As we enter 2024, the insurance industry is poised for significant developments. According to the Swiss Re Institute, the non-life insurance sector is expected to see improved profitability, with a projected return on equity (ROE) of around 10% in both 2024 and 2025, surpassing the 10-year average.
The property-casualty insurance sector is also anticipated to experience moderate premium growth, and the life insurance industry is adapting to higher interest rates, with strong growth expected in savings products.
Deloitte’s 2024 insurance outlook emphasizes the impact of factors such as InsurTech innovation, underwriting data, and the rising frequency and severity of catastrophes on the industry.
Furthermore, experts are looking to the 2024-25 budget for measures to address gaps in the insurance sector, including increased investment, regulatory measures, and technology adoption.
Insurers are also focusing on trends such as interest rates, talent acquisition, and digital transformation.
These insights provide a comprehensive view of the trends and expectations shaping the insurance industry as it moves forward into 2024 and 2025.
Life insurance premium growth
Carroll stated that in 2022, there was a 1% increase in total life insurance premiums, resulting in a new sales record. As of the third quarter of this year, the total life insurance premium remains consistent with sales from the first three quarters of 2022. LIMRA predicts that total individual life insurance premiums could potentially rise by up to 5% in both 2024 and 2025. Carroll explained that things are expected to stabilize in 2024, with no major regulatory issues on the horizon. Despite some consumer uncertainty due to inflation and lingering economic concerns, the economy is anticipated to be stable.
Carroll also mentioned a noticeable shift towards digital engagement, particularly among young consumers. According to LIMRA’s research, 81% of Gen Z and 75% of millennials are using social media for discussions, advice, and information related to financial topics.
Furthermore, 2024 will witness the growth of insurance firms as the industry continues its efforts to streamline insurance processes. Carroll emphasized that the use of technology is indispensable for the industry’s needs. The COVID-19 pandemic compelled the financial services industry to invest in technology, and this trend toward increased technological utilization will persist.
Carroll also highlighted the growth of social media prospecting, with many agents and advisors lazing platforms like LinkedIn for prospecting. While there has been a significant shift towards technology, he cautioned that human interaction remains crucial. Those who excel will have a digital presence combined with a strong physical connection. (2024-25: Life Insurance’s Surprising Imperative by Experts! – A Positive Outlook)
Experts’ Views on Insurance Company, Insurance Technology, Digital Transformation, Interest Rates, Talent Gap, and Inflation
Insurance technology, digital transformation, interest rates, talent gap, inflation, insurance companies, life insurance, and insurance quotes are all critical factors that will shape the insurance industry in 2024 and 2025. There is a significant insurance coverage gap among American consumers, which will continue to pose challenges for both insurers and consumers.
LIMRA estimates that there is a US$12 trillion mortality coverage gap, and insurers have an opportunity to help close that gap by improving engagement.
The insurance industry is facing many challenges, including slowing GDP growth, continuing inflationary pressures, and talent shortages, particularly in the US.
However, the life insurance company is resilient and has a deep sense of purpose, offering people, families, and businesses protection and a more secure future.
The insurance segment is seeing stronger demand for savings and retirement products, and revenue growth is expected to reach 5.1% on average in 2024 and 2025 in emerging markets.
The insurance industry is also focusing on trends such as interest rates and talent acquisition.
Experts anticipate measures to help the insurance sector, including regulatory measures, and technology.
Insurance companies are seeking tax benefits for health insurance products, emphasizing relaxation in tax deductibility limits for premiums, particularly for term plans.
Inflation is another critical factor that will shape the insurance industry in 2024 and 2025. Claims volumes and costs across lines of business remain elevated in most major markets, and some of this is inflation-driven and cyclical.
The health insurance coverage gap spans all races/ethnicities, age groups, and income levels, but some are less penetrated than others.
Insurance companies are also focusing on digital transformation, with experts suggesting that allocating a budget for technology adoption in the industry can enhance customer streamline operations and encourage innovation.
Integrated platforms, artificial intelligence, and data analytics can unlock immense potential for the sector and drive growth.
AI analytics platforms, AI chatbots, AI-powered virtual assistants, machine learning, predictive analytics, and deep learning are some of the AI technologies that are being used in the insurance industry.
