Consumer trends in the insurance and pension markets

Key trends in 2021

The analysis conducted in 2021 shows that the insurance sector and pension funds have shown resilience and business continuity despite the global pandemic, which has fast-forwarded digitalisation, raising opportunities but also risks for consumers.

Find out more about the main consumer trends in our video:

Growing interest in sustainable products

Consumer interest in sustainable products is growing.

Insurance and pensions undertakings are now offering more sustainable products, particularly in relation to unit-linked products.

This positive ESG trend could lead to greenwashing and other problems.

Fast-paced digitalisation

The pandemic has fast-forwarded digitalisation in the insurance sector.

This has led to many positive opportunities such as:

• streamlined processes across the product lifecycle,
• possible lower costs in the long term leading to higher financial inclusion,
•  wider offering,
• product personalization

However, some challenges related to the ethical use of technology, cyber & IT resilience, fraud and scams targeting consumers and undertakings, and possible exclusions of the less digitally savvy can negatively impact consumers.

Concerns around claims handling persist

Issues such as insurance claim management delays, low payments, complex liquidation process, exclusions and transparency remain areas of concern in the area of claims handling.

But overall claims handling practices are slowly improving across the EU thanks to digital innovation. The claims processes become more efficient, more user-friendly and offers better interactions between providers and consumers.

Emerging risks raising new concerns on exclusions and the protection gap

COVID-19 and climate change risks highlight issues related to exclusions and the widening insurance protection gap, such as:

• lack of clarity of T&C,
• unilateral changes to T&C
• limited consumer understanding
• uninsurable risks

The lack of clarity and limited consumer understanding can be detrimental for consumers.

Unit-Linked Product Issues

 Unit-linked products are the most concerning insurance products because of their complexity and their lack of clarity around costs and benefits. Badly designed unit-linked products deliver poor value for consumers.

Price optimization

Some undertakings optimise the premium using a number of techniques, often relying on artificial intelligence that are largely independent from the risk profile of the consumer;

This practice leads to consumer detriment by increasing the premium for old/loyal consumers or by increasing the risk of indirect discrimination.

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