Two promising consumer segments for inventive life and health insurers

by Leo Almazora30 Apr 2021

The survival of life and health insurers threatened by supply-side disruption may depend on their ability to innovate and court two key demographics, according to a new report from Accenture.

In its Insurance Revenue Landscape 2025 report, the global consultancy firm said that while insurers have historically been able to count on customer retention rates hovering around 85%, there are signs that consumers in personal lines won’t be so sticky moving forward.

“We anticipate almost 5% of global premiums—approximately US$280 billion—to be impacted by innovations in products (US$140 billion) and shifts towards digital third-party platforms (US$140 billion),” Accenture said.

Focusing on health/wellness and life products, it projected that US$120 billion in revenues will be in play over the next five years, including US$60 billion in smart health products, US$30 billion in direct life and wealth management products, and $30 billion in products and services for aging populations.

“By 2050, one in four persons living in Europe and Northern America could be aged 65 or over,” the report said. “In 2018, for the first time in history, persons aged 65 or older outnumbered children under five years of age globally. … The number of persons aged 80 years or over is projected to triple, from 143 million in 2019 to 426 million in 2050.”

With innovative new products and services as part of a partner ecosystem, insurers could be able to better serve seniors, increase revenues, and delay the need for life, disability, and longer-term care claims. Such consumers, the report added, are increasingly expressing a desire for products to help build and maintain healthy habits to extend their lifespans and promote better quality of life.

The report also pointed to a ripe opportunity for insurers to incorporate innovative technology into insurance products for millennials, a demographic well known for being digital natives.

Notwithstanding an overall slip in trust, the report said consumers are increasingly open to sharing their personal data with insurers in exchange for something of value.

“Rewards for data sharing could come in the form of reduced premium or perks and discounts on non-insurance products and services,” Accenture said. “They could also come in the form of real-time health and wellness guidance based on user attribute or behavior data.”

The willingness of millennials to share personal information, the report said, may allow insurers to narrow risk pools to a more accurate extent than they’ve been able to historically. At the same time, they may also be able to maximize the lifetime value of millennial consumers with offers that defy the traditional indemnity model.

“Millennials and younger consumers are especially interested in insurance offers that steer them in the direction of safety, sustainability, and holistic physical and financial well-being,” the report said.