance claims and the maturation of annuities are clear opportunities for insurers to build deeper relationships with beneficiaries. Advisors worry about losing this business, too. Insurers can keep beneficiaries engaged by reaching out proactively with timely guidance long before claims are paid and then provide a clear, non-stressful wealth transfer experience when they are paid.

Insurers engaged in strong ecosystems can expand their offerings to include access to life coaching and grief counseling. Smart decumulation strategies and multigenerational advice for managing inheritances are attractive to growing numbers of customers. Those services can help insurers engage with their customers’ families long before claims need to be paid.

Advisors concerned that they could lose business as wealth transfers between generations


Source: Schroders Annual Advisor Survey 2022

Show resources

  • Download the NextWave Insurance: Life, Retirement and Group report


Because customer preferences and priorities have changed, almost everything else in the insurance industry must change. Necessary transformations will affect not just life insurance and retirement savings products, but also go-to-market approaches and distribution networks, organizational models and performance metrics. For firms that get it right, customer relationships will become both deeper and longer and, in many cases, last a lifetime.

So what is it that customers want? Increased financial security and, ultimately, happier and healthier lives. “Financial solutions for better living” – perhaps that’s how life insurance will be known in 2030.

About this article

By Nicole Michaels

EY Global Insurance Business Transformation Leader

Transformation leader in insurance. Passionate about diversity and inclusiveness as a business imperative and growth driver.

Related topics Insurance Consumer Products