The insurance industry is facing a critical crossroads, with life insurers struggling to stay relevant, particularly among younger consumers, according to a new report from Bain & Company.
While the sector has benefitted from strong capital reserves and favorable trends such as rate hikes in property and casualty (P&C) insurance and interest-driven annuity sales, these tailwinds are beginning to fade. Bain’s Bridging the Protection Gap: Affordability, Access, and Risk Prevention report highlights that rising premiums, natural disasters, and the growing threat of cyberattacks are severely straining profitability and access, leading to significant protection gaps in both property and life coverage.
In the P&C sector, affordability is becoming a pressing concern, with some areas experiencing “insurance deserts,” where coverage is becoming increasingly difficult to obtain.
For life insurers, the challenge is greater, as shifting savings habits and changing demographics make it harder to appeal to younger generations.
Furthermore, emerging risks such as climate change, cyberattacks, and autonomous vehicles are prompting a need for new insurance products and strategic partnerships, including public-private risk-sharing efforts.
The ongoing digital transformation in the sector, driven by digital engagement, embedded insurance, and the rise of artificial intelligence, is reshaping how insurers operate and engage with customers. However, the industry faces an additional challenge with a looming talent gap, as many experienced professionals are approaching retirement.
To remain competitive, insurers must modernize their operations, expand preventative services, adopt alternative capital strategies, and target underserved markets. Those that move swiftly to adapt to these changes will be best positioned for sustainable growth and a stronger societal impact in an increasingly uncertain world.
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