Term Insurance Companies to Focus on Curating Strategic Plans and Transformation Programs to Launch New Products
The finance sector has been consistently treading through uncertainty and exhibited fluctuating growth patterns over the past few years due to an array of factors. A number of insurance companies have entered the current financial ecosystem around the world due to which, there is no dearth of insurance services, particularly in the urban regions of the world. Some of the factors that have had a negative impact on the demand for term insurance include looming threat of a global recession, low interest rates, and stagnant growth. At present, players operating in the current term insurance market landscape are focusing on devising strategic plans and transformation programs to roll out products and solutions to attract a larger consumer base.
The evolving demographics around different regions of the world coupled with a considerable shift in lifestyle choices are factors expected to have a strong influence on the term insurance market during the forecast period. Insurance companies are projected to consistently forge solid customer-relationships by finding value proposition. One of the leading factors that is likely to provide an impetus for the growth of the term insurance market is the noteworthy rise in the middle class population, especially in developing regions of the world, including Middle East & Africa and Asia Pacific.
At the back of these factors, along with consistent expansion into newer markets by several top tier insurance companies, the global term insurance market is expected to attain a market value of US$ 353.4 Bn by the end of 2030.
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Exponential Rise in Middle Class Population in Developing Regions to Aid Market Growth
The consistent shift in the overall demographics around the world is expected to remain a key factor that is likely to influence the expansion of the global term insurance market. While a significant rise in the aging population, along with low birth rates in certain regions of the world could potentially hinder the demand for term insurance in these regions, the exponential surge in the middle class population in developing regions of the world is projected to provide lucrative opportunities for insurers.
In addition, as consumers in Asia Pacific and Africa continue to focus on savings, the demand for term insurance policies in these regions has witnessed considerable growth over the past decade– a trend that is anticipated to continue during the forecast period.
As technological advancements continue to penetrate the financial sector, customer expectations around the world have increased. At present, players operating in the current term insurance market are increasingly focusing on creating improving the efficiency of their digital channels and customization to gain an edge in the competitive market landscape. The analysts at Transparency Market Research are of the opinion that high customization, low unit costs, and innovations are expected to have a positive impact on the sales of term insurance policies over the assessment period.
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Due to the digital transformation across the term finance market worldwide, players in the term insurance market are increasingly focusing on improving their digital presence and services to establish a strong foothold in the market. Although sales via online channels are likely to remain lower than offline sales channels in the first half of the assessment period, as technology continues to evolve, more number of consumers are expected to turn to online distribution channels due to convenience and lower costs. In addition, as Internet-savvy consumers continue to grow in numbers in the various regions of the world, online sales are expected to witness consistent growth during the assessment period.
Demand for Term Insurance on Rise amid COVID-19 Pandemic
The ongoing COVID-19 pandemic has had a strong impact on various core industrial sectors. However, one of the few markets that is expected to witness growth amid the ongoing pandemic is the term insurance market. The COVID-19 pandemic has had a strong influence on the term and health insurance segment in several regions around the world. The demand for term insurance policies has witnessed considerable rise in 2020 and as per current observations, term insurance covers are likely to gain further momentum as lockdown norms in several nations are relaxed.
Although rising costs of term insurance covers could pose as a major barrier, market players are strongly emphasizing on revising their interest rates and reinsurance premium rates to increase sales.
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Term Insurance Market: Overview
- According to Transparency Market Research’s latest report on the global term insurance market for the period 2018–2030 (wherein 2020 to 2030 is the forecast period and 2019 is the base year), growth in online aggregators is significantly driving the global term insurance market
- In the report, revenue generated by the global term insurance market has been mentioned in terms of value (US$ Bn) throughout the forecast period
Significant Growth in Online Aggregators: A Key Driver of Term Insurance Market
- Term Insurance online aggregators are expected to continue to grow at a rapid pace in the coming years, both through expansion into new markets and offering new products. This growth of term insurance online aggregators is highly influenced by the shift in the use of the Internet for procurement and management of insurance policies.
- Growth in term insurance online aggregators has enabled them to focus on strategies to extract more value from the customer relationship. Furthermore, they also make use of their distribution power to obtain better terms of trade from carriers, whether in the form of new pricing models or other concessions.
- In addition, term insurance aggregators are using new platforms, including social media and mobile to find and attract new customers
Uncertainty and Low Cash Value Offered by Term Insurance: A Key Restraining Factor of Term Insurance Market
- One of the major drawbacks of term insurance is that premiums increase as policy holder ages. When someone buys term insurance in their 20s or 30s, it is relatively economical compared to when someone has to renew their term insurance policy later in their 50s or 60s. This potentially hinders the adoption of term insurance policies and increases the risk of low switching cost to permanent insurance policies.
- In addition, term insurances mostly stop providing coverage when the term ends. If the buyer wants to renew their term insurance policy after the period term ends, the age factor alone might hike the cost of term insurance, restraining its acceptance among consumers.
- Besides, most term insurances are not designed to offer cash value, which is also a noteworthy disadvantage of term insurance compared to permanent insurance
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Development of Personalized Customer Experience: A Key Opportunity in Term Insurance Market
- Customer expectations revolve largely around digital channels and tailored experiences. This has been rising. Creating unique and personalized customer experiences has been a priority for several years, indicating that many companies are still playing catch-up and remain vulnerable to non-traditional players.
- Term insurance service providers in the industry are strategizing to deeply understand how customer expectations are changing, and leveraging the relevant technologies to deliver products, services, and experiences that match those expectations
- This growth opportunity is further expected to be fueled by increased adoption of Mobile Cloud Computing, Big Data analytics, and social media
Term Insurance Market: Competition Landscape
- Detailed profiles of manufacturers in the term insurance market have been provided in the report to evaluate their financials, key product offerings, recent developments, and strategies
- Key players operating in the global term insurance market include
- AIA Group
- AIG
- Allianz SE
- AXA
- Berkshire Hathway
- Brighthouse Financial
- China Life Insurance
- Prudential PLC
- United Health Group
- Zurich Insurance Group
Term Insurance Market: Key Developments
- In May 2024, the AIA Group announced that it adopted the Global Investment Performance Standards (GIPS®). This would enable the company to ensure that the investment performance information utilized for governance and decision-making meets the highest standards of integrity.
- In April 2024, Berkshire Hathaway Specialty Insurance (BHSI) announced that it had introduced a few new policies tailored expressly for the U.K. financial institutions. These include Professional First Financial Institutions Civil, Liability Insurance, and Executive First Financial Institutions D&O Liability Insurance.
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