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The Business of Life Insurance: Complete Sector Overview

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Global Life Insurance Industry

Life insurance is a protection against the loss of income that would result from the death of the insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the insured’s decease. The main providers of life policies are insurance companies and lenders such as banks or building societies. There are also intermediaries such as brokers and advisers.

Worldwide life insurance premium revenues are over $2.5tn. The global market is fragmented. Different regional players hold the largest share in their respective regions – MetLife in the U.S., Japan Post Insurance in Japan and Aviva in the UK.

Low interest rates, regulatory scrutiny, customer concerns and rising competition from mutual funds and other investment vehicles are some of the key challenges faced by the life industry.

Key Segments

While there is a range of different kinds of policy with different durations and potential benefits, the two main types of life cover are term and whole-of-life insurance:

Term cover provides coverage for a limited period of time at a fixed payment rate. The beneficiary gets the death benefit only if the insured dies within the insurance term. 

Whole-of-life cover guarantees a lump sum payment at whatever age the policyholder dies, provided premiums have been paid continuously from the start of the policy. In Japan around 35% of the total policies in force are whole-of life insurance policies.

Some life policies, such as unit-linked policies, have an investment component.

Some long term cover providers also offer retirement solutions in the form of annuity products. According to Market Realist, about 50% of the life premiums in the U.S. come from annuity-type products.

Regional Market Shares

According to Moody’s, the largest life protection market is in the U.S., followed by Japan and UK. Other markets which feature among the top ten are France, Germany, China, Italy, South Korea, Taiwan and Canada.

The U.S. alone accounts for over $500bn of life premiums, or about one-fifth of the total premiums written globally. There are more than 1,000 insurance companies operating in the U.S. with around $5trillion in invested assets, making the industry one of the largest sources of investment capital in the country. MetLife, with a market share of over 10% is the market leader in the U.S., followed by AFLAC Group and Prudential Financial.

With about 387 companies playing in the market, the UK life cover market is the largest in Europe. Aviva, L&G, Prudential, and Friends Life Group are some of the key players in the country’s life market. Other markets in Europe are smaller, partially because of the high level of state social security, reducing the need for insurance and pensions.

The Asian market for life insurance has traditionally been dominated by Japan, which accounts for more than half of the region’s premiums and about 20% of total premiums globally. Developing markets such as China and India present growth opportunities. The two countries account for about 8% of global life business. An increasing number of elderly people and a growing middle class create significant opportunities for life insurers in Asia.

The African industry is one of great contrasts. South Africa generates about 90% of the region’s premiums.  While South Africa has very high penetration, half of African countries either do not have a life industry or are marginal markets with extremely low insurance penetration.

The Middle East insurance market has a tiny penetration of just 0.3% in life business. According to experts, insurers that have the scale and the bravery to lead M&A activity in the region will benefit from ‘first mover’ advantage. Latin America and the Caribbean have only a 1.3%  penetration, thus indicating potential for growth.



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