Life Insurance Market Analysis

Part
01
of five
Part
01

Life Insurance Market Size

The current size of the United States life insurance market is $868.5 billion.

Life Insurance Market Size

Research Strategy

To obtain the size of the United States life insurance market, we leveraged the information provided by a reliable industry research expert, IBISWorld. We have provided a screenshot of the information contained in the source for reference.
Part
02
of five
Part
02

Life Insurance Market Growth Rate

Based on our findings, the current growth rate (2019) of the US life insurance market is around 3% (all life lines) and is forecasted to increase to 3.7% in 2020. For North America overall, the life insurance industry is expected to grow at a CAGR of 1.5% between 2018-2030.

Current Market Growth

  • According to the Nation Master database, since 2013 the US had a year-over-year growth rate of 1.1% and became the global leader in 2018 reaching $563.4 billion in gross life insurance premium income.
  • EY states that the insurance industry experienced a low-growth decade, particularly in the US in both life and non-life segments. The number of policies sold has fallen as a result of the industry no longer meeting customer needs.
  • SP & Global has reported the following growth rates in life insurance (direct premiums) for 2019 in the US: ordinary life (2.9%), group life (3.5%), credit life (2.2%), and all life lines (3%). This compares unfavorably to 2018 with a historical strong growth rate of 7.7%, the highest in 12 years.

Future Market Growth

  • SP & Global further states that its US life and annuity growth projections reflect its cautious near and intermediate-term outlooks for expansion. However, they expect growth in direct business volume on an annual basis throughout the next five years.
  • Munich RE predicts that in 2030, the global insurance market will reach €7.9 trillion with almost two-thirds of the revenue from life health insurance. It further states that the US will still be the world’s biggest insurance market, with a market share of almost 24%.
  • The expected growth rate (CAGR) for life insurance in North America for 2018-2030 is 1.5% (life premium).
  • As for the near-term, SP & Global has forecasted a 3.7% growth in direct business volume for life insurance in the US for 2020.

Research Strategy

Our first approach was to search through official databases and its publications such as the National Association of Insurance Commissioners (NAIC), the American Council of Life Insurers and the Insurance Information Institute as well as other industrial databases such as Statista, and the Nation Master.

We then searched through websites and publications from key players within the insurance industry such as Munich Re, and Zurich as well as news and media sources that is likely to contain the required information such as the Wall Street Journal, Insurance Journal, Insurance Business Magazine, and Atlas Magazine (insurance news),

Finally, we searched through market research reports from consultancy firms and market intelligence sources such as EY, PWC, Deloitte, SP & Global as well as general market research sources such as PR Newswire, Market Watch, and IBIS world. While we were able to find the current growth rate of the life insurance industry in the US using the above three approaches, information on the future growth rate was not readily available (excluding research that were behind paywalls). The most relevant finding that was available was the 2018-2030 life insurance growth rate for the North American region overall.


Part
03
of five
Part
03

Life Insurance Industry Trends

In the past few years, the life insurance industry has seen changes including mergers and acquisitions, implementation of an automated underwriting process, and investment in technology startups. It has also begun marketing to historically underserved populations and proven commitment to diversity and inclusion in the corporate workplace.

Mergers & Acquisitions

  • In order to continue growing, life insurance companies utilize mergers and acquisitions to expand their markets, offer more advanced products, and react to changes in regulations.
  • In 2019, New York Life Insurance bought Cigna's life and disability unit for $6.3 Billion.
  • Hartford Financial Services Group Inc. acquired an Aetna Inc. life and disability operation in 2017 for $1.45 billion.

Automated Underwriting Processes

  • Automating the underwriting process allows a life insurance company to acquire new business in a quick and seamless fashion.
  • In January 2017, Lapetus, a US based life insurance company, started offering an option that allowed customers to buy life insurance by taking a selfie. Lapetus incorporated facial analysis technology to assign risk scores, which made the process quick and removed the time and cost of a medical examination.
  • In 2019, Gen Re partnered with Lapetus's app technology to incorporate selfies into their policy acquisitions process.
  • In 2017, Cuna Mutual implemented a new life insurance product called TruStage that allows customers to complete their application process by answering only two health questions. The fully automated underwriting platform generates a decision instantly.
  • In the first 2 years of its release, TruStage had acquired $1 billion in coverage via its completely digital instant decision platform.
  • In 2017, Northwestern Mutual implemented an intuitive application process for their life insurance policies. This automated underwriting process includes a medical history questionnaire the eliminates the need for medical examinations for approved customers. The process has reduced the underwriting time from an average of 28 days to one day.

Investment in InsurTech and Technology Startups

  • Investment in new technologies, particularly InsurTech startups, is trending among life insurance companies.
  • New York Life is investing in technology startups that offers data and analytics and advanced technology platforms, calling it a LifeTech ecosystem.
  • Allianz Life Insurance's Venture sector has invested in SixThirty, a venture fund with a portfolio of FinTech and InsurTech companies.

