The Capgemini Research Institute is warning that the life insurance industry is largely unprepared for the US$7.8-trillion that is expected to transfer to beneficiaries by 2040. The shift is unprecedented for insurers, they add; the outflow of assets under management (AUM) could reach US$7.8-trillion as these assets are transferred to beneficiaries. This amount, worth approximately 40 per cent of insurers’ AUM, is currently held by policyholders over the age of 65.

A new report from Capgemini, The Aging Well Opportunity: How Trust and Engagement Can Unlock Growth For Insurers, also found through surveys with 6,775 insurance customers over the age of 50 in 20 countries that 60 per cent of individual over 65 have not sought professional financial advice to prepare for retirement or transfer their wealth. The report also draws on interviews with 200 senior executives across 14 markets.

“The demographic shift, coupled with the greatest wealth transfer to take place in the coming years threatens the life insurance industry as it competes to serve the needs of an aging population,” the report’s researchers state. “Ecosystem partnerships, such as engaging with firms that specialize in serving seniors, can help insurers orchestrate value-added services and close their capabilities gap in key areas.” They add that new partnerships should focus on affluent customers. These clients, they say, want innovative life products, but only 27 per cent of insurers have the advanced product development capabilities to provide them.

“Strained government finances and a growing retirement protection gap mean the responsibility to age well is increasingly shifting to individuals. As people live longer, the impact of an aging population on the life insurance market landscape will be significant,” the report states.

“Insurers that enhance touchpoints across the customer lifecycle will protect their current assets and unlock future growth. The goal is to evolve from today’s product-centric approach, where offerings are determined mainly by what’s technically feasible, to a more customer-centric model, based on broader value propositions and more personalized experiences. Insurers that successfully evolve will fortify trust across generations and minimize the risk of losing assets.”