The life insurance industry in the US is facing several trends that are shaping the market. Key trends include shifting demographics as the population ages, changing customer buying habits and expectations, a shift towards online research but continued preference for offline applications, increasing use of predictive modeling and data analytics in underwriting and pricing, and growing adoption of mobile applications by insurers and customers. Insurers are focusing on product innovation, expense management, and adapting to regulatory changes to improve revenues and customer satisfaction in this evolving market.

1. Life Insurance Trends in US

3. Trends in Industry Sources: PWC, KPMG Pressure on pricing - Managing pricing cycle Intense competition Pressure on profitability Pressure on cost containment Emphasis on volume of new business Focus on investment profits – Investment performance Trend Increase in complexity of products Emergence and Pricing new risks Change in risk profiles of customers Capital and Reinsurance availability Fraud Long tail Liabilities Trend Change in portfolio of investments Growing demand for healthcare Increase in number of claims Higher claims outpay Emphasis on retirement, pension & health products Re-thinking of marketing/distributi-on strategies Trend Ageing baby boomer population and the rise of Gen Y Consolidation through M&A Exposed to regulations and new compliances (accounting, taxation etc) Exposed to diverse customer profiles or Changing customer attitudes Trend Insurance companies are expanding operations and Regulatory changes Turbulent Economic and Financial market environment Changing risks management techniques and Products

4. Demographic Profile in US Source: Swiss Re, Deloitte

6. Distribution Trends By 2008 independent agents held 56 percent of the new individual life insurance sales market, followed by affiliated (i.e., captive) agents with 36 percent, direct marketers (Internet, Telephone. No producers are involved. Does not include direct marketing efforts involving agents.) with 3 percent and others (Includes stockbrokers, financial institutions, worksite etc.) accounting for the remaining 5 percent Source: LIMRA

9. Underwriting and Pricing Trends Life insurance’s traditional underwriting approach is being challenged by market forces Source: Strategic issues faced by US Life Insurers Potential inflection point for increased predictive modeling in life insurance Emerging innovation by insurance competitors • Automated underwriting for simplest policies • Use of medical data in some product lines (e.g., stop-loss insurance) Growing pressures from distribution • Demand for shorter application process – Interest in less burdensome application process for the customer Market participants (e.g., hedge funds, pharma cos) paying greater attention to life insurance (e.g., life settlements) and experimenting with pricing innovation Increasing computing power and data availability (e.g., medical and prescription history)

10. Underwriting and Pricing Sophistication Life insurance underwriting is also becoming sophisticated. Increased use of predictive modeling in pricing. Source: Strategic issues faced by US Life Insurers

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