UK life insurance futures

Growing the retirement opportunity

This paper examines the major trends reshaping the UK life insurance market and outlines the options available to life insurers to take advantage of market-shaping trends.

The major trends reshaping life insurers

Life insurers are rethinking their strategies, business and operating models. We estimate profit pools in the market will grow from £6.6 billion to £8.1 billion over the next ten years, and growth will come from defined contribution pensions, bulk annuities and drawdown; profits in other lines of business will shrink.

Insurers are vulnerable to disruption by banks, asset managers and new entrants, especially around new forms of advice and risk taking. We estimate due to disruption insurers could lose up to a quarter of profits by 2025 – in this scenario profits would fall by £1 billion compared to today and expenses would need to fall by 10% across the industry to maintain current levels of profitability.

Whilst we believe that asset managers will indeed benefit, insurers are also well positioned to grow. To take advantage of the disruption, insurers need to be proactive , leveraging their strengths in six key areas, including M&A to reposition the business portfolio, digitisation and updating operating models to build retail marketing and risk management skills.

Levers life insurers can use to take advantage of market dislocation:

Did you find this useful?