The life insurance industry is at a crucial juncture today and needs an overhaul. Younger policyholders (between 18-40 years) are more frustrated by a challenging experience than older customers (between 41-60 years) throughout their insurance journey, notes the Capgemini Research Institute’s World Life Insurance Report 2025. Amid high inflation, economic uncertainties, and evolving consumer expectations, life insurers need to redefine their approach to engage the younger generation, who view traditional life insurance as an outdated and rigid ‘death insurance’, the research shows. This term reflects a product that primarily focuses on death benefits, rather than offering a more comprehensive suite of services that appeal to modern consumers’ evolving needs.
The report drew data based on research of 20 markets, including India, and a customer survey, administered in collaboration with Phronesis Partners, that polled 6,186 life insurance customers in 18 countries.
Why Insurers Need To Focus On The Young Generation?
The report highlights a significant gap between what modern (younger) policyholders desire in comparison to what the industry has to offer currently.
The younger customers are being untapped because of the ‘legacy technology’. The report reveals that many insurers are struggling to meet the needs of the market, which is particularly evident among younger policyholders aged between 18 to 40.
The young cohort is more likely to show dissatisfaction with the existing onboarding processes, service models, and claims experiences. Their top frustration is centered around lengthy application processes including a lack of self-service options and rigid payout structures that don’t align with their financial goals. All these factors combined, make life insurance a cumbersome and outdated product that fails to adapt to their lifestyles.
The data shows that 42 per cent of younger policyholders find inflexible payout structures to be a significant deterrent, compared to 26 per cent of older customers. There’s a visible generational shift among policyholder preferences where younger consumers prioritise adaptability and user-friendly digital interactions.
Are Life Insurers Meeting The Current Standards?
The report notes that a small elite group of life insurers have managed to stand out as “best in class” by focusing on customer experience and leveraging cutting-edge technologies. These insurers have invested in automation, self-service capabilities, and advanced AI tools to streamline processes like underwriting and claims. As a result, most of these have been rewarded with a 38 per cent higher Net Promoter Score (NPS) and 11 per cent lower expense ratio and a 6 per cent higher revenue growth compared to their peers over the past three years.
The best-in-class insurers have made significant changes to improve the onboarding experience with 78 per cent using automated underwriting compared to just 15 per cent of mainstream insurers. Such automation reduces the time and complexity of the application process, making it easier for younger customers to engage.
In addition to this, 78 per cent of these insurers offer self-servicing portals, empowering policyholders to make changes to their policies without facing lengthy wait times or cumbersome processes, something that only 13 per cent of mainstream insurers provide today.
Another missed opportunity by life insurers is the use of Generative AI which has emerged as a powerful tool to personalise interactions and analyse customer behaviour to deliver tailored offerings. The ‘best in class’ insurers use AI for voice and sentiment analysis during claims processes, creating a more empathetic and streamlined experience. However, only 3 per cent of mainstream insurers have adopted similar AI capabilities.
What Should Insuers Do To Remain Relevant?
The report concludes that insurers need to transform their offerings in the current market scenario. They also need to embrace customer-centric approaches and innovative technologies like generative AI.
Says Samantha Chow, Global Leader for Life Insurance, Annuities and Benefits Sector at Capgemini, “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’.”
The insurers can achieve this by focusing on engaging the next generation of policyholders, moving beyond a product-driven approach to put the customer at the center of their strategies.
“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 notes.
