Study: Life insurance business model from a European perspective

Life insurance has a future if it renews itself

The study also shows that the level of digitization is still low compared to other lines of business and industries. In the future, insurance companies will have to develop their competitive advantage in the market through digitization, efficient processes and focus, because the key differentiator will be in the area of costs. The trend toward niche products for specific target groups, e.g., term life insurance for certain sports or retirement provision for special occupational groups, will continue.

Six promising business models

Based on this analysis, six promising business models emerge, with different characteristics in each European country:

1. Insurers who want to adopt the cost leader business model are focusing on simple products with low acquisition costs and on digital services. The Scandinavian countries are playing a pioneering role here.

2. Those who want to become ecosystem providers must build up a comprehensive range of services to reach customers and suppliers. In this area, the trend in Switzerland is for providers of occupational pension scheme services to join forces.

3. In markets where adequate ecosystems are forming, insurance companies can act as ecosystem suppliers. In Eastern Europe, insurers are positioning themselves as partners in the “finance” ecosystem, and in the Netherlands, Premium Pension Institutions (PPI) or insurers are supplying specific pension products to various employers.

4. The asset manager business model focuses on investment, which is not only interesting for Swiss insurers. To be successful in the market, there is a need for insurance products which are purely unit-linked or that combine guarantees with smart investment.

5. The health expert business model focuses on biometric products or on health-conscious target groups. This model is found in Spain and the United Kingdom, where biometric risks such as death, disability and critical illness are predominantly covered. New customers are often acquired in the context of real estate financing.

6. Target group insurers concentrate on specific niches, which often results in overlaps between different business models. For example, the cost leader business model is also useful in serving the target group of cost-conscious

About the Study

The “Business Model Life Insurance 2025 - 2030” study was initiated by adesso insurance solutions and prepared together with Versicherungsforen Leipzig. The study consisted of four phases: The first phase included research and evaluation of the content of existing studies and publications as well as the identification of possible drivers and their effects. This was followed by a second phase of in-depth expert interviews with 14 industry representatives from European insurance companies. Interviews were then conducted with 62 actuaries to gather their opinions. Finally, the results were combined to identify future scenarios and opportunities. The study (in German) can be downloaded here: www.perspektiven-lv.de