Life insurers struggling to meet customer expectations, reports Capgemini

The latest report shows that many life insurers are not meeting customer expectations, largely due to outdated technology.  

The life insurance industry is facing big challenges: since 2007, market penetration has dropped by 33% in mature regions.  

According to a report by Capgemini Research Institute, almost half of all policyholders say they are unhappy with their experience, especially during onboarding and claims processing. Many complain about long applications, lack of self-service options, and slow responses to claims. 

The findings are based on global surveys of life insurance customers and executives. 

The life insurance sector faces significant challenges, including a 33% drop in market penetration in mature regions between 2007 and 2023. Nearly half of all policyholders report dissatisfaction, particularly with product offerings, onboarding, and claims processes. Common frustrations include lengthy applications, limited self-service options, and slow claims handling. 

Younger customers under 40 years old are more likely to express frustration, citing complex processes, lack of communication channels, and inflexible claims payouts as key concerns. 

Are any life insurers doing well? 

The report highlights that some insurers are leading the way by using new technologies like generative AI. These best-in-class insurers offer faster onboarding, self-service portals, and better claims experiences.  

For example, 78% of these insurers have automated their underwriting processes, compared to just 15% of mainstream carriers. They also provide self-service options to policyholders and use AI-driven claims systems to offer more responsive customer service. 

Generative AI has the potential to transform the industry, but many insurers are not ready. While 67% of best-in-class insurers are prepared to use AI, only 25% of mainstream insurers are equipped for it. One major challenge is the lack of skilled workers, such as AI engineers. 

How insurers can tackle these new challenges and stand out

“Life insurance is shifting from a must-have to a maybe proposition,” commented Samantha Chow, global leader for life insurance, annuities and benefits at Capgemini. “Carriers must shake off the perception that life insurance is just ‘death insurance’. They can achieve this by focusing on engaging the next generation of policyholders, moving beyond a product-driven approach to put the customer at the center of their strategies. 

“Many insurers are struggling with legacy technology or investments that have failed to deliver the target returns. The path forward is a customer-centric transformation that draws inspiration from the best-in-class by embedding AI-augmented, human-touch service into core processes.” 

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Josie Geistfeld Josie is an editor for Claims Media. She welcomes feedback, comments, and opinion at josie.geistfeld@barkerbrooks.co.uk