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FORECAST 2024: Growth Opportunities


Jennifer Rankin
Contributing Editor

January 2024

What opportunities exist for the insurance and annuities industry going forward? In a word, lots.

According to MarketFacts’ annual Forecast survey participants, these include demographics, the uninsured and underserved populations, small-to-midsize businesses (SMB), the retirement product space, worksite benefits and technological advances.

Let’s start with demographics.

According to Adrian Griggs, EVP & Chief Operating Officer, Pacific Life, “Long-term global GDP and population/demographic trends will continue to be the ultimate driver of growth at the highest macro level.”

The affluent continue to be a major market for insurance companies. “The vast majority of economic opportunity in our industry continues to rest with older and more affluent consumers,” he continues. “While we believe the industry can better serve the emerging needs of younger consumers, we do not believe this is the primary source of opportunity in the short term.”

“Insurance has typically focused on the affluent marketplaces,” notes Joe Monk, SVP, Financial Services, State Farm, “leaving a huge opportunity to meet customers’ needs in the middle market. From a State Farm perspective, we have agents in most cities across the country and are focused on having conversations with as many of our customers as possible to meet their life insurance needs.” Gordon Watson, Chairman, AXA Asia, also believes there are growth opportunities to be found in the middle market.

State Farm also is tapping Generation Z and Millennials for growth opportunities. They are experiencing key life events, such as marriage, home purchase and children, which call for important financial — and insurance — decisions. “This is a key demographic that values our products, and we are looking to develop an omnichannel approach to be their insurance provider in the manner of their choosing,” says Monk.

The existing low insurance penetration rate and various underserved markets also offer growth opportunities for insurance and annuity players.

“With over 100 million underinsured or uninsured people in America, there is a lot of room for our industry to grow,” says Mark Holweger, Chief Executive Officer, Legal & General America.

The middle class and young customers are just two relatively underserved markets in the insurance industry. Another opportunity exists in the form of financial inclusion.

“We know that a significant racial wealth gap exists in America,” notes Kamilah Williams-Kemp, EVP & Chief Insurance Officer, Northwestern Mutual. “At Northwestern Mutual, we’re focused on expanding financial inclusion, which is central to our mission. In 2020, our CEO John Schlifske created the Sustained Action for Racial Equity (SARE) initiative to help drive bold and sustainable change. With a network of 80 leaders across our organization, we’ve been driving actions that support financial inclusion and positively impact business growth. I’m very proud of the results that Northwestern Mutual’s SARE Task Force continues to deliver. I believe in the business imperative to bring in more clients than ever before — and as an industry, this is one of our greatest opportunities.”

Yet another market presenting the opportunity for growth is the small-to-midsize business (SMB) market.

“We see tremendous opportunity for organic growth in the small-to-midsize business (SMB) market,” says Amy Friedrich, President, Benefits and Protection, Principal Financial Group. Ninety-nine percent of all U.S. businesses employ less than 500 people, and while SMBs are significantly overrepresented among U.S. employers, they remain underserved. In talking with SMB owners, we hear them reiterate the importance of offering their employees a holistic benefits package, helping them care for their families, invest for their future and make retirement a reality. Employers know that when they take care of their teams, their teams will take care of business.”

The retirement space also offers major opportunity for growth, especially for pension risk transfer (PRT) and in-plan annuities — more specifically, annuities embedded in defined contribution (DC) pension plans.

“There is considerable untapped opportunity in the in-plan market,” says Adrian Griggs, EVP & Chief Operating Officer, Pacific Life, “although the solution ecosystem and regulatory environment in this space have yet to enable widespread adoption.”

Griggs also believes that PRT will continue to be a primary opportunity in the institutional retirement space, as will the annuity market, as demand continues to shift to fixed and buffered products.

“At Prudential,” says Caroline Feeney, EVP & Chief Executive Officer, U.S. Businesses, Prudential, “our vision is to be a global leader in expanding access to investing, insurance and retirement security, and with this comes a variety of opportunities for growth in our businesses.

“Top of mind is closing the $30 trillion retirement savings gap. This is a key opportunity for growth in our industry and for Prudential. We can do more as an industry to close this growing gap and meet the needs of current and prospective customers.

“To do so, we must consider the underlying factors such as individuals navigating retirement readiness in one of the most complex economic landscapes we’ve seen in decades. We’re also seeing a steep decline in defined benefit (DB) pension plans — approximately 15 percent of private sector workers today have access to this benefit in comparison to over 80 percent in 1980.

“As a major player in pension risk transfer, market rates are a key driver pushing the average funded status of pension plans over 100 percent. The result is that more sponsors are likely to transact, creating a robust pipeline that we can execute on for growth.”

The robust worksite benefits space continues to offer growth opportunities.

“For worksite benefits,” says Mike Simonds, Chief Operating Officer, Unum Group, “the biggest opportunities for the industry are to increase coverage with voluntary benefits, driving up the participation and product breadth inside midsize and large employers.” It is important, he notes, to also find cost efficient ways to increase benefits penetration in the small employer market.

Several of the Forecast survey participants believe that advances in technology will play a vital role in expanding opportunities for the insurance industry.

According to Denise McCauley, President & Chief Executive Officer, WoodmenLife, “Advances in technology [represent the biggest opportunity for growth] that will make processes easier and more engaging for consumers. In turn, all stakeholders who serve customers will enable our industry to move forward and make it far more attractive to consumers. In addition, major changes in technology have the ability to materially impact/reduce unit costs.”

Other survey participants say that advancements in technology offer the opportunity to modernize underlying systems and capability, as well as to create opportunities for insurers to reach customers more effectively and efficiently. Both will drive better customer outreach and experiences.

Wade Harrison, EVP & Chief Retail Officer, Protective Life, adds, “Advances in technology and artificial intelligence continue to be a great opportunity for our industry and Protective to allow for improved efficiencies and cost savings, customer satisfaction and reduced turnaround times for application completions, underwriting, customer service and beneficiary payouts.”

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