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Life Insurance Industry Trends And Outlook 2022

The industry witnessed a radical shift in customer’s needs, behaviour, and expectations, which disrupted insurance operations prompting an overnight shift to virtualization

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In the last one year, the life insurance industry continued to take some of its biggest leaps. Though it had its share of challenges owing to the pandemic and lingering uncertainty, increased awareness and need for protection helped the industry to turn headwinds into tailwinds. Widespread vaccine deployment and easing of pandemic-related restrictions acted as catalysts towards rebuilding confidence among people and businesses alike, while fuelling economic recovery. Life insurance selling, which was heavily dependent on in-person interaction, moved to predominantly digital channels and self-service. In addition to the pandemic induced uncertainties, turbulent markets and falling interest rates played a key role in increasing demand for pure protection plans, and solutions offering guaranteed returns and assured savings. The need for adequate life insurance and being covered with appropriate products will take a leapfrog. Fear of uncertain global events and the flight to safety will further push the need to stay protected with life insurance solutions. People will focus on prudent financial planning. Turbulent markets and the uncertain job market will encourage individuals to secure their savings with long-term guaranteed return plans. 

The industry witnessed a radical shift in customer’s needs, behaviour, and expectations, which disrupted insurance operations prompting an overnight shift to virtualization. The sector streamlined and simplified its tech experience to become more agile and offered innovative digital propositions to enhance customer journeys. 

The sector certainly matured and collectively held its ground in 2021, and it is preparing well to make 2022 another differentiated year. So, what would be the next year like? 2022, will witness insurers focusing on these changing customer behaviours to play an expanded role– from payer to a caring partner to preventer. 

Growth to continue, backed by increased awareness and demand: Pandemic firmed up the growing customer confidence towards insurance as a safe financial instrument especially in times of uncertainty. This mind-shift of people perceiving life insurance as one of the best safeguards against risk and not merely a savings instrument will continue in 2022. The industry will carry on witnessing increased demand of pure protection products (Term plans) across age-groups and demographics, despite the hike in its prices. 

Customer engagement will take centre stage: Omni-channel sales and novel ways of interacting with the customers through hyper-personalization and more intimate digital sales interaction will encourage companies to explore newer ways to enhance customer engagement and experience. Customer preference for easy process and digital channels will continue to be on the rise. Insurers will focus on expanding service channels, providing more options to engage – physical branches, phone-based contact centres, chatbots, WhatsApp, Mobile Apps, social media, etc. Phygital will be the way to go. 

Insurance on the go, anytime, anywhere: Customers will expect services to be available on their fingertips, wherever they are. Speed will emerge as a differentiator, and companies will enhance use of alternate data for better customer insights and rely on technological advancements and intelligent automation to enable faster turnaround time. 2022 will see more and more insurers transitioning out of legacy platforms to collaborate with ecosystem players to speed-up their game. Modernizing core systems will help companies to launch new products rapidly, integrate widespread multiple channels for consistency, and enable effective policy service and timely problem resolution, leading to enhanced customer experience and understanding.   

Product disruptions and transformations: Need for adequate life insurance and being covered with appropriate products, will take a leapfrog in 2022. Life insurers will continue to focus on simple, innovative, and differentiated products to offer better customer experience. There can be innovations in the space of protection and health-related covers. These solutions will be simple to understand, will have hybrid features or bundled offerings, available across channels. The focus will be on creating hyper-personalized customer-centric offerings to cater to policyholders’ emerging needs. 

The 2022 policyholder: 2021 saw individuals becoming aware, realizing the need and the real potential of life insurance. 2022 will witness the trend continuing. Concerns regarding uncertain global events and the flight to safety will provide an ongoing push to the need for adequate protection solutions. Individuals will opt for securing their savings with guaranteed return plans. There will also be increased demand for child products and retirement solutions. Customers will ask for enhanced transparency in coverage details, on the go access, and speedy transactions. They will look for an insurance partner which thinks like a customer, understands their needs well and offers desired new-age, custom-fit solutions. 

Looking ahead with confidence: Digital adoption, value-based personalized purchasing, and increased awareness will further shape customer behaviours and will redefine the next year. Such trends will be a game-changer for the life insurance industry and will provide an opportunity for the industry to think beyond the usual, innovate and offer granular, value-based, and integrated products to meet customer needs. The focus will be on insurance offerings which will combine risk transfer with proactive and value-added services and emerge as a differentiator. It will be critical for insurers to stay relevant and adapt with the changing times. 

Needless to say, that the Life insurance business is at a pivotal moment. The low product penetration in India will continue to provide significant headroom for the sector to grow. Given these trends, 2022 will be a year wherein the demand for suitable life insurance offerings will remain strong, and the long-term opportunities for growth will remain as compelling as ever. 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Year 2022 life insurance

Kamlesh Rao

The author is MD & CEO, AB Sun Life Insurance

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