Marketing to Historically Underserved Markets

  • In a 2017 report, Reinsurance Group of America outlined how important underserved markets are becoming for insurance companies. Industry competition for low-risk consumers is high with pressure to reduce price. In order to continue to grow, insurance companies need to reach underserved customers.
  • One example of marketing to an underserved market is John Hancock's Aspire program which targets US customers with diabetes.
  • Aspire uses advanced technology to assist diabetics who acquire life insurance through John Hancock, to have longer and healthier lives.

Commitment to Workplace Equality and Diversity

  • Life insurance companies are more steadily focusing on efforts to prove their commitment to diversity and inclusion in the workplace.
  • In the 2020 Corporate Equality Index, a survey conducted by the Human Rights Campaign Foundation, Northwestern Mutual Life Insurance received a perfect 100 rating for the 6th year in a row, noting their commitment to LGBTQ inclusion in the workplace.
  • MetLife has joined a project from Catalyst, an organization committed to helping women progress in the workplace, to show their dedication to represent women, including women of color, in leadership positions including the Board of Directors and senior level positions at their company.
  • In 2019, MetLife won their 8th award for the company's dedication to Hispanic inclusion in the workplace.
  • Transamerica was included in the Diversity Best Practices Inclusion Index, a list of companies that proves dedication to inclusion of women, minorities, people with disabilities, and people who identify as LGBTQ in the workplace.

Research Strategy

Based on a few lists of the most popular and largest life insurance companies in the United States, the top companies were determined. From there, Wonder analysts performed in-depth searches of news from the past 1-5 years to discover recent changes across the industry. The results are outlined above.
Part
04
of five
Part
04

Competitive Landscape 1

Ladder Insurance is targeting young American families, Americans between the ages of 25 and 45, with an income level above $50,000. Its on-boarding process lasts for approximately five minutes.

Ladder Insurance: Target Audience

  • Ladder Insurance is targeting Americans between the ages of 25 and 45 with household income above the $50,000 mark.
  • The company also targets "young families, people with little time and who grew up with the world at the touch of their technologically adept fingers."

Value Proposition

On-Boarding Experience

Product Line Offerings

Significant Partners


Health IQ: Target Audience

Value Proposition

On-Boarding Experience

Product Line Offerings

  • Health IQ product lines are life insurance, life insurance for well-managed diabetics, medicare supplements, and disability insurance.

Significant Partners


Fabric: Target Audience

Value Proposition

On-Boarding Experience

Product Line Offerings

Significant Partners

Part
05
of five
Part
05

Competitive Landscape 2

John Hancock/Vitality is targeting Americans with diabetes through its partnership with One Drop, Verily, and Onduo. John Hancock/Vitality program is made up of the Vitality GO & Vitality PLUS.

John Hancock/Vitality: Target Audience

Value Proposition

On-Boarding Experience

Product Line Offerings

Significant Partners


Anorak: Target Audience

Value Proposition

On-Boarding Experience

Product Line Offerings

Significant Partners

  • AXA backs the company as its investment partner and a product partner, Starling Bank.

Slice: Target Audience

  • The company is targeting players in the on-demand home industry such as Airbnb hosts and tenants and other on-demand home-sharing sources.
  • Through its partnership with AXA, Slice is also targeting companies hoping to protect their clients from cyber-attacks.

Value Proposition

On-Boarding Experience

Product Line Offerings

Significant Partners

Sources
Sources

From Part 03
Quotes
  • " Fifty percent of a company’s long-term growth is determined by bold moves (or lack thereof) on resource allocation, M&A, productivity improvements, and investments in the future."
Quotes
  • "At large, this survey found that consumers were generally uncomfortable sharing sensitive information with insurance companies and dealing with AI-driven, automated underwriting processes. While consumers may not currently be receptive to these innovations, it is clear that the game-changers they power are here to stay."
From Part 04
From Part 05
Quotes
  • "Why choose John Hancock? John Hancock's financial strength ratings, as judged by the major ratings agencies, are a measure of John Hancock's financial strength and stability. That's important when you're choosing a life insurance company – you want a partner who will be there for your family if the time ever comes. With over 150 years of experience, John Hancock has protected generations of American families."
  • "How does the John Hancock Vitality Program save me money? Earn points for making healthy choices — the more points you earn, the more your vitality status will increase. For Protection Term with Vitality policies, every year on your policy anniversary, you may receive premium savings depending on the points you accumulated and the status you achieved. Those savings can continue for the life of your policy if you lead a healthy lifestyle. In addition, if you achieve Platinum status is achieved in any year, the premium you pay in your next policy year will decrease compared to the amount you pay in the current policy year."
Quotes
  • "Are you an insurer? No. We’re an independent insurance adviser, similar to a broker. We assess what kind of insurance you need based on things like your age, income, household size and finances. Then we scan policies from the major providers to help you find just the right cover for your needs."
  • "Once you‘ve done the checkup, we can give you advice on term life insurance as well as income protection."