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Life Insurance Markets

Life insurance is an insurance that usually consists of two components: the savings part (endowment) and risk life cover.

Life insurance is a contract between an insurance policyholder and an insurer, in which the insurer promises to pay a designated beneficiary a sum of money in exchange for a premium, upon, for example, the death of an insured person.  

Life insurance companies also offer sickness and accident insurance policies. These can either cover various expenses or pay daily allowances or one-off compensation payments for sickness or accidents that affect the insured party.

Life insurance providers are key actors in their national financial markets because of their substantial investment of capital under management. Therefore, market developments have a significant influence on the profits and solvency position of insurance companies.

Life insurance terminology:

Megatrends in Life Insurance


Wearables and Other Sensor-based Devices

Wearable devices, along with other sensor-based devices, can be used in order to collect data with regard to the policyholder’s physical activities and lifestyle. These devices enable insurers to gather relevant real-time data and create more personalized insurance offerings. Some insurance companies offer discounts on life insurance policy premiums in return for sharing fitness tracking device data. Meanwhile, other companies offer safety and monitoring systems for elderly policyholders through which the companies hope to improve safety in the everyday life and increase the life expectancy of their elderly policyholders.


RPA and AI to Automate Core Processes

With the help of Robotic Process Automation (RPA) and Artificial Intelligence (AI), life insurers are aiming to automate their core processes (i.e. policy administration and claims handling). Recent technical developments have enabled automation systems to process vast volumes of both structured and unstructured data from various sources. The automation of core processes can improve process efficiency by reducing the processing time cutting out human errors.  


InsurTech Approaches

The emergence of life insurance start-ups and a new “tech-savvy” customer segment (millennials) has led insurance companies to develop InsurTech approaches in order to remain competitive in this ever-changing environment. InsurTech approaches mean that life insurance companies are aiming to design more innovative products that utilize the latest technologies. These new, innovative products make life insurance more cost-efficient and more appealing to millennials, who are used to personalized and on-demand services.


Blockchain-based Smart Contracts

Blockchain technology enables life insurers to improve effectiveness across the value chain and increase transparency to stakeholders. A smart contract is based on blockchain technology and it is a contract that is written in a code which automatically executes when the claim occurs on a multi-party shared network. This therefore eliminates the need for third parties. Blockchain or distributed ledger technology offers both enhanced security and effortless data transfer. Many life insurance companies are in the process of piloting the blockchain-based applications, while some are expecting to see increased adoption activity in the near future.


Advanced Analytics

Life insurance companies are employing advanced analytics in order to improved fraud detection and Know Your Customer (KYC) processes. These advanced fraud detection models can also be used to analyze the performance of the distribution network and check it for possible cases of misselling.

Source: Capgemini 2018

The life insurance market of Finland:

Life Insurance Market, Finland (pdf)

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Updated 13 Dec 2022