The insurance market in the UK is the fourth largest in the world, boasting no shortage of longstanding insurers or brilliantly innovative insurtechs. However, despite its historic steadiness, or perhaps in part because of it, the insurance market in the UK is in a period of dramatic change. 

Of course this isn’t unique to the UK. Today’s global insurance market is undergoing rapid change from the rise of insurtech, the insurance boom in Asia, and the overwhelming amount of new internal and external data that’s readily accessible. There are, however a few things influencing the UK market specifically, including the life insurance and pensions markets.

Change in the UK life insurance and pensions market

Market and Regulation

The UK life insurance industry is currently facing down a significant amount of change. It has to deal with the ramifications of Brexit, including slower growth, economic uncertainty, and a general feeling of unrest as the UK and EU finalize their split. It’s also is facing a slew of recent regulatory changes from the Financial Conduct Authority (FCA), such as the Retail Distribution Review (RDR), Pension Freedom, and Solvency II, all of which focus on customer treatment.

Protection Gap

Outside of government and regulatory influences, the industry is also struggling with a significant protection gap. When it comes to retirement planning, things aren’t much better. A large number of UK citizens feel like they haven’t saved enough and aren’t adequately prepared. Eight million people report that they expect they will never be able to retire and, according to a report by Scottish Widows, 60 percent of young people report savings of less than 12 percent.

Retirement & Pensions

The pensions industry is undergoing dramatic change as well. After a warning from the Pensions and Lifetime Savings Association that nearly three million people in the UK may not receive the full extent of their retirement benefits, the industry has been increasing its use of liability driven investment strategies in order to try and reduce this risk. Whether or not this will work might not be clear for another decade or so. 

Simultaneously, the market for UK pension transfers, in which insurers take on the assets and liabilities of a corporate pension scheme, doubled in the first six months of 2019. “There has been a ferocious rate of activity,” said Charlie Finch, a partner at the consultancy Lane, Clark & Peacock. “We’ve never had such a fast start to the year.”

What does this all mean for the life and pensions market in the UK?

All of these factors indicate a time of dramatic change and no small degree of uncertainty in the UK life insurance and pensions markets. It falls on UK insurers to become more agile, dynamic, and responsive in order to keep up with fast moving changes as well as modern consumer demands. The question is, how do incumbent insurers transform the way they do business while improving the efficiency of their existing operations? The answer lies in finding the right tool. 

There’s no shortage of solutions out there on the market, especially in the UK, which boasts one of the most vibrant insurtech markets in the world. In addition to a large number of insurtech companies that are based out of the UK, there’s also a number of prominent accelerators and innovation consultancies that help insurers find their ideal insurtech match. There are a significant number of solutions and insurtechs that target everything from claims to underwriting to data analytics, the issue is few of them provide a solution specifically designed for the life insurance industry. 

Despite this, there are partnerships springing up that address this need for change and help insurers meet these shifting market conditions with innovative solutions. 

Making the most of the data you have to better serve your customers

Today, data is the name of the game in the insurance industry. The right solution helps life insurers make the most of the data they have in order to help them succeed in the market and deliver better products and services for their customers. As one UK provider recently discovered, a fantastic way to do this is through pricing transformation.

Scottish Widows, a subsidiary of Lloyds Banking Group, recently inked a deal for a pilot with Montoux, a global leader in pricing transformation software for life insurers. The two companies were linked through the innovation consultancy Rainmaking Insurtech, which assists large companies with their innovation strategy and startup engagement. 

Transforming pricing can help insurers achieve sustained growth targets, reach more people in the market, improve retention, and make smarter, more strategic, evidenced-based decisions. It also helps insurers deliver better products to their customers by helping them keep their fingers on the pulse of the market and by providing the flexibility required to adjust to changes swiftly.

“The committed blend of actuarial and data science in Montoux’s price optimisation offering is compelling," said Scottish Widows’ product owner of innovation and analytics, David McLeay. 

"It’s practical innovation that delivers genuine ROI, allowing us to be more responsive to the market, and ultimately provide better products and services for consumers, for the right price at the right time.”

Through these kinds of partnerships and innovative collaborations, insurers in the UK life insurance industry can meet today’s changes with confidence,  knowing they have the flexibility and data-driven market intelligence to continue to grow and deliver the best possible service to their customers.

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