Moize Goulamhoussen is a Senior Portfolio Manager and Wealth Advisor based in Toronto, Canada. According to Statista, Canada ranked eighth in the world in 2022 for the value of non-life and life direct premiums written, with the largest insurance company by assets in Canada reaching nearly 900 billion Canadian dollars in 2023. This article will provide an overview of themes predicted to feature prominently in the insurance industry throughout 2025 and beyond.
The life insurance and annuity industry creates value for both shareholders and consumers. However, it can only achieve this if it can motivate millions of consumers to learn about its products and recognise their potential benefits. Today, the insurance industry is undergoing a sea change spurred on by technological innovation, resource challenges, demographic shifts and changing regulatory demands. Forward-looking insurance companies are rapidly coming to realise the need to place the customer journey front and centre, delivering personalised experiences tailored to each client’s specific needs.
Organisations capable of leveraging advanced technologies are gaining a significant competitive edge in an industry that has traditionally been relatively slow to embrace innovation. In addition, new start-ups are also disrupting the market, brimming with talent and unburdened by rigid mindsets and lethargic legacy systems. These new entrants are making their voices heard via the right channels at the right time, enabling them to better serve customer needs while remaining relevant and competitive.
In their latest report, KPMG consulted more than 425 insurance industry decision-makers, discussing key signals of change across the sector, from claims handling and distribution to recruiting and underwriting. Having risen during the pandemic, consumer interest in life insurance and annuity products is starting to decline, KPMG’s research reveals, highlighting the need for fresh approaches to identify and capitalise on new opportunities.
Today’s discerning customers are looking for life policies and annuities online. However, despite showing a preference for digital channels, consumers still expect a personalised experience, as in many other industries. Old-school, advisor-led sales models are becoming increasingly alien to those entering the marketplace for the first time. Nevertheless, there still remains a need for human interaction and empathy in the insurance industry, meaning that the advisor model needs to evolve.
Keeping pace with changing consumer preferences and needs is integral to commercial success. Leading insurance companies are reviewing and transforming their business models and organisational cultures to enhance processes, portfolio management and product development in different ways. In the months and years ahead, experts at KPMG predict that insurance business models will fall into four main categories:
- Continuous product development, with organisations focussing on creating innovative products and improving pricing flexibility, harnessing powerful data architectures and high-quality data to deliver high-end, autonomous experiences.
- Effective education and clearer value propositions, communicating with buyers more clearly by embedding simplicity into educational materials, product design and marketing DNA, culminating in the creation of dynamic and nimble organisations capable of responding to change rapidly.
- Embedded solutions, with an emphasis on developing new partnerships across the health, wealth and other non-traditional sectors, leveraging a wider array of marketplaces and channels to provide fast, flexible and convenient services.
- Mergers and acquisitions and capital management, driving more effective and efficient service lines, renewing and removing capital-intensive suboptimal lines of the business, and redeploying capital in more sustainable, high-growth core business segments.
KPMG warns that the slower pace of innovation among traditional life insurance and annuities players, with their huge pools of capital, is creating enticing opportunities for their faster-moving competitors, particularly non-traditional entrants. To succeed in a rapidly evolving market, key players will need to better align themselves with consumer preferences and needs, demonstrating resilience and agility and implementing new technologies. While automation is a key proponent of much of the change currently underway, insurance companies will still need to maintain the human touch, keeping the experience ‘real’ while paving the way for seamless customer interactions.
