To some fintechs, non-insurance incumbents, and venture capitalists, the industry’s challenges suggest opportunity. The life insurance value chain is increasingly losing share to these players, who are chipping away at the profit pool.
How might incumbent life insurers keep pace in today’s fast-moving competitive environment and meet customers’ changing needs?
Deploying the Design Thinking methodology in the insurance sector could be the key to helping save insurance from itself. Here's what McKinsey has to say about design thinking in insurance in their article "Transforming Life Insurance through Design Thinking".
"Better addressing the evolving needs of consumers can help incumbents win their loyalty—and protect against new competitors.
In the past decade, however, the rules of the insurance game have changed. Today’s consumers reward transparency, speed, and flexibility, new competitors are looming on the horizon, and the low-interest-rate environment makes the traditional business model a thing of the past.
This challenge is reflected in the sector’s financial performance: the life industry has grown only 3.1% p.a. globally1 in the past decade (and only 2% p.a. in Europe), significantly lagging behind other mature industries such as banking or manufacturing, which have achieved a 5 to 6% p.a. growth rate.2 European life insurance delivered an after-tax ROE of around 8.6% between 2010 and 2015"