Life Insurance Executive Survey: Seizing Growth Opportunities

November 2023

Today’s dynamic insurance industry offers a new set of opportunities for life insurance leaders. Carriers that are proactive in addressing these opportunities will be well-positioned to grow within today’s changing environment. Findings from the 2023 Insurance Barometer Study from LIMRA and Life Happens suggest that over 100 million U.S. adults need insurance but don’t have it or don’t have enough. This is a big opportunity.

Meanwhile, interest rates and 10-year Treasurys are back at levels not seen since before the financial crisis, creating an attractive environment for insurers to grow. In the U.S., mutual insurers have been particularly aggressive, expanding their market share by 30 percent from 2013-2022 and now control about 43 percent of the market. Perhaps one of the most interesting developments is that private equity (PE) firms have aggressively entered the market. They now own or control 137 insurers, up from 89 in 2019. PE backed insurers have taken a particular interest in annuities, which saw record-high sales of $312.8 billion in the U.S. in 2022, propelled by higher interest rates and market volatility. Those sales were 18 percent higher than the previous record of $265 billion set in 2008.

It was in the context of this complex and vigorous market that LIMRA and BCG conducted the third edition of our biennial executive study. Consumers’ increased desire for life coverage makes this an opportune time for life insurers to address protection gaps around the globe. The goal of the 2023 study is to provide insights into the highest priorities of life insurance leaders as they tackle today’s challenges and embrace emerging opportunities. In terms of challenges — profitable growth topped the list, cited by 33 percent of the respondents. The previous edition’s top challenge, technology, dropped to third, cited by 28 percent of the respondents. Executives also mentioned a broader set of emerging challenges, including macroeconomic uncertainty, disruptive potential of new tools like generative AI, complex talent dynamics and others that have moved to the forefront of their strategic focus.

These unprecedented opportunities and challenges are creating a pivotal point for the industry, and industry leaders are already taking action. The research revealed six key opportunities based on executive responses: focus the portfolio to win, personalize the journey, help advisors to help clients, modernize technology front-to-back, partner to accelerate innovation and win lasting talent.

Focus Portfolio:

When asked about their top strategy priorities, 51 percent of executives surveyed said they planned to focus on higher profit margin products. Many companies, especially public companies, have been selling off pieces of their business to better focus on key product priorities. Whether it’s the sale of a retirement business (Prudential, 2022) or the spinoff of a retail business (MetLife, 2017, AIG, 2022), or the sale of ancillary business (Corebridge sale of an Irish health care business, 2023), this activity does not seem to be slowing down.

Personalize the Journey:

Leading carriers today are enabling data-driven personalization of products and services. Many executives believe that customer experience — advisor and consumer — and the critical capabilities that enable it will drive growth. Simplifying the customer journey will enhance the experience, increase sales and improve persistency over time.

Advisor Experience:

Distribution remains a challenge and opportunity, and many companies are looking to differentiate themselves through the advisor experience. Nearly 2 in 3 told us advisor enablement is a top distribution challenge. Leading insurers are focused on improved tools and insights to help advisors build and maintain relationships. To this end, carriers are building new capabilities to meet advisor needs. These include services around lead generation and applied analytics, the provision of holistic advice and automation of account services.

Technology Modernization:

Having strong technology is a prerequisite for long-term success. Despite this, many executives do not believe their companies are prepared. Less than 27 percent of executives consider their companies well equipped for existing technology challenges. Legacy modernization remains an issue for more than half of the executives we surveyed. While companies continue to address this, they are also focused on future needs. Insurers are investing in technology across the value chain, with digital automation and data analytics as top priorities.

Partnerships:

The services the business needs to provide, and the technology needed to provide them, require significant investment. Many insurers are partnering to provide them rather than building it themselves. Insurtechs and other innovative companies are helping create more scalable opportunities for insurers. These partnerships allow insurers to do things like embed insurance at purchase points, enable direct-to-consumer (D2C) sales channels, enhance distribution efficiency, improve underwriting and streamline backend functions to better manage expenses.

Growing Talent:

Attracting and retaining talent, particularly in digital and data roles, remains a challenge. Insurers need to act now to build the workforce of the future. More than 25 percent of the insurance workforce is age 55 or older, and future skills like critical thinking, agility and collaboration are becoming more important. Promoting employee engagement is the number one talent focus area for executives. Insurers are reassessing the hiring process and job requirements, developing programs to reskill and upskill talent, building ecosystems of shared, temporary talent, and building a strategy and infrastructure for remote and hybrid work.

The life insurance industry is changing and will continue to evolve. Carriers that move quickly to build the products and services they need with the infrastructure to support it will be well-positioned to achieve growth and longevity.

The following individuals also contributed to the article: Joe Khoury, managing director & partner, BCG; Todd Silverhart, corporate vice president, research quality & markets research, LIMRA and LOMA; Alex Dancu, project Leader, BCG; Ben Gherardi, lead knowledge analyst, BCG.