A recent report by international management consultancy, Oliver Wyman, urges life insurers in the UK to broaden their services and reach in order to take advantage of potential market opportunities driven by reforms.
The report, The Retirement Franchise Opportunity, states that UK life insurance companies have the potential to add £7.5 billion of annual cash generation to their industry, while adding £100 billion of shareholder value by the year 2021.
But in order to achieve this potential, Oliver Wyman calls on UK life players to be bold and transform their business models in order to move beyond pensions and to provide a broader range of financial and older age services.
Oliver Wyman partner and lead author of the report, John Whitworth, commented: “Life insurers must shift from their current narrow product focus to a client relationship-based proposition. In doing so, they have the potential to build client relationships that are stronger than those with retail banks, becoming the ‘Financial Home’ for the over 50s.”
The report calls on life insurers to take advantage of the changing environment, which is seeing auto-enrolment combine with other market changes, such as the decline of defined benefit pensions and the ‘Pension Freedom’ reforms drive a greater need for retirement advice or guidance.
However, in order to capture this potential opportunity, companies must adapt their business models says Oliver Wyman, to ensure they extend further than the revenue sources they capture currently.
According to the report, the significant investment in and adoption of new technologies, such as digital channels, data analytics and robo-advisory services, is an important part of the picture, enabling UK life insurers to both broaden and deepen client relationships, and lower costs while improving profits.
