While I don’t claim to have 20/20 vision, I do have a view of what the UK’s life and pensions landscape will be like in 2020, and it is one that will be hugely different from the one we see today.
The changes introduced in recent years have changed the game completely. They will take some time to bed in but their effects will be dramatic, particularly the effects of the Retail Distribution Review, the reforms in the at-retirement space and the introduction of auto-enrolment. For instance, auto-enrolment will introduce millions of people to the use of financial products for saving and will thereby provide great opportunities for cross selling of other financial products.
We are living in a highly brand conscious age and this expanded consumer market will be looking for the type of protection that can only be provided by big brands. Meanwhile, the deregulation of pensions will lead to the demand for niche products for the more financially savvy investor. In response, I expect new entrants will appear from other markets; big brands that have the trust and engagement to market effectively to brand conscious consumers, and niche players that will seek to capitalise on the sophisticated investor’s new freedoms for at-retirement investment. I predict many joint-ventures between these new entrants and existing market players, to provide the product knowledge and management needed for white-labelling by the brand leaders and also to provide the day to day product administration needed by the niche entrants.
I also foresee that consumers will expect the kind of multi-platform service that is becoming prevalent today in so many other industries. An ability to allow consumers to manage their own investments and carry out transactions from smartphones and tablets will be a sine qua non of life and pension services in the next decade and existing providers are ideally placed to provide these interfaces to the customer, enabling the consumers to see their complete financial portfolio – income, investments and protection – in one place.
Holistic views will become more important as customers demand individual views of their own financial situation, as they seek to plan for their retirement, long-term care and estate planning needs. This will require a level of individual underwriting that life and pension providers can provide using the smarter technologies that are emerging, including wearable technologies. The ability to underwrite at an individual level due to advances in the science of DNA will come to the fore in a world where medical science is increasing the lifespan of the population at a rate that would have been seen as unbelievable just two decades ago.
The life and pensions organisation looking to thrive in the customer-centric market of 2020 needs to increase its use of technology to provide individualised product matching to individual customer needs. Life and pension companies have been through a lot of change over the past 5 years and this rate of change is only going to accelerate. It is an exciting time for the industry and for all of us involved in it.
Norman Carroll, CEO
What do you think is the future for the life and pensions industry? Do you agree with Norman's predictions? Let us know in the comments below!