Too few over 65s have engaged with professionals to manage their retirement or wealth transfer
The world’s aging population controls a vast amount of wealth and is set to transfer it to their heirs in the coming years, but is the life insurance industry ready?
Not according to a new report from Capgemini which says that insurers need to engage with their wealthy older cohort with new and innovative life products to protect the 40% of the industry’s AUM held by policyholders aged 65 and over.
Insurers are managing US$7.8 trillion that is expected to be transferred to beneficiaries by 2040, the largest inter-generational wealth transfer ever, but the report reveals that 60% of over 65s have not sought professional financial advice for retirement or to transfer their wealth.
While the burden on aging well is increasingly shifting onto individuals rather than governments with health care costs and the cost of living adding to the load, many who should be seeking advice say life insurance products are too complex, or they lack awareness of them, or don’t trust them.
“The demographic shift coupled with the greatest wealth transfer to take place in the coming years threaten the life insurance industry, as it competes to serve the needs of an aging population,” said Samantha Chow, global leader for life, annuity, and benefits sector at Capgemini.
What can the industry do?
To address the barriers to attracting customers, the report calls on life insurance providers to focus on affluent and mass affluent consumers who hold 39% of global wealth and account for about 20% of the aging population.
Three quarters of this cohort want innovative life products, including wellness initiatives and assisted living, but just 27% of insurers said they have the advanced product development capabilities to meet the demand. However, partnerships could address this shortfall.
“Ecosystem partnerships, such as engaging with firms that specialize in serving seniors, can help insurers orchestrate value-added services and close their capabilities gap in key areas. Those that prioritize early engagement with clients and their beneficiaries will generate trust and safeguard their assets,” added Chow.
Putting the customer first with comprehensive, higher-value solutions designed to help consumers age well is the key, rather than the current product-centric operating model.
This will require a value-driven approach to onboarding and customer relationships which can be assisted by technology, including consolidating data for a single view of the customer and digitally empowering agents by leveraging artificial intelligence, including generative AI, to offer hyper-personalized advice.
“To help policyholders age well, carriers must find a way to appeal to the evolving needs of consumers by creating a personalized and tailored experience through more innovative product design,” concluded Chow.
However, only 21% of insurers have the tools for advanced data analytics capabilities, and fewer (19%) are taking advantage of advanced technologies to streamline operations, enrich experiences, integrate across emerging ecosystems, and make faster and more data-driven decisions.
Additionally, personalization is important along with a more flexible claims structure. And there is work to do on building trust across generations to optimize future growth and protect the significant assets at risk to be transferred in the near future.
