2022 Life Insurance Industry Outlook

14 Jan 2022

2022 Life Insurance Industry Outlook

Like every other industry seeking to move forward from the challenges of the past two years, the life and health insurance industry will need to keep adapting to changing global conditions.  

What will those conditions be, and how will the industry respond? While we don’t have a crystal ball, we checked in with a few industry experts to review their forecastsand we’d also like to offer you a few predictions and promises of our own. 

Industry Revenues Expected to Rise

The industry expectation is that revenues will increase in 2022—as found by the Deloitte Center for Financial Services, which conducted a global survey more than 420 insurance carriers. 

In fact, the Swiss Re Institute forecasts that the life insurance industry will achieve an above-trend growth rate of 3.9% in 2022, compared to an estimated 3.3% growth rate for 2021. 

Group of colleagues walking through the office hallways smiling together

It’s no secret that COVID-19 raised consumer awareness about the importance of life insurance—a trend Deloitte expects to continue. At the same time, rising inflation and flat interest rates could hinder investment returns and could threaten the profitability of some life insurers. 

So, while increased demand and an improving economy are expected to fuel life insurance sales, some carriers may be impacted by their baseline financial strength and investment philosophy.  

Needless to say, we have every reason to believe that Pan-American Life’s robust balance sheet, conservative investment strategies and steadfast A ratings will continue to serve us well in 2022  

Industry-wide Investments in Technology Expected

Investing in technology remains an industry-wide priority. According to Deloitte, insurers are increasing their technology budgets by an average of nearly 14% in 2022. The emphasis: advancements in AI, cloud computing, data privacy, cybersecurity, analytics and mobile technology.   

At the agency level, social media and digital marketing are expected to play an increasingly important role in their marketing strategies, in order to appeal to Gen Z and Millennial prospects.  

At the same time, the industry will continue to place value on personal connections. As always, agent/client relationships will remain critical to positive client/policyholder experiences.  

Industry Mergers and Acquisitions Ahead

According to Deloitte, throughout 2021, mergers and acquisitions activity was higher in the insurance industry than other financial services sectors—a trend expected to accelerate in 2022. In fact, 44% of life insurance carriers surveyed by Deloitte anticipated heightened M&A deal-making in the new year. 

It’s expected that these deals will be strategic in nature, whether the goal is to expand into new geographic markets or jumpstart tech capabilities through acquisition of an InsurTech company.  

At Pan-American Life, of course, we remain open to select M&A opportunities that will help us advance our goals.   

Enjoying Enhanced Consumer Confidence and Trust

Since the pandemic began, consumers faith in the life insurance industry has grown—and the momentum is expected to carry forward. In a LIMRA study conducted in the fourth quarter of 2021, 86% of those surveyed said they were at least somewhat confident in the industry, with 35% professing to “quite a bit” or “extreme confidence—the highest levels since 2008.   

Businessman in a suit looking at his cellphone messages with icons popping out of the screen

In a separate Deloitte surveyabout one-third of small business owners in 14 countries reported that their trust in their insurers and agents had improved significantly” since COVID-19while another third reported it had improved “somewhat.” The reasons for the improved attitude included accelerated claims payments, premium discounts and exceptional support.  

As you know, at PALIG, earning trust has always been one of our operating principals. In 2021, we paid over $1 billion in claims and policy loans. It’s the reason we’ve always prioritized our financial strength: so that we can respond ably when our insureds need us most.

Furthermore, in 2021, we were able to maintain our A ratings and stable outlook—a claim few life carriers can make right now. 

In short, we kept our promises in 2021, and as we welcome 2022, we will continue to do so. We begin the new year with optimism and determination—and, arm in arm with you, focused on what matters.  

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