7 minute read 13 Jun 2022
Father and daughter hiking in woods

How to navigate US life insurance and retirement trends

By Ed Majkowski

EY Americas Insurance Sector and Consulting Leader

Transformational insurance leader.

7 minute read 13 Jun 2022

Evolving customer needs and new technologies are reshaping the US life insurance industry. Insurers need to be ready for what lies ahead. 

In brief
  • The US is experiencing a challenging environment for delivering long-term investment returns for the life insurance industry.
  • A customer-centric approach is vital, but with four generations of potential customers, there’s a greater need for customization and commoditization to deliver.
  • It is increasingly urgent for insurers to update processes and tech to enable flexible, data-driven omnichannel delivery.

The US life insurance market is evolving and over the next 10 years is set to see substantial change. This is creating opportunities for those insurers who are willing to embrace change and invest in the technology that’s needed to thrive in the modern world.

In the near term, a lot of that change is being driven by the prevailing low-interest-rate environment that’s dominated the market in recent years, which has put unprecedented pressure on earnings growth. Insurers have also seen increased consumer demand for insurance products that meet their specific needs.

At the same time, substantial advances in technology, changing demographics and shifting customer expectations all mean that the biggest life insurance sector globally is in for a period of transformation. 

NextWave Insurance: Life insurance and retirement

How life insurance companies will protect people against risk and preserve their well-being will look vastly different tomorrow. Discover how insurers can navigate growth in the next decade.

Download the report

Addressing challenges by refocusing on customer needs

With financial well-being and health matters front and center in the minds of many Americans. The opportunity for US life insurers to grow their business and reach a whole new market has never been greater.

But, while demand for these protection and retirement products is growing, changing customer expectations and needs mean that life and group insurers must transform how they operate to satisfy this potential demand. In an industry that tends to look into the long term, there’s an urgent need to reframe the future of how life insurers create value for their customers in the months and years ahead.

A shrinking sector


The decline in life insurance ownership in the US since 2011.

With jobs no longer for life, but benefits like life insurance and pensions still in demand by employees, traditional products are becoming increasingly unhelpful for workers – or to their employers. Today a flexible, transferrable employee benefits product – one that can follow the individual from employer to employer – is seen as a major plus point, often a key differentiator. Such benefit packages are becoming an increasingly important consideration for people switching jobs. Over the next decade, this may become the expectation rather than the exception.

To respond effectively, life insurers need to reassess their business models and move away from focusing on the performance of individual product lines that have led their strategies in recent years. They must move toward a more customer-centric model that offers flexibility both in terms of the types of products being offered, and the way in which customers can engage with their insurers.

Advice needed


of millennials and Gen Z consumers expect financial, health and wellness guidance from their insurer.

Finding more sustainable business models

Our report explores several potential future business models for the life insurance industry, all of which have their merits. At the heart of these changes is the realization that the market is moving toward an approach that will focus on giving greater flexibility to customers and insurers alike.

As insurers shift their focus and ways of working, we will likely see the development of a more granular, omnichannel ecosystem of providers that will help customers boost their overall financial well-being through customizable plans that they can access and tweak as needed. This ecosystem will provide end-to-end solutions to help individuals protect themselves and their dependents throughout their lives – even as they change employers more frequently, creating a more challenging environment for managing their employee benefits.

Some of these services will come from retail providers, while others may end up as part of an employee’s benefits package. They will cover everything from traditional protection products to more prevention-based services, perhaps built around financial education and advice to boost financial well-being and physical health. 

New generational perspectives


of US consumers age 25-34 are interested in financial subscription models.

This growing variety of business models and renewed focus on highly customizable products means that insurers need to decide whether they want to simply provide individual products, or become an integrated part of a suite of products and services that their customers need to manage their lives.

While life insurance has traditionally been seen as a confusing product for many, this shift to a customizable ecosystem of products and services with a focus on improving financial well-being presents a significant opportunity.

By helping their customers navigate different life stages and life-changing events like getting married or having children, insurers will encourage greater loyalty. It should also give insurers much greater visibility into their customers’ needs through the behavioral data that such approaches will generate.

We believe that this kind of closer, more regular customer interaction is key to unlocking long-term, sustainable success in the US life insurance market.

Becoming data-driven and digital-first

Whichever business models emerge, insurers will need to ensure that they have the necessary tools and data to allow them to meet their customers’ evolving and more varied needs. Finding ways to leverage new and alternative sources of data that will enable greater customer insight, automation and personalization will be critical to carriers hoping to succeed in this rapidly evolving marketplace. Underpinning this is the need to update existing tools and processes with effective, flexible and scalable replacements – one of the most pressing needs facing the US life insurance industry.

Some insurers are already making progress in developing the automation and personalization capabilities that are the foundation of such customizable services, with experiments already underway by digital leaders in the US, Europe and the Asia-Pacific region.

Analytical insights


of outperforming insurers leverage advanced analytics solutions.

Once these new tools and processes are developed, they should provide information about how existing customers are using them, but this will need to be supplemented with data from broader sources to enable genuine insights about emerging trends to enable products and services to adapt and evolve over time. While there are ongoing challenges around regulation, security, privacy, and trust – especially around health data – life insurers are becoming increasingly confident that they will be able to unlock insights on both existing and potential customers.

But, for this, they need the right people, as well as the right tools.

Finding the right talent

Digital capabilities need digitally trained staff, but that does not mean that the era of the traditional insurance agent is coming to an end. Instead, insurers need to focus on up-skilling their existing workforce while simultaneously attracting new talent into the industry.

A key challenge is that a career as an insurance agent is not as attractive as it used to be. Many family-run agencies that have operated for generations no longer have their children following in their parents’ footsteps. In addition, enhanced digital capabilities mean that entry-level paperwork and data entry roles are becoming rarer, with advisory and digital expertise becoming increasingly important as a result.

This is creating a talent shortage that is making it hard for many insurers to thrive. Insurers need to demonstrate the appeal and potential of careers at their firms in their job advertisements, including an emphasis on training opportunities.

Reframing the next decade for US life insurance

Many of the industry’s needs – be it dealing with low-interest rates, becoming more customer-centric or updating technologies to enable a more data-driven approach – have been known for most of the last decade.

The challenge of scaling up rapidly means that tech-focused competitors may now be open to forging partnerships and alliances to maximize the potential of this emerging ecosystem. By taking advantage of this unique opportunity, insurers can upskill their workforce and build a wider partner ecosystem that is able to create digitally enabled user experiences designed specifically for the changing needs of their customers.

Insurers are facing a once-in-a-lifetime situation. Approached in the right way, it can help drive growth and create new markets to sustain the industry for years to come.

By successfully reorienting their business model so that they become partners capable of meeting the financial needs of their customers, life insurers in the US have a fantastic opportunity to capitalize on these opportunities.

And those that don’t could be left trailing in their wake.



Today’s challenging environment and shifting customer priorities mean the US life insurance industry will radically change over the next decade. A customer-centric approach supported by updated technology and data-driven customization will see a whole new ecosystem emerge, based around commoditization of services designed to boost financial well-being across generations. Insurers need to identify the right business models and start their transformation now if they are going to be ready for what’s next.

About this article

By Ed Majkowski

EY Americas Insurance Sector and Consulting Leader

Transformational insurance leader.