Like many of the industries we serve, the life insurance industry is facing a pivotal moment. Several converging trends present both challenges and opportunities for life insurers to reinvent their business and remain relevant in a quickly evolving landscape. We believe the companies and brands that will emerge on top are those that seek not just to understand their customers today, but to develop deep human-centered insights that will allow them to shape the future of the industry.

But first let’s take a step back. We see three critical forces that are converging on the industry right now:

Growing Disconnect Between Need and Solution

As social safety nets face funding gaps and pensions a thing of the past, people increasingly feel the pressure to personally secure their financial futures. The sentiment is clear for consumers, ‘I’m on my own.’ Yet, a recent LIMRA survey show 1 in 3 Americans believe they lack adequate life insurance coverage, more than double compared to a decade ago. Why would this be so? The short answer might be folks can’t afford it. But the long answer is that people think they can’t afford it. 8 in 10 US consumers overestimate the cost of a life insurance policy. So, while the salience of the need has risen, the perception of the solution has eroded. This gap is a huge opportunity for the right insurer.

The Rise of Fintech 

Legacy life insurers face mounting competition from tech-savvy upstarts. The demand for convenient digital experiences has reached the life insurance industry, challenging traditional business models. Insurtech firms lead the way with innovations like accelerated underwriting and online policy shopping. Incumbents must prioritize digital transformation and deliver the seamless customer experiences today’s consumers expect. As Raju Seetharaman, SVP, IT and Transformation of Legal & General America put it “We need to change from being a life insurance company who knows how to do technology, to a tech startup who knows how to do life insurance.” But digital for digital’s sake is always a failure. Getting it right means first knowing what problems consumers are trying to solve, then designing experiences that consistently meet or exceed their expectations.

Declining Industry Relevance

Finally, life insurance companies have simply lost stature among other financial services firms. Once titans of the industry, the largest life insurer today claims just 9% of the financial services market capitalization, down from 40% in the 1980s. Not only that, but insurance has also lost ‘headspace,’ particularly in younger consumers to ‘sexier’ financial topics like crypto, entrepreneurship, meme-stocks that dominate #finance TikTok. It’s clear life insurance has a story to tell, but of late it has fallen short. Finding the right narrative to draw consumers in and reestablish some mental real-estate must be on the top of life insurers list.

Critical Insights to Win

So, what’s an insurer to do? As we said above, getting ahead with human-centered insights that don’t just explain the state of the industry today but empower marketers and brands to discover new opportunities for the future.

As a first step, we encourage life insurers to consider a few critical pieces of work:

Customer Journey – Deep insight along the course of the consumer journey; pain points, tensions, and aspirations. This not only achieves crucial customer empathy it will also fuel solutions, tech-forward and otherwise, that truly enhance the customer experience.

Jobs-to-be-Done – Thinking beyond life insurance as merely a financial product to a careful and detailed understanding of what “jobs” consumers “hire” it to do opens opportunities for product innovation and inspires new monetary and non-monetary benefits to embrace. This will be critical in winning back industry relevance and headspace.

Brand Narrative – Brands that win in this environment will have a clear, compelling brand narrative to re-establish relevance and close perceptual gaps between need and solution. Getting this right takes insight at every turn – from finding the right narrative to presenting it in a powerful way.   

Only by focusing on achieving and leveraging true human insights will life insurers successfully navigate this critical moment. At Shapiro+Raj, we have the financial service industry experts, social-science researchers, and brand strategists that can help your brand move from insight to inspiration to outcome. Reach out to us today at [email protected] to learn more about how we can help you shape the future of the industry.