Clive Bolton, Pensions & Retirement Expert, The International Longevity Center UK
Where do you see the life and pension in the future?
I think we are at a tipping point in the UK. The majority of customers now save into modern, platform based pensions and the old style policies (often with higher charges and sometimes with valuable guarantees) make up a fast diminishing proportion of pension business.
There will be considerable focus on efficiently transferring customers of these older policies to the new style contracts as the regulatory overhead and running costs escalate. This will be done with the dual objectives of ensuring that customers get good value and defending their business from aggressive competitors, many of whom see themselves as asset managers rather than insurers.
Indeed, as “life” increasing comes to specifically mean life insurance and pensions become just one way of saving for retirement (ISAs and property being other popular choices), the term “life & pensions” may itself begin to fade.
What are the new technologies that insurers should embrace?
There are a number of exciting developments in the biotech arena that could revolutionize medical underwriting and assessment of longevity. However, I think the two technologies that will impact this industry the most will be mobile payments and robo advice.
The transition from full-time work to retirement is becoming longer and more complicated, requiring greater flexibility in drawing funds from pensions and other savings (including housing wealth). This points to a convergence of investments and banking where mobile payment technology could provide customers far better access to all their wealth.
Robo advice could help when saving for the future and during the much more complex journey of approaching, transitioning to and finally reaching full retirement. Although there is now far greater flexibility and choice, most individuals are not equipped to make these important decisions on their own. Traditional advice can be expensive and, without underestimating the substantial hurdles (including regulatory), a cost effective online solution would be attractive to many customer segments.
What is the path to follow for to create the most disruption in the market?
When developing disruptive strategies, going right back to customer need and under served segments is a prerequisite. Obviously, new technologies such as biotech for underwriting, mobile payments, and robo advice have the potential to disrupt. Looking more broadly, other areas to consider are:
- Customer segments that are paying too much due to undifferentiated pricing/service – especially when they underpin the profitability of the market
- The opposite strategy – companies have strong herd instincts and tend to copy the market leader but often doing the opposite can be a successful business model that competitors have overlooked
- Using digital channels to access customers that were previously “protected” by the incumbent players