Capturing the insurance opportunity in the private savings market

Responsibility for retirement saving is shifting rapidly onto individuals as ageing populations challenge the funding of pension systems. Concern is growing that the rate of saving for retirement accumulation globally falls far short of the sums that will be needed.

Retirement savings gap in 2022 values, USD trillions

Life insurers can respond to this growing long-term private savings need by activating new demand. We expect the life savings market to expand significantly as a growing global middle-class adopts retirement planning and incomes in emerging markets rise. About USD 2.3 trillion of savings premiums were written globally in 2022, and we forecast this to grow to USD 4.0 trillion globally in 2033, a 2.7% average annual growth rate in real terms. The increase would translate into USD 1.7 trillion of additional savings premiums over the next 10 years, a 65% increase in new business premiums compared to the past two decades.

Origin of new life insurance savings premiums by region

Further, the high interest rate environment of today is expected to improve life insurance profitability, paving the way for the sector to meet its cost of capital again after more than a decade of losses.

To harness the opportunity and differentiate insurance saving products from competitors, life insurers may wish to free up capital, boost their underwriting capacity and focus on product innovation for capital-light growth. Insurers may also wish to address stresses introduced by higher interest rates, such as increased lapse risk.

We identify areas in which reinsurance can support the life sector to optimise in-force portfolios and write new products. In doing so, reinsurance can help to stabilise balance sheets, reduce earnings volatility and increase capital efficiency. Find out more in our report.