This article is an in-depth analysis of life, retirement, and health insurance, one of three sections in the Global Insurance Report 2025.
It has been a year of unpredictable mixed signals, uncertainty, and surprising upsides for the world’s life and retirement insurance industry. While unexpectedly resilient macroeconomic conditions provided tailwinds—global GDP growing in real terms, inflation steadily decreasing, and equity markets turning positive—not all product lines and geographies benefited (exhibit). There are bright pockets of growth across the globe—perhaps more so in the past two years than in the past decade. But overall, traditional products and major markets are stagnant, and the industry is in search of growth and relevance.
Embracing a changing landscape
The life and retirement industry has been struggling for relevance, as evidenced by growth lagging behind global GDP and shrinking in importance in capital markets. But several structural shifts present opportunities alongside challenges, from growing demand for retirement solutions tailored to an aging population to the emergence of customer experience as a competitive differentiator for life insurers and the growing relevance of private capital to the sector’s expansion.
The life insurance market is being reshaped by the aging global “silver” population of people aged 65 or older and the concentration of wealth among Generation X and retirees. And while changing social norms and ways of living—such as fewer marriages, lower fertility rates, and more dual-income households—are challenging the traditional life insurance model, it presents an opportunity for more flexible policies catering to nontraditional family structures.
Finding avenues of growth and value creation beyond ‘traditional’ life insurance
The need for insurance carriers to make a step change in their ability to create value while meeting the evolving needs of consumers and society demands going beyond traditional life insurance offerings. We see four immediate axes for growth:
- Regain relevance and win in retirement. The conditions are now in place for a renewed effort from life insurance carriers to meet retirement needs and regain relevance, driven by higher interest rates and macroeconomic uncertainty renewing the fundamental product value proposition for a new cohort of pre-retirees and retirees, as well as demographics shifting much of the retirement asset pool into its decumulation phase. There is a timely and powerful opportunity for life insurers to regain relevance by providing a stable, secure retirement income for life, holding on to accumulated assets that would have been ceded to asset and wealth managers during the past three decades.
- Move toward integrated wealth and health solutions. The line between life and wealth solutions has become increasingly blurred as customer preferences evolve across demographics. Modern consumers actively seek advisers capable of addressing all of their financial needs, which involves understanding and addressing customers better through greater personalization and delivering on a holistic set of needs in an integrated experience. By embracing the synergies between life insurance, wealth management, and healthcare underpinning the quality of life, insurers can offer a holistic approach that meets evolving client needs and ensures sustained growth and competitiveness in a dynamic market.
- Find new avenues to serve customers and advisers. The declining penetration of life insurance, contrasted with its increased attractiveness, suggests there is an opportunity for insurance carriers to tell the story of protection to more consumers. This is especially true given that advisers are aging and spending increasing amounts of time advising on other products. Insurance carriers have been exploring differentiated access to customers through their adjacent businesses, such as worksite, and through data- and digital-augmented distribution that lowers advisers’ cost to serve their customers.
- Activate the flywheel across insurance, asset management, and capital. As life insurance and asset management converge, value creation is driven by successful implementation of a “flywheel” approach. The flywheel consists of three components: issuance of insurance policies and annuities at scale, differentiated investment management, and capital management. Some insurers could pursue distinctiveness in all three components, offering a truly integrated flywheel model, but others will need to identify which parts of the flywheel they are best positioned in and decide whether to double down on these areas.
In protecting against uncertainty and helping individuals build wealth, life insurance carriers play a critical role in societies. Although the industry’s relevance has declined, there is an opportunity for insurers to harness emerging structural tailwinds and redefine their role beyond life insurance. Harnessing these structural forces and opportunities for value creation demands that insurers build new capabilities and step into new adjacencies, recalibrating their position across financial services, health, and longevity care. Now more than ever, going beyond traditional life insurance is a necessary and exciting growth imperative for the industry.
