How European Life Insurance Sector can be Revived?

By Insurance CIO Outlook | Wednesday, December 18, 2019

Understanding the needs of the population, European insurance firms need to offer more customer-centric policies that are relevant to the targeted customers.    

 FREMONT, CA:The life insurance sector is not immune to the aftermath of the Euro-zone crises. Despite the fact that life insurance is a cornerstone of the European savings and retirement ecosystem, the sector is experiencing an economic slowdown in the past few years. Nearly two decades of low-interest rates have significantly impacted the profits of the sector. Further, the value proposition of life insurance is fundamentally challenged without the promise of attractive guarantee levels and healthy investment returns. 

The demand for long-term savings is growing among the mass, thereby taking a toll on life insurance investments. The primary motivation for the above trend is that people are living significantly longer. The mortality rate is constantly falling while life expectancy continues to rise. According to a report, 70-year-olds will be almost 40 percent more likely to live through the year than their counterparts in 1983. Further, an additional burden on European states is leading the governments to decrease pensions, causing the people to find alternative sources of investments where life insurance takes a back seat.

Changing customer expectations and needs require the insurers to adapt their business propositions accordingly. However, resetting the distribution requires massive change for insurers. The insurers need an increased agility and balance speed to succeed in case of a transformation. Deployment of technology-based solutions can significantly aid in the afore-mentioned transitions. 

European insurers need to respond to customer expectations and needs around personalization and relevance. One way to enhance flexibility is to bundle insurance products across the verticals of health, retirement, and wealth management. Insurers can also develop a product that enables the customers to adjust premiums flow into various types of protection as they grow older. Such flexibility of being able to adjust premiums will enhance personalization as well as increase customer engagement. Insurers can also enhance relevance by offering some downside protection for retirement solutions such as via hybrid products that combine unit-linked products to a guarantee of around 80-85 percent of the invested capital. 

The European life insurance industry can enhance its value proposition by adapting as per the customer expectations and requirements. 

See Also :-  Top Insurance Technology Solution Companies


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