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Life insurers must look holistically at product offerings, says State Street


State Street’s latest Vision paper on the life insurance industry says life insurers must look holistically at product offerings and develop financial products that deliver performance, manage risk and provide value.

Entitled “Life Insurance: Focused on Growth,” the report assesses the current life insurance landscape and highlights growing changes in client needs.

It also explores solutions to the urgent challenges the life insurance industry is experiencing as demographics shift and markets evolve.

“Around the globe, retirement savings needs are rapidly changing and a new lifetime savings industry based on a more holistic, lifelong approach is taking shape to meet those needs,” says Wade McDonald, head of client management and sales for State Street’s global services business in the UK, Middle East and Africa. “To compete effectively in this new environment, life insurers must look holistically at product offerings and develop financial products that deliver performance, manage risk, and provide value. Both banks and insurers will be actively involved in developing new approaches to address the challenges that the industry faces.”

The need to develop the appropriate solutions for this new environment is sparking an evolution in life insurance product development.

The Vision paper states: “In the emerging environment, the first priority for insurers is to make products that consumers want and need, and deliver them in the right way. The products offered must evolve to reflect a holistic approach to financial planning that answers a lifetime of needs and they must be accessible in a way that acknowledges the changes in how products are purchased today.”

Life insurers face significant operational implications as the industry landscape changes. With new regulatory requirements, managing the liability side more carefully and improving risk management are key priorities. Insurers must also clearly distinguish core and non-core business activities.

The paper says: “Against the backdrop of demands on optimization of capital and a redefinition of the value chain, insurers must first more closely examine what business activities are ‘core’ and ‘non-core,’ and actively seek to outsource those elements that are not core to the business.”

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