Legacy technology is preventing the majority of insurers from meeting their customers’ expectations, claims a report published by a business systems and data management firm.
Authors of the US-based Capgemini Research Institute’s World Life Insurance Report 2025 collected data from life insurers from Australia to the UK.
The report’s authors conclude that just a handful of life insurance firms have achieved what it terms ‘best-in-class’ status, and that the sentiment of consumers is life insurance is moving from a ‘must-have’ to a ‘maybe’.
The company found that just 5% of insurers it surveyed offer a superior customer experience.
Researchers found that:
- 78% of best-in-class insurers have automated underwriting, compared to 15% of mainstream insurers to optimise onboarding efforts
- 78% of best-in-class insurers offer policyholders self-service portals compared to only 13% of mainstream carriers
- 56% of best-in-class insurers provide a seamless and intelligent claims experience through AI assistance for voice and sentiment analysis versus 3% of mainstream insurers
The report states life insurers are at a critical juncture, saying the industry globally faced a 33% fall in penetration in mature markets (such as in New Zealand and Australia) between 2007 and 2023, “with one-in-two policyholders saying their experience is underwhelming”.
“Much of this dissatisfaction permeates through the entire customer journey, particularly across product offerings, onboarding, servicing and claims/surrenders,” states the report.
Capegemini’s data shows 35% of retail policyholders struggle with complex terms, and 27% don’t like lengthy application processes.
After buying a policy, a quarter of retail and group customers express frustration due to long wait times, while 23% are frustrated by the inability to access self-service options for policy changes.
The firm also states the claims process poses challenges, primarily due to a lack of digitisation, leaving one-third (35%) of retail policyholders to say they face a complicated claim application process, with 27% noting a lack of empathy during the claims experience.
Carriers must shake off the perception that life insurance is just ‘death insurance’…
Perhaps more concerning for the sector, is that younger policyholders (aged 18-40) are more frustrated by a challenging experience than older ones (aged 41-60) throughout their insurance journey.
The report states: “Despite a desire to redesign the onboarding, service, and claims experience, only 9% of carriers have established ecosystem-wide processes that capture data from multiple sources to create a unique view of customers, and in turn, deliver personalised experiences through policyholders’ preferred channels.”
Samantha Chow, Global Leader for Life Insurance, Annuities and Benefits Sector, Capgemini, says: “Life insurance is shifting from a must-have to a maybe proposition.
“Carriers must shake off the perception that life insurance is just ‘death insurance’.
“They can achieve this by focusing on engaging the next generation of policyholders, moving beyond a product-driven approach to put the customer at the centre of their strategies.”
She says many insurers are struggling with legacy technology or investments that have failed to deliver the target returns.
“The path forward is a customer-centric transformation that draws inspiration from the best-in-class by embedding AI-augmented, human-touch service into core processes,” she says.