Lack of innovation in insurance PD

Part 3: Lack of innovation

As mentioned in part 1,RGA's global PD survey of over 100 primary life insurance carriers, found that most insurers rely on existing products as design templates when embarking on a new product development.

The secondary sources are often:

1. Distributors - typically agents or brokers, whose input varies on the type of PD:

• Savings (or cash value) products, having the most input, approximately 60% as prevalent as competitors or existing products
• Risk (or non-cash value, mortality) products, having the second most frequent amount of input, approximately 30% as prevalent as competitors or existing products

2. Reinsurers - typically supporting primary insurers with pricing assumptions, underwriting guidelines in return for ceded risk premiums from the end sales.

• Reinsurers are more frequently cited during living benefit, and risk products, in comparison compared to savings PD efforts.

This highlights a compelling insight. If primary insurers are optimizing their product around existing competitors, and treating their distributors as end-consumers, we can see why our industry has generally been lacking in terms of innovation and consumer satisfaction with our product designs.

In the next post, we will discuss some potential paths forward.

If you would like a deeper, personalized discussion and analysis about the findings from this report, please feel free to contact myself, or one of my colleagues from one of RGA's local offices.

As always, welcome and thoughts, perspectives, and comments.

The full report can be found here

Kind regards,
Farron