US life insurance players entered 2016 with moderate momentum, improved capital and liquidity, and an expectation of higher investment income. However, there’s an increase in the competition. The top 25 players are targeting higher business. There’s also an increase in the demand for customized offerings from a diverse set of customers. Customers are expecting technology-driven solutions that can cater to their specific requests. They also expect a competitive pricing model. Major players like Metlife (MET), Prudential (PRU), AIG (AIG), and Manulife (MFC) are expected to deploy higher resources for developing technology-driven channels in order to attract more customers. They’re expected to offer customized solutions.
Technology and new channels
Life insurers will have to integrate emerging distribution technologies to expand their customer base. They will expand multiple channels for distribution. The investments into existing channels are expected to continue. This will support long-term growth. Insurers are deploying resources for omni-channel platforms in order to reach and service customers effectively. Players are also exploring the use of wearables and health monitors for customized and usage-based life insurance. Investors can gain exposure to insurance companies by investing in financial sector ETFs like the Financial Select Sector SPDR ETF (XLF).
Inorganic and other routes
Insurers are looking at partnerships and acquisitions for the quick adoption of new technology in a bid to offer new and innovative offerings. In 2015, Northwestern Mutual acquired LearnVest, an online planner, to provide more customized support to customers. Transamerica and Mass Mutual set up venture capital firms to invest in digital service providers. Insurancetech is gaining momentum. Insurance players are expected to face competition from tech companies providing innovative platforms to purchase insurance.