The insurance industry is facing many challenges, including talent shortages, inflation, and a significant life insurance coverage gap among American consumers. However, the industry is resilient and has a deep sense of purpose, offering people, families, and businesses protection and a more secure future. Insurance companies are focusing on trends such as interest rates, talent acquisition, and digital transformation to drive growth and innovation in the industry.
While a considerable number of consumers recognize the importance of having life insurance, only 52% of U.S. adults currently have coverage, whether it be an individual, group, or both. However, 41% of American consumers acknowledge the need for energy insurance or express the need for more coverage. This represents a staggering number of over 100 million adults. “Therefore, the demand for life insurance is evident,” he stated.
To address this need and bridge the coverage gap, Carroll emphasized the importance of agents understanding the realities faced by individuals. The issue lies in the fact that many people are unsure about the type of insurance they require or how to go about purchasing it. “It is crucial to find ways to connect with these individuals,” he advised. “Buying life insurance is a complex process, so it is essential to help them comprehend their needs and how to fulfill them.”
As agents and advisors collaborate with their clients and prospects to expand outreach and close the coverage gap, Carroll stressed the necessity for them to:
- It is essential to devise a strategy.
- Present yourself as reliable.
- Showcase your expertise and proven track record.
- Adopt a comprehensive approach. “Continuously inquire about your clients’ evolving requirements as their needs evolve,” he advised.
- Understand that selling life insurance requires ongoing effort and is not a one-time task.
More trends shaping the Life Insurance Company
Haney highlighted the financial services industry’s utilization of technology and AI in insurance to enhance decision-making and outcomes. He emphasized that computers can greatly contribute to improving the overall life insurance market experience for both consumers and providers.
According to Haney, there are numerous opportunities to create a better marketplace by reducing underwriting expenses, enhancing margins on existing risk blocks, and offering a more user-friendly interface for producers and consumers. These opportunities can lead to increased access to policies for more Americans and help bridge the underinsured gap in our country.
Haney believes that prioritizing the adoption of AI and digital tools is crucial for the life insurance company. Instead of questioning whether to adopt these tools, the focus should be on identifying the most relevant tools that can add value, streamline processes, reduce friction, and ultimately provide better policy experiences.
Another trend highlighted by Haney is the importance of better choice architecture. By leveraging technology and emphasizing the goal of serving more people, strategic conversations and collaboration can be fostered at both the insurance companyand practitioner levels. This collaboration can help the industry deliver increased value to “Main Street America.”
Haney also emphasized the need for reflection planning discussions due to the significant demographic shift in the country, where we are becoming a “majority-minority Nation.” This shift requires renewed attention to how the life insurance company is perceived and experienced across different event audiences, demanding a more effective approach to its delivery.
Source: https://www.eurosightanalytica.com/post/the-demographic-shift-europe-s-response-to-india-and-china-s-growing-population
The insurance company can benefit from understanding how to cater to a more diverse marketplace. This will allow for a wider range of product offerings and delivery systems, while also enabling practitioners to have better interactions with minority groups and underserved markets. Haney emphasized the importance of corporate leaders adopting inclusive practices internally and externally, as the diverse range of stakeholders demands this approach. He suggested a simple quest to address this issue: “Who are the potential customers who are not buying our products, and what can we do to change that?”
Furthermore, financial professionals and insurance agents need to acknowledge that the insurance company is at a crucial point in history. Haney posed the question of how to remain relevant to a consumer who is increasingly hesitant to work with agents and advisors and has more online tools to purchase financial products and services independently. He asked whether the industry will embrace radical changes in consumer engagement, adapt to the communication on preferences of a diverse marketplace, and evolve practices to meet the growing needs of consumers. The goal is to change the perception of seeking financial help and emphasize the importance of working with a professional.
Haney also emphasized the need for practitioners to step up and become effective communicators on digital platforms. He highlighted that marketing and business development are not solely focused on lead generation, but also on thought leadership and changing narratives.
BP, also known as Bishwa Prakash Koirala, brings over 17 years of expertise in reporting on the financial services sector. Previously, he held the position of editor-in-chief at NAIFA’s Advisor Today magazine. For any inquiries, feel free to reach out to him at bishwa.koirala@gmail.com