We are optimistic as we look forward to 2025. There is an urgency and momentum to change across the industry that has been building over several years, and we are excited to see it take shape. We are anticipating a wave of bolder organic and inorganic moves focused on driving growth, regaining relevance, and building resilience.
Life insurers are increasingly mobilizing around the asset management-led insurer model, asset managers are responding to the public-to-private markets shift, and property and casualty (P&C) carriers are reorienting for growth in a moderating interest rate environment. Macroeconomic pressures, geopolitical tensions, and demographic shifts are further accelerating the need for reinvention. Meanwhile, more attention is being paid to developing solutions that address large unmet customer needs.
In this third edition of our annual provocation to C-suite executives, we propose 10 actions to keep up the pace and drive reinvention in the insurance industry. While these are relevant to insurance leaders across the globe, we appreciate that nuances and variance exist across regions as well as industry sub-segments, leading to different implications and degrees of applicability.
In a world where insurance is dealing with more complex and urgent problems, actively promote the benefits and criticality of the industry to address reputational and talent challenges
In our prior edition, we referenced the need for the insurance industry to become a talent magnet for the bionic workforce. Since then, the industry has faced even greater reputational challenges, despite its critical role in making the world safer and more resilient and enabling humanity to reach new frontiers.
This role needs to be made more obvious to society, customers, employees, and potential recruits. There is an unprecedented opportunity for the industry to actively make the case for itself to the people and industries it serves. Insurers should also continue to make what it means to work in the industry more engaging — reducing administrivia, strengthening the workforce through artificial intelligence (AI), recruiting from diverse talent pools augmented by technology, and fostering a culture of innovation, collaboration, and transparency.
There is an unprecedented opportunity for the industry to actively make the case for itself to the people and industries it serves
Mobilize behind a clear and straightforward investor narrative that prioritizes strengthening your right-to-win, and guides all major moves and discussions — internal and external
The insurance and asset management industries are facing many inflection points — the rise of private capital in life insurance, the shift from public to private markets in asset management, the softening of market cycles in P&C — with divergent valuations between those perceived by investors to be well-positioned against macro themes and those with less compelling narratives. The industry has already seen many major players placing big bets (including large-scale acquisitions or strategic separations) in response to these structural shifts. Heading into 2025, we expect these big bets to continue playing out in an even more prominent way.
In order to successfully reposition in this environment, management teams must live into a clear and coherent investor narrative that reflects their strategy, guides all growth decisions — organic and inorganic — and fuels rigorous execution. This narrative should align capital deployment with strategic goals and facilitate constructive dialogue within management teams, colleagues, investors, and capital providers — ultimately ensuring that decisions are based on intellectual honesty around what can and cannot be managed, as well as market realities.
As C-suite executives face an increasingly complex and fast-moving environment, evolve your finance and actuarial functions to support timely, high-quality decision-making
In this climate, finance and actuarial functions must evolve from being back-office support into agile, strategic engines that empower executives to cut through the clutter and act decisively.
CEOs need to ensure that finance and actuarial functions can inform strategic decisions at the clock speed of the external environment. This requires not only evolving traditional processes — especially on the back of large, regulatory-driven transformations, but also rethinking governance and organizational frameworks. In the end-state, this has the potential to deliver a “ChatGPT for strategic decisions” — an advanced, integrated capability that can rapidly process emerging data, provide forward-looking insights, and help the C-suite navigate uncertainty.
As C-suite executives face an increasingly complex and fast-moving environment, the need for timely, high-quality decision-making has never been more urgent. CEOs need to ensure that finance and actuarial functions can inform strategic decisions at the clock speed of the external environment
Traditional life insurers and asset managers have lost ground to private capital specialists. Bold moves are required in 2025 to regain ground and re-rate for long-term relevance
Tectonic shifts are happening in the life insurance and asset management industries globally, fueled by a complex set of interconnected forces including shifts from public to private markets, the continued rise of nonbank lending, and rising demand for debt financing driven by population aging, longevity improvements, and infrastructure spending needs.
These forces are driving major shifts in the competitive landscape as the fortunes of incumbents and private capital specialists diverge. In 2024, the industry saw an acceleration in the degree of focus among large incumbents on honing their own strategies and investor narratives around growth in private asset capabilities, and in some cases, inorganic moves to acquire capabilities. While momentum is building, critical questions remain around whether the gap to the private capital players can be closed. In reality, closing the gap will require significant inorganic investments and incumbents in many cases lack a strong acquisition currency.
In our view, management teams have largely identified the right issues and in some cases have settled on what looks like a sensible strategy to increase relevance once more, but bold moves are required in 2025 and beyond to ensure course and speed are sufficient.
Double down on a clear acquisition strategy to scale, diversify, or strengthen your capabilities efficiently, at a time when organic growth is becoming more constrained and M&A activity is poised to intensify across the industry
In today’s property and casualty market, organic growth has become more difficult to achieve as softening pricing cycles, large catastrophe risks, social inflation in various markets, and other headwinds hit the industry. Meanwhile, many insurers are pursuing mergers and acquisitions (M&A) to chase growth and accomplish one or more of the following: (1) achieve scale in their existing markets; (2) acquire new capabilities or strengthen existing ones; and (3) diversify globally or into counter-cyclical areas to hedge against multiple cycles and unlock growth opportunities.
This evolving landscape necessitates a robust strategy around deal-driven transformation, with a clear and disciplined equity thesis to guide acquisitions, divestitures, and portfolio restructuring, and a robust integration playbook that rewards value creation.
Insurers must articulate what it means to be “at scale” in their sector — whether through organic growth, acquisitions, or partnerships — and develop a plan to achieve it. For P&C, where many local constraints are limiting growth in incumbents’ existing markets (again, social inflation, large catastrophe risks, pricing cycle dynamics), companies need to use M&A to chase growth in new, uncorrelated markets, while playing to existing strengths.
As intermediated channels remain strong across regions, work tightly with your existing distribution partners to augment the customer experience and expand the value proposition
With notable exceptions, insurance continues to be “sold, not bought,” and intermediated channels, such as agents, bancassurance, financial advisors and brokers, are thriving. Direct-to-consumer has struggled to take off, oftentimes due to the complex and deeply emotional nature of the insurance purchase product. Therefore, insurers continue to rely primarily on captive and third-party distribution workforces. However, many challenges lie ahead. Agency channels need help attracting new talent instead of losing it to other channels and non-insurance careers, especially in the wake of the COVID-19 pandemic. Bancassurance has been facing customer-centricity-related challenges and needs an increasingly sophisticated toolkit for relationship managers and sales specialists that requires effort to build. Meanwhile, customer expectations keep rising, which contrasts against often-dated, poorly integrated insurance purchase journeys.
There is an opportunity to embrace the relationships more tightly and forge stronger win-win collaborations between insurers and their existing distribution partners, focused on reinventing the end-customer value proposition and deepening their joint competitive moat. For example, insurance agents and financial advisors can evolve their value proposition to become end-to-end financial concierge for their customers, augmented with lead generation support, analytics, novel data sources, and an ecosystem of products and services beyond traditional insurance. This vision requires closer collaboration, founded on shared success rather than maximizing the short-term economics of any one side. Joint development of product propositions, focusing on bringing an ecosystem of solutions (that expands beyond basic insurance products) to customers, and shared technology investments will be key to maximizing success.
This evolving insurance landscape necessitates a robust strategy around deal-driven transformation
Take a leading role in addressing the rapidly increasing need for holistic retirement solutions by developing an integrated retirement ecosystem encompassing accumulation, decumulation, advice solutions, and services
The world is entering an “Age of Aging,” characterized by increased longevity and declining birth rates, which strain public pension systems and shift the retirement burden onto individuals. This demographic shift presents a significant challenge across the globe for both individuals and insurers, as traditional retirement systems struggle to provide sufficient support. Cracking this challenge will require bringing together distinct capabilities to offer holistic solutions in a “retirement ecosystem” centered on customer needs and including accumulation, decumulation, and advice solutions, as well as ancillary services. The prize is an estimated $400 billion incremental revenue opportunity by 2028, and an ability to fulfill a vital societal role in securing dignified retirements for a growing aging population.
While this trend is not new, and nobody has yet “owned” this space, more actors are now seriously looking into retirement as a broad theme, including private credit players, who are actively looking for their next growth engine. We believe the inflow of new, well-capitalized challengers will likely become the catalyst for change in the retirement space. As a result, insurers that do not already have a clear strategy around holistic retirement solutions should now define and begin implementing it, or are at risk of otherwise missing the boat as the space rapidly evolves. The “when,” “where,” and “how” remain non-obvious as of today, but we expect more serious attempts in the near future, which will cause the ecosystem to crystallize around few, specific solutions.
Unlock hyper-organic growth through an organizational “solutions layer” to address large unmet needs
Many spaces — including global retirement, wealth, health, and property insurance — have large, widely acknowledged, unmet customer needs and are ripe for disruption. Yet, we still see limited focus on customer-back solutions addressing these challenges. The focus often remains on efficiency and sustaining innovation, rather than market-creating innovation. Meanwhile, the rest of the landscape is starting to respond. For example, private credit players are entering many insurance markets at cruise speed; large corporates have been retaining more risk as a result of commercial insurers limiting their risk appetite and have developed increasingly sophisticated captive insurance operations in the process.
We continue to believe the insurance industry needs structural changes to think back from the customer needs and capitalize on category-defining opportunities, rather than starting from existing products. This requires a “solutions layer” dedicated to understanding and addressing unmet customer needs; developing an ecosystem of first- and third-party solutions that transcend existing products and distribution channels; and rethinking success metrics around innovation — adopting a stage-gated, venture-like mindset.
The age of proofs-of-concept is over, but the age of scalability isn’t here yet; start from the top-of-the-house objectives, with an “AI Inside” lens, where AI is a critical enabler to a transformation requiring strategic, operational, technology, and behavioral changes
The age of proofs-of-concept is over, but the era of scalability hasn’t fully arrived yet. In 2023, the focus in the wake of ChatGPT’s reveal to the world was on experimenting with low-scale use cases, determining the boundary between hype and reality, and primarily chasing efficiency. In 2024, the focus of AI programs shifted from efficiency to effectiveness, with a progressive focus on scalability. However, in many cases, these programs haven’t delivered the promised gain, whether in efficiency or effectiveness goals.
We continue to believe AI is not the solution to transformation; rather, it is an enabler. To harness the potential of AI, insurers must begin with a transformation oriented toward their most critical enterprise goals or large, unmet customer needs. AI should be integrated as a powerful tool within a broader transformation strategy that addresses strategic, operational, technological, and behavioral changes. This “AI Inside” approach ensures that AI is not seen as a standalone solution but as a critical component that supports the overarching transformation objectives.
There is an opportunity to embrace the relationships more tightly and forge stronger win-win collaborations between insurers and their existing distribution partners, focused on reinventing the end-customer value proposition
Management attention needs to be carefully allocated between continuing to perform in existing businesses and heading toward the future
While there is still significant work to be done around cost and performance transformation, there is also a need for structural repositioning around the themes of growth, relevance, and resilience, as covered in the prior nine ideas. This balancing act of management attention between today’s and tomorrow’s business requires deliberate focus.
Management attention needs to be appropriately balanced across a portfolio of initiatives that span the performance of existing business — including portfolio simplification, cost initiatives, divestiture, and M&A for scale — and the quest for growth and reinvention — such as new solutions, new customers, or M&A for capabilities. This will require a clear top-down focus, dedicated governance and metrics for each type of business (revenue, profit, cost for today’s growth and conviction for tomorrow’s), and the right stage-gated mechanisms to test, prioritize, and fund the right portfolio of future bets.
