FORECAST 2023: Growth Opportunities

January 2023

They say every cloud has a silver lining. This will be the case with respect to growth opportunities in the insurance and financial services industry as the year unfolds.

The COVID pandemic, stock market volatility, and inflation are among the factors compelling consumers to recognize the value and importance of protection and life insurance. The executives who participated in the MarketFacts forecast survey say the industry can take advantage of this unexpected silver lining and develop fresh strategies to sell more products. Generally speaking, they believe the group benefits segment, including voluntary offerings, is poised for further growth. They also say there are growth opportunities in the middle, multicultural, and senior markets. Some believe the insurance industry must leverage registered investment advisor (RIA) platforms, where insurance products are part of a larger financial planning package.

Group benefits continue to be a growth opportunity for insurance companies. Employees are becoming more aware of the value of group benefits and are looking for robust benefits packages. Companies — small businesses, in particular — must offer a solid benefits package to attract and retain employees.

“It is hard to tell if COVID’s impact will last,” says Todd Katz, EVP, Group Benefits, MetLife. “Nevertheless, COVID impacted Small Market growth as businesses closed and cut back on benefits. Consequently, Small Market could be an opportunity as companies bounce back from COVID and want or need to offer benefits to attract and retain employees. Voluntary benefit products would be especially helpful to enable small businesses to help employees’ wellbeing without impacting their bottom line.” Voluntary products also are popular additions at larger companies. They include accident & health, supplemental life insurance, pet insurance, and legal services.

The middle market is another growth opportunity. “Insurance typically has focused on the affluent marketplaces, leaving a huge opportunity to meet customers’ needs in the middle market,” says Joe Monk, SVP, Financial Services, State Farm.

At one end of the insurance spectrum are Generation Z and the Millennials; at the other are senior citizens. The former are experiencing key life events, such as getting married, buying a home, and having children; the latter need a dependable income stream and integrated solutions for aging. Both groups can leverage insurance offerings to meet their needs.

“We are looking not only to keep interacting and educating across generations,” says Monk, “but also to develop an omni-channel approach to be our customers’ insurance provider of choice, showing up how, where, and when they want us.”

The need for so-called senior solutions will only continue to grow as the population ages. There is much room for innovation in this space. “Customers are no longer satisfied with a single pension product,” says John Cai, General Manager & CEO, China Pacific Life. “[They] want integrated solutions covering geriatric care, chronic disease [coverage], and other value-added services.” Seniors also need a large range of products to help them deal with the financial challenges of retirement.

The shift to fee-based solutions in the growing advisory channel continues to increase. What does this mean for insurers? For starters, it represents an opportunity to grow annuity sales. Independent RIAs, who manage trillions of dollars in assets, focus on more holistic financial planning for their customers. Insurers that develop product for this space will enable RIAs to incorporate guaranteed lifetime income options seamlessly into their planning process. According to one executive, “The RIA channel is the fastest growing model for financial advice, as defined by growth in assets under management, and it represents the greatest growth opportunity in the near future.”

Those without any or sufficient coverage present a big growth opportunity for the industry. “There are still so many people who are underinsured or uninsured,” says Brooks Tingle, President & CEO, John Hancock Insurance. “I think this is an important issue we need to solve as an industry, which is a challenge, given the current market volatility and inflation. Notwithstanding how practical the decision to buy life insurance always is, and the fact that any amount of coverage is always better than none, that’s simply not in the cards for many people right now. We don’t know how long these economic conditions will prevail or if they’ll get worse. That means we need to get creative and think big about how we can make our products more accessible.”

According to the C-suite, then, opportunities for growth in the insurance industry this year abound. It remains to be seen which players will leverage them — and what strategies and products they will deploy to do just that.