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Life insurers face persistent challenges. What major forces are at play in the industry?

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Reimagining life insurance

In the news

•

More uninsured women. The percentage of women in the US without a life-insurance policy has gone up for the sixth year in a row, according to a 2022 survey that garnered more than 8,500 responses. US women are likelier than US men to forgo life-insurance coverage, with 46% saying they own life insurance compared with 53% of men. Despite the gap in coverage, only around one-third of uninsured women say they intend to buy life insurance in the coming year. The cost of coverage is a top reason women remain uninsured, according to the survey. [InsuranceNewsNet]

•

Billions to beneficiaries. More Americans are seeking life-insurance coverage as the COVID-19 pandemic lingers. In 2021, application activity for individual life insurance increased at a rate of 3.4% compared with 2020, which itself was a year of record-breaking growth. US life insurers paid more than $100 billion to beneficiaries in 2021, an 11% increase in payments compared with the previous year. Looking ahead, industry leaders are grappling with a series of questions over how to evolve applications and pricing. [CNBC]

In the past two decades, economies grew faster than insurance premiums, indicating insurers haven’t been growing at the same rate as the economies in which they operate.

On McKinsey.com

•

Four forces in life insurance. The past decade has brought with it instability in the life-insurance and retirement industry. Four forces are likely to shape the industry’s future, McKinsey senior partner Vivek Agrawal and coauthors explain. Gaps in governments’ funding of health and retirement programs may create growth opportunities for insurers, nominal interest rates will likely remain high as central banks aim to tamp down inflation, the role of technology is growing as consumers expect better service, and a new middle class is emerging in Asia.

•

Structural shifts. New sources of capital are disrupting the life-insurance sector. Consider the rise of private-capital-backed platforms, which alternative asset managers typically own. These platforms are gaining relevance, in part, because they can generate fairly predictable fees while reducing the fundraising burden. In the US, private-capital-backed platforms account for almost $292 billion in general account reserves, McKinsey analysis finds. See how life insurers are reevaluating traditional business models.

Understand life-insurance trends

— Edited by Alexandra Mondalek, editor, New York

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 10:15 - 7 Dec 2022

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Life insurers face persistent challenges. What major forces are at play in the industry?

Reimagining life insurance

In the news

In the past two decades, economies grew faster than insurance premiums, indicating insurers haven’t been growing at the same rate as the economies in which they operate.

On McKinsey